How the electricity distribution and transmission costs in Alberta will increase in the years ahead
Recently, the Alberta Electricity System Operator (AESO) has announced an investment of $1.4 billion into the province’s electrical infrastructure over the next four years. The AESO plans and operates Alberta’s electricity grid and the wholesale electricity market.
While the $1.4 billion investment means that Alberta will have a safe electricity grid, it also means that electricity rates in Alberta will go up over the years ahead, at least when it comes to distribution and transmission costs.
The cost of the investment will be paid for by consumers through distribution and transmission costs. As a result, an approximate increase of at least 0.5 cents per kilowatt-hour (kWH) is expected.
Transmission costs are charged based on a consumer’s use of electricity; these costs are how transmission facility owners recover the costs for building, operating and maintaining the transmission facilities. These rates are established in the ISO tariff and are approved by the Alberta Utilities Commission (AUC).
The Transmission Rate Projection is AESO’s way of providing residential consumers with an approximate estimate of how much they’ll pay for transmission in the future. It also provides stakeholders with information that will help them plan their actions as a result of the increased distribution and transmission rates.
The increased monthly transmission and distribution rates paid by consumers will help cover the costs of infrastructure enhancements for Alberta’s electrical infrastructure.
In order to cover the cost of the infrastructure enhancements, transmission and distribution rates will rise between now and 2037.
|Average transmission rate ($/MWh)||$36||$37||$37||$39||$41||$42||$42||$42||$42||$42|
|Average transmission portion (600 kWh) of a residential monthly bill||$22||$22||$22||$24||$25||$25||$25||$25||$25||$25|
This table using data from the AESO shows how power prices will increase, and the average portion of a residential energy bill that will go to paying transmission costs.
The transmission portion of a residential monthly bill is based on an average of 600 kWh of electricity used per month by the average residential consumer.
Let’s look at how to read the table: For example, the average transmission rate is $36/MWh in 2019 — by 2028, it will increase to $42. As a result, residential consumers will go from paying $22 for the transmission portion of their energy bills to $25.