Power prices set to zap Albertans
Albertans are likely to face a spike in their electricity bills in the new year as a result of a backlog of costs that have built up during a nine-month price freeze ordered by Premier Alison Redford last February.
Neither the Alberta Utility Commission (AUC) nor provincial utilities contacted by the Herald could estimate the amount of costs backed up in the system, but consumer advocates say the figure could be in the millions.
“When the freeze comes off, no one will be able to avoid those costs. They are coming one way or the other,” said Jim Wachowich of the Consumers’ Coalition of Alberta. “How big a blip it will be, I don’t know. We have heard some concerns it could be pretty large.”
Non-energy costs make up about a third of an average consumer’s electricity bill, Wachowich said.
Wildrose electricity critic Joe Anglin said the size of the spike is unknown, but it doesn’t look good for consumers.
“Hang onto your hats,” he said. “This could be a rough ride.”
Prior to the election in the spring, Redford ordered a freeze on electricity distribution and transmission costs, rate riders and other fees on electricity bills to coincide with a review aimed at costs and volatility in the retail electricity market. Critics claimed it was a blatant attempt to diffuse angst over rising electricity prices during the election campaign.
The freeze is expected to be lifted next month when Energy Minister Ken Hughes releases the 391-page report of a government-appointed expert panel and sets out his position on its 41 recommendations to improve the deregulated retail electricity market.
Hughes said he is not worried consumers will be hit with a huge price shock in January because the extra costs will likely be added onto electricity bills gradually over the first six months of the year.
“There are existing measures in the way the AUC looks at these issues to make sure, first of all, the costs are appropriate, that they are turned out over a period of time, that they are substantial relative to the base ancillary costs,” he said.
“It will take longer than January for the AUC to work through the process.”
Enmax spokesman Ian Todd declined to comment on the potential backlog of costs, but Epcor spokeswoman Connie Smart said the Edmonton-based utility will attempt to work with the industry to minimize the impact on its customers.
“We understand that the amount on your bill is a concern and we want to be sensitive to that,” she said.
NDP Leader Brian Mason said it’s bad enough the Redford government froze electricity bills at the highest level they have ever been, but Albertans shouldn’t be hit with more fee hikes now.
“I think the freeze should continue and I think we should be reviewing the whole case for electricity deregulation,” he said. “Power prices are too high. Albertans are paying too much for power and the minister is playing games by holding back important public information that we could be using to debate the future of electricity in Alberta.”
AUC spokesman Jim Law said the commission is aware there could be a spike in fees once the freeze is lifted.
“We are aware of the potential, of the possibility, that we may have to deal with this,” he said. “However, it is only a possibility at this point and by no means certain that this will be the case. If it does turn out to be an issue, we will be prepared to deal with it. “
Law said the commission can decide when to allow any rate increase to begin to take effect and can spread it out over what it determines to be a reasonable period.
“We do have the ability to adjust the rates so as to mitigate what we determine would otherwise constitute rate shock.”
Law said it is difficult to determine the scope of the increase today because he is awaiting applications for rate hikes from transmission facility owners, the Alberta Electric System Operator, distributors and regulated retailers.
“We will need to see what happens when the freeze is lifted before we can begin to see how the various outcomes of all of these together might affect the end bill for consumers,” he said.