Understanding Your Energy Bill in Alberta

When it comes down to paying energy bills, many consumers just pay the amount listed on their bills without really understanding how they were calculated. However, it’s worth taking the time to look more closely at your Alberta power bill and learn how you are being charged.

Knowing how to read your energy bill is important – having a good understanding of the charges and fees on your power bill and how your bill is calculated can help protect you from being overcharged. It’ll also help you track your energy usage – great for if you’re trying to make your home more energy-efficient. Plus, tracking your energy usage throughout the year can help you plan out your budget.

Reading your electricity bill doesn’t have to be a hassle. If you’ve been wondering ‘how do I read my utility bill?’ or just been wanting your energy bill explained, check out the rest of this page – we’ve broken down the items on your electricity bill and the items on your gas bill so that you have an easier time understanding your energy bill in Alberta.

Understanding Your Electricity Bill in Alberta

Before we get into the more major components of your energy bill, you should take notice of your account number – this is often required to pay your bill. It’s also useful to have on hand if you ever have any inquiries about your energy bill that you need to contact your energy provider about. Something else that your electricity retailer may include on your bill is a usage graph, which helps you visually track how much electricity you’ve used each month.

Note: The percentages on the infographic may differ due to automated rounding created by the chart software, as well as the variable ranges provided by the AUC, although it keeps the visual proportion.

As for the rest of this section, we’ve listed a breakdown of items on a typical residential electricity bill in Alberta. 

• Energy Charge – This is a fee for that amount of energy you’ve used during your billing period – it’s calculated via price per kilowatt-hour. The energy charge does not include delivery costs or other fees such as administration fees. This is how much you pay per kWh for the electricity you use. It is usually listed in cents per kilowatt-hour: ¢/kWh. 

Your energy charge rate will be one of the following: a regulated rate option (which is the default if you do not sign with a contract with a competitive energy retailer), a floating-rate option or a fixed-rate option. If you’re not sure which of the following applies to you, you can either check your energy contract or contact your energy provider for more details. 

• kWh – kilowatt-hour is the standard unit of energy used by energy retailers to measure the electricity delivered to consumers. 1 kWh means the energy consumption of 1,000 watts for one hour. For example, a 250W laptop will use 1 kWh after being on for four hours.

• Site ID (Site Identification Number) – The Site ID is your unique identifier. This refers to the address or location of the meter and it works like a serial number for your electricity or gas. 

• Meter number – This is the number on your meter. 

• Administration Charge (admin fee) – This is what your electricity provider charges you to cover the costs of billing and customer services. This charge is fixed/remains the same for each billing period or month. 

• Distribution Charge – This fee is for covering the cost that a distribution company incurred for bringing electricity from the transmission system to your home. This fee covers the cost of building, maintaining, and operating their distribution systems.

This charge is composed of a fixed portion that remains the same for each billing period (regardless of if you used electricity or not), plus a variable component, which is based on the amount of electricity you used during the billing period.

The fixed portion is still charged even if you didn’t use any electricity because there are costs associated with making energy available to you at all times. 

• Transmission Charge – Transmission charges help recover the cost of transporting electricity generated from the transmission grid over to the distribution system. Typically, this charge is based on your energy consumption for a billing period. For larger consumers of electricity, the transmission charge will be based on both energy consumption and the required demand level/load.

• Rate riders – Rate riders are a temporary, additional rate on your bill which is separate from the monthly rates charged for electricity usage. Rate riders can either be credits or charges, as they are used to close the gap between expected operational costs and actual operational costs.

Rate riders are a mechanism used to flow through costs that are incurred by a distribution utility or refunds provided to the distribution utility, which were not included in its tariff distribution rates at the time those rates were approved by the Alberta Utilities Commission (AUC).

Once AUC has approved utility rates, rate riders are added to a bill for a certain amount of time. There are several current riders for each regulated utility:

• Local access fee rider – This fee is to cover the costs that municipalities charge to distribution companies for the right to exclusively serve its residents and to have utility infrastructure on municipal grounds. These fees are determined depending on what municipality you’re a part of.

• Transmission adjustment riders – Transmission adjustment riders can either be a charge or refund – their purpose is to reconcile the AESO charges paid by the distribution company with those charges collected from customers in a previous period. 

• Balancing pool adjustment rider – This rider is designed to collect or refund charges that are flown through the Balancing Pool credit or charge from the AESO. The Balancing Pool determines whether this rider will collect or refund charges from electricity consumers based on their annual forecast of revenues and expenses.

• Tax – As with any other goods or services purchased in Alberta, you will see a 5 percent goods and services tax collected on behalf of the federal government.

And distribution riders:

Municipal franchise fee – those are paid to municipalities for their ability to put gas distribution facilities on land. The fees are paid as the exclusive grant of a franchise.

Municipal property tax – those property taxes are imposed by municipalities against Apex Utilities (or other utility provider) and their equipment, property and buildings.

Unaccounted-for gas – this rider is used to calculate monthly gas commodity rate and determine the amount of gas to be delivered from to utility supplier by retailers.

Unaccounted-for gas settlement is used to make gas settlement and calculations easier. This rider also ensures that terms and conditions of service are consistent with Rule 028 (Natural Gas Settlement System Code Rules).

Understanding Your Natural Gas Bill in Alberta

For this section, we’ve listed the components of a typical natural gas bill in Alberta and made an energy bill breakdown for natural gas. Much like your electricity bill, you’ll also find an account number before the other elements on your bill. You’ll need to have this number handy for paying your bill as well as for any inquiries you have about the energy bill that you have for your energy provider (e.g. extra energy bill charges that don’t seem right to you.)

Note: The percentages on the infographic may differ due to automated rounding created by the chart software, as well as the variable ranges provided by the AUC, although it keeps the visual proportion.

• Energy Charge/ Cost of gas – This is the cost of natural gas (price per gigajoule) according to the amount that you used during the billing period. It does not include the cost of transporting natural gas to your home or business. As with your electricity bill, the rate for which natural gas is charged will be one of the following: a regulated rate option (which is the default if you do not sign with a contract with a competitive energy retailer), a floating rate option or a fixed rate option.

• GJ – Natural gas is measured in GJs, and GJ per hour (GJ/h) is the standard unit of energy used by energy retailers to measure the natural gas delivered to consumers. In Alberta, the average household uses around 110 GJ of natural gas per year. 

• Administration fee – The admin fee covers the cost for your retailer of providing billing and customer services. It’s a fixed fee – it’ll be the same amount for each billing period if you stay with the same natural gas retailer. Different natural gas retailers charge different administration fees.

• Delivery charge (fixed) – The fixed delivery charge is meant to recover the costs that distribution companies incur such as designing, installing and financing pipelines and meters. This charge does not vary with the consumption of gas – it’s a daily charge based on the number of days in your billing cycle.

• Delivery charge (variable) – The variable delivery charge recovers the costs that vary with the consumption of gas to distribution companies. For example, it covers costs associated with labour, materials, and supplies.

• Rate riders – This is a temporary, additional rate (charge or credit) added to your bill. Riders are for recovering costs or refunding money to the utility for previously forecasted costs on which the utility company bases its rates. Over-forecasted amounts are refunded to customers while under-forecasted amounts are charged to customers.

• Municipal franchise fee – Each municipality charges a distribution company for the right to exclusively serve its residents and to have utility infrastructure on municipal lands. As such, the utilities pass these costs onto their customers via municipal franchise fees.

• Carbon charge – This charge is part of the federal government’s climate action plan to reduce greenhouse gas emissions. Utilities must pay a federal fuel charge to the federal government for natural that they deliver to consumers in Alberta – you’ll see this on your natural gas bill as ‘carbon charge’ or ‘federal carbon tax.’

• Tax – As with any other goods or services purchased in Alberta, you will see a 5 percent goods and services tax collected on behalf of the federal government

Frequently asked questions

Why do I pay more for distribution than energy?

Distribution is the cost to build, operate and maintain the infrastructure necessary to deliver energy to your home. As a result, they are a constant cost despite how little energy you may consume at any given point.

Additionally, as the transmission system expands, requiring more capital investments, the costs of updating the infrastructure cause your distribution charges to rise.

Why do different distribution companies charge different delivery rates?

The delivery rates you are charged are based on how much of the cost of maintaining and operating the system the distribution company must recoup from each customer. As such, the number of customers will “split” this cost will affect what you are charged. Rural areas, where there are fewer customers and greater resources needed, will see a relatively higher distribution cost than urban areas.

The size of the infrastructural system, its age and how large the service area is also affect the distribution costs.

Learn more:

• Factors That Affect The Cost of Electricity in Canada
• Why Alberta Electricity Bills are Getting Higher — and What you can do About it