Price cap to protect consumers from volatile electricity prices
The Government of Alberta is protecting families, farms and small business with a ceiling on electricity prices as the province makes necessary reforms to the electricity system.
“Our government inherited a volatile electricity system that doesn’t look out for consumers or work for investors. While electricity prices are low today, the current oversupply won’t last forever. Alberta’s economy is stabilizing and this government won’t put Alberta families, jobs or the economic gains we are beginning to see at risk in a volatile electricity market. This rate ceiling, along with other electricity system reforms we will announce this week, will ensure stable and affordable electricity prices going forward.”
When fully implemented in June 2017, the government’s rate ceiling will ensure that Albertans pay no more than 6.8 cents per kilowatt hour – an available long-term contract rate – for electricity over four years.
During the period from June 2017 to June 2021 that the rate ceiling is in effect, consumers on the Regulated Rate Option (RRO) will pay the lower of the market rate or the government’s ceiling rate.
This rate ceiling will be automatically applied to the bills of consumers on the regulated rate. Albertans may also choose to continue to take advantage of an offer from any private supplier they believe better suits their needs.
The government will consult with distributors, RRO providers, retailers and consumers, beginning in December. The Minister of Energy will lead the consultation on this plan.
Historically, regulated electricity rates have been extremely volatile – increasing by as much as 65 per cent (or 4.66 cents per kilowatt hour) in a single month (April 2011) and crashing by as much as 42 per cent (or 4.14 cents per kilowatt hour) in a single month (June 2014).
“Previous Alberta governments experimented with a risky and volatile form of electricity deregulation. This experiment left families, businesses and our economy at the mercy of sudden price spikes and uncertainty like we’ve seen in the past and need to protect against in the future. This week, we will announce more steps toward ensuring a future of reliable energy at stable, reasonable prices for Albertans.”
Further measures will be announced to address this ongoing volatility.
This week, the government will also outline a series of reforms that will:
- Enhance Alberta’s market framework to create the conditions for private investment affordability, reliability and price stability; and
- Provide more detail on the phase-out of toxic emissions from burning coal by moving to a healthier mix of electricity generation sources.