Empowering electricity consumers would prevent potential abuse

Big changes taking place, and residents of Alberta have no say, writes Sheldon Fulton

Major changes are being made to the Alberta electricity market. These changes will have a significant impact on consumers, yet they are barred from having any voice.

The Alberta electric market is being transformed privately by shadowy, cosy and exclusive industry and government working groups.

Why should consumers be concerned? Higher electricity prices are on the way. In the first three months of 2018, regulated rate option prices for residential consumers rose 33 per cent (from 3.6 cents per kilowatt-hour to 4.8 cents). The rates increased a further 3.2 cents in April as a result of the market response to TransAlta mothballing several of the Sundance units.

How is the electricity market changing ? A new, little understood capacity market is proposed, power purchase arrangements are terminating, there are lengthy and expensive payouts for coal shutdowns, mothballing of generating plants, hitting the 6.8 cent rate cap, tripling of power prices in just three months, losses in the balancing pool, long-term contracts for renewable energy, and the redesign of regulated rate options.

All initiatives affect residential, commercial and rural electricity consumers. Yet consumers have no direct engagement in the design of these initiatives.

These changes have no criteria to review the costs to consumers, and no review of less expensive or alternate designs. Working groups are staffed by the generation, distribution and transmission utilities. The dominant utilities employ expert consultants and legal services and flow the costs through to consumers. But the consumers have no one to challenge these costs or speak on their behalf. Alberta electricity consumers have no venue, no public hearing, no independent tribunal, no process where they can represent their interests.

The doors have been barred to consumer participation for so long, a moratorium on any market design changes is required while a full and independent review can take place. Alberta needs an independent commission to undertake a comprehensive assessment of the electricity market before any further market design changes are allowed.

Consumers would need to play a prominent and meaningful role in any review.

In 1995, the Alberta government deregulated the electricity sector. Their initial objectives were to turn large, centralized, cost-based, regulated power plants into deregulated, competitive units. Market competition was meant to drive down costs.

Throughout the initial years of transition, consumer interests were represented by a number of interveners, including municipal governments, farm groups, industrial businesses, Indigenous peoples and others. They had enough influence over big changes to keep a balance in the system.

But generation, distribution and transmission companies complained that these consumer voices constrained their profit potential. In 2008, the government replaced the energy regulator with the Alberta Utilities Commission. It also removed almost all funding for consumer interventions in applications before the commission.

In 2018, residential consumers and seniors have only one independent consumer voice left. It is the Consumers Coalition of Alberta, which is severely constrained from participating in policy initiatives, unless it does so with its own resources. There is no cost recovery for speaking up on behalf of consumers.

Alberta needs to re-enfranchise consumers. The government needs to follow through on its repeated promises to re-initiate an independent board for the Utility Consumer Advocate.

It needs to ensure qualifying consumer groups can engage in policy discussions and in regulatory proceedings supported by independent expertise. And it needs to ensure all major market, distribution and transmission initiatives are required to seek regulatory review and approval before proceeding.

The Alberta government is insisting Calgarians have the right to a plebiscite before Calgary proceeds with a bid for the 2026 Winter Olympic Games. While Albertans are being given a voice and full public debate over a big decision, we should remember that electricity consumers have just as much, if not more, at stake. They deserve a voice, too.