What options are available for those who consume more than 250,000 kWh per year now that they are no longer eligible for the regulated rate option in Alberta? Lots—and in a lot of cases, they are much more advantageous options for the businesses involved.
What were the advantages of RRO?
Many people liked the regulated rate option in Alberta because it didn’t lock you into a fixed energy rate; the RRO rate plan offered a rate that fluctuated based on market rates. That meant, when projections were good (when demand was low and production was high, and when no significant events loomed on the horizon that could disrupt that productivity) that consumers received low rates; and better yet, those consumers didn’t have to lock into paying that one rate. If the prices of energy were to drop in two months, their rates drop, too.
Of course, the opposite was true, as well, with the regulated rate option in Alberta: if those prices were to increase in two months, clients would end up paying more than if they had opted to lock into a lower rate. For many, the benefits outweighed the risks, and the fact that this option is no longer available for some is leaving many feeling as though they are being left in an energy-related lurch. While this may seem true, though, it isn’t actually the case. For many of those who are no longer eligible for RRO, recent modifications to the way the projections are made would actually be increasing the risk—and the cost—of opting into the RRO rate plan, and the truth of the matter is that there are a lot of better rate plans out there for those who consume larger quantities of energy each month.
Changes to the RRO
On April 18, 2024, the Alberta government announced the RRO would be renamed to the Rate of Last Resort (RoLR). According to the Minister of Affordability and Utilities, Nathan Neudorf, the proposed changes would provide more clarity to electricity consumers and encourage them to explore other retail energy options. The provincial government will also introduce the following requirements for RoLR providers:
- Within 90 days of providing services, providers will be required to confirm with their customers whether they’re choosing to sign a competitive rate contract or stay on the RRO.
- Providers will be required to remind customers of their energy rate options on their monthly bills.
The RoLR rate will be set every two years rather than every month as was the case for the RRO. At the end of each term, the rate can only adjusted by a maximum of 10%. For example, if the rate is 10¢/kWh in the first term, then the second term’s price must be between 9¢/kWh and 11¢/kWh. The provincial government believes the RoLR will have more predictable and affordable rates with minimal fluctuations.
The Rate of Last Resort will come into effect as of January 1, 2025.
What are the options now?
Load Following
For many large businesses and industrial consumers who are no longer eligible for the regulated rate option in Alberta, load following energy plans are an optimal alternative. Why? Because the load following plan is structured around risk mitigation for those consumers for whom even the slightest increases in energy rates can mean large-scale hits to the profit margin. Load following plans protect against energy spikes, but they also protect companies who experience changes in rates of consumption (as can happen when the construction or extraction business slows down in the wintertime).
Load following plans minimize risk and enable long-term budgeting by basing energy rates on extremely conservative block pricing plans that use the company’s historic usage to make projections about future use and negotiate an applicable rate to match that projected demand. Load following also awards credits when a company comes in under their monthly allotment, so they are never wasting money when the projections are off. Further, when consumption goes over the projected limit, spot market prices are used to purchase the surplus.
What does this mean in comparison to the regulated rate option in Alberta? It means there is a lot less risk that a business or company will have to pay thousands of dollars extra when the price of energy spikes—even if the company is coming in under their allotted rate of consumption.
Block Pricing
Of course, load following isn’t the only alternative option to the regulated rate option in Alberta. Large businesses and industrial consumers can also opt for block pricing, which protects against energy prices while still opening up access to current market pricing (instead of locking into higher fixed rates). It’s a middle-of-the-road approach that blends two rate plan options together to mitigate the risks and maximize the benefits of both.
Or, if you would prefer to eliminate the risk of spikes altogether and opt for the fully budgetable approach, fixed rate plans that cater specifically to large-scale consumers are available, too, and they also offer a beneficial alternative to the regulated rate option in Alberta.
Whatever your preferences when it comes to substituting the regulated rate option in Alberta, there are options that can offer you more benefits than just the basic provision of energy you are looking for. Contact us at Energyrates.ca today to learn more about the plans that are out there for you.
