Utility deferral payments: How the unpaid bill rate rider is going to work
As of July, it has been announced that Alberta consumers will see small to moderate increases to their electricity bills in the coming months. These fee increases are to recover the debt that is owed to gas and electricity distributors and providers from the three-month utility deferral program that was offered to Albertans having hardship during the pandemic.
The Utility Payment Deferral Program Act allowed electricity consumers who consumed less than 250,000 kilowatt-hours of electricity per year, and natural gas consumers who consumed less than 2,500 gigajoules per year, to have deferred utility payments until June 18, 2020.
However, many energy consumers across the province weren’t able to repay these deferred bills, and the Alberta Utilities Commission (AUC) is now set to define how (and how much) all consumers will pay for these late bills.
Who’s going to pay for it?
Participants had until June 18, 2021, to repay their deferred payments – any remaining outstanding payments are to be added to a small, temporary rate rider – a fee paid by all utility customers in the province – with one for natural gas and one for electricity.
The announcement of the rate rider fee has sparked some controversy – according to a CBC news article, the repayment process wasn’t made clear when the deferral program was announced. As such, there are concerns regarding if there will be programs that will be funded by ratepayers in the future rather than being funded by the government. Additionally, an Edmonton Journal article underlines that there is not enough focus on delivering Albertans stable and affordable electricity.
Are bills going to be higher because of this decision?
In the coming months, Albertan energy consumers can expect bills to be slightly higher as a result of the announced rate rider that will be added to all utility customer bills. The exact amount was determined by the Alberta Utilities Commission on August 18, 2021.
How much will Albertans have to pay?
According to the AUC, the rate rider charges will appear on residential energy bills from November 1, 2021, and are expected to last for four months.
For electricity, the rate rider will be 27 cents per month (based on the average residential energy use of 600 kilowatts).
For natural gas, the rate rider will be 78 cents per month (based on the average residential energy use of 21 gigajoules).
How many consumers didn’t pay the utility deferral costs?
Over 245,000 electricity customers and 181,000 natural gas customers took advantage of the deferral program, according to an Edmonton Journal article. While there isn’t a figure on the number of consumers that did not repay their deferral costs, it’s estimated that out of approximately $92 million in deferred payments, around $13 million to $16 million remains outstanding.
As announced by the AUC, no more than $8.77 million will be collected from electric utility consumers, resulting in a rate rider of 0.045 cents/kWh.
For natural gas, no more than $6.1 million will be collected from consumers, resulting in a rate rider of 3.7 cents/GJ.
Both are expected to run for four months.
What is a rate rider?
A rate rider is a temporary credit or charge (in this case, charge) that may appear on utility bills in some communities. Rate riders are approved by the Alberta Utilities Commission for the purpose of enabling firms to recover actual operational costs not included in approved rates.
Rate riders usually only relate to transmission and distribution costs, which may include:
• Municipal franchise fees
• Transmission surcharges
• Special facilities charges
• Balancing Pool riders
For more information on rate riders and other items on your electricity and natural gas bills, go to our Alberta energy bill breakdown.
What can Albertans do about this rate?
Utility providers such as Enmax and EPCOR are expected to use reasonable efforts to collect unpaid balances and must detail such efforts to the Alberta Utility Commission (AUC), according to a CBC article.
In particular, Enmax has stated it will work with its customers to find reasonable payment arrangements and support services if they have difficulties paying. If payment cannot be arranged, collections agencies may be called for – otherwise, if all efforts fail, only then would Enmax seek reimbursement through rate riders.
Otherwise, Albertans can contact their electricity providers for more information on how the rate rider fee will be integrated.
Consumers who have additional questions about rate riders can contact the Alberta Utilities Commission at [email protected].