by Colin Smith
Some Alberta electricity users may see spikes in their bills with the removal of the price cap proposed as part of the recently introduced Provincial Budget.
The price cap initiated in June 2017 ensured that consumers on the default regulated rate option – who had not signed up for a retail plan – were charged no more than 6.8 cents per kilowatt-hour for electricity.
If the rate charged by the provider for electricity exceeded that amount, the government paid the difference above that price.
As part of the budgetary Ensuring Fiscal Sustainability Act that cap will be removed as of November 30. The act is currently being debated in the Provincial Legislature and requires passage before it becomes law.
“We feel the removal of the regulated rate cap ($0.068 kWh), may expose consumers to potential pricing spikes or volatility in the electricity market,” according to a statement provided by Alberta Co-operative Energy representative Doug Strobl.
The cap was introduced to reduce volatility in the deregulated electricity market, in which price spikes of up to 65 per cent in one month had occurred.
In 2018-19 it saved regulated rate option electricity users – residential consumers, farmers and small business operators – some $53 million.
Removal of the price cap follows the introduction of legislation to undo the previous government’s pending move to a capacity-based rather than energy-only electricity market.
“Whether it is a capacity or energy-only market, there will be challenges for consumers and retailers of energy products,” said the statement from the community-run energy retailer.
In an energy-only system, producers are paid for electricity that is sold into the wholesale power market, while in a capacity system, they are also paid for having energy capacity available if it might be needed.
The Alberta Co-operative Energy statement points out that competitive retail prices, such as it offers, have typically been lower than the regulated rates.