The Regulated Rate Option in Alberta has been available as a safety net to energy consumers since 2001, but there are restrictions when it comes to who is eligible for this type of service.
What is the RRO all about?
The Regulated Rate Option in Alberta (or the RRO) describes an energy rate that is determined by the Alberta Utilities Commission (AUC), an independent organization that acts impartially to ensure fair rates for electricity are available to consumers and suppliers alike. The RRO is calculated based on the current market price. It operates similarly to a month-to-month phone plan; you pay the same rate throughout the month, but each month those rates are subject to change based on the factors that affected the rate the previous month as well as on forecasted predictions for upcoming months.
There are a number of factors that can influence the current price of the Regulated Rate Option in Alberta. For instance, weather conditions can play a big role in changing the rate you pay. Mild, windy weather creates optimal conditions for wind generation to feed into the grid—not to mention the fact that demand for energy decreases when temperatures are such that don’t require a lot of heating or cooling within the home or workplace. When demand is low and generation is high, the rates for electricity are low; and if these conditions are sustained for multiple months, the regulated rate will either remain low or continue to decrease monthly; however, there are also factors (like high demand and disruptions in energy production) that can cause those rates to increase as well.
Despite the fact that the Regulated Rate Option in Alberta can offer some of the lowest rates out there, recent changes have made RRO a less viable option for large-scale consumers. In 2006, the AUC shifted from basing their calculations on long-term projections to short-term projections, and by 2010 this meant the default rate became entirely based on the projections for the following month. The result? The RRO now changes often—and some of those changes are substantial.
Does this mean you should avoid the RRO?
Not necessarily. If you don’t consume much electricity, then the fluctuations in the RRO aren’t going to create much of an impact—plus you will be able to take advantage of those significant price drops when the projections for the following month are in your favour. The problems exist more for those who have large consumption demands and thus feel the impact of those rate fluctuations much more severely, or for those who need their electricity rates to correspond to a strict budget in order to keep their business or personal expenditures on track. The other problem with the Regulated Rate Option in Alberta is that it is no longer available to businesses or commercial operations (or residences) that consume more than 250,000 kWh per year.
Fortunately, those for whom the Regulated Rate Option in Alberta isn’t the right choice have alternative options in the competitive retail electricity market. For more information on the rate options that might be best for you, visit https://energyrates.ca.
