POWER TO THE PEOPLE?
Province eyes cap on bills
Albertans’ power bills will soon be capped, if legislation tabled Tuesday passes through the house. Here’s what it means for you.
Why the change?
The bill gives government the power to implement a change it announced last fall. The idea is to reduce electricity price volatility by capping power at 6.8 cents per kilowatt hour.
Over the last six years, it has fluctuated anywhere between 2.7 and 15.3 cents.
The legislation tabled Tuesday is a safety measure while the entire system is overhauled to become a capacity market and more renewables are introduced to the grid.
What will happen to my power bill?
The cap will only apply to you if — like around one million other Albertans — you have opted for a regulated rate, where the cost of your power fluctuates each month.
The change will take effect June 1. For now, though, it won’t do much, because the regulated rate is around 2.7 cents per kWh — well below the 6.8-cent threshold.
Power prices aren’t forecast to increase much over the next four years, but if there is an unexpected spike, you’re protected.
An average Alberta home uses around 7,200 kWh each year. At 6.8 cents per kWh, that makes the electricity portion of a bill $489.60 per year.
At the lowest recent rate of 2.7 cents, the same usage cost $194.40, while the highest rate — 15.3 cents — skyrocketed power to $1,101.60.
Where is this money coming from?
Payments to power companies will come from the carbon tax. For each cent beyond the 6.8-cent cap, the government will pay an estimated $10 million per month to power retailers to offset the difference.
Government doesn’t anticipate prices rising above the cap for any sustained period over the next four years, though EDC Associates in Calgary has estimated the program’s four-year cost at between $250 million and $1 billion. If power doesn’t go above 6.8 cents, the program will cost the government nothing.
What’s the reaction?
Energy Minister Marg McCuaigBoyd said the change will provide stability as Alberta moves toward a capacity market.
Alberta’s Market Surveillance Administrator will recommend other system adjustments by summer’s end.