Enmax ordered to revisit pricing

Consumer groups succeed in price challenge

EDMONTON— Enmax has been ordered to go back to the drawing board in setting monthly electricity prices after two consumer organizations challenged the amount it was claiming for risk compensation.

Following a confidential hearing last month, the Alberta Utilities Commission (AUC) directed Enmax to continue using its previous pricesetting method until it can come up with a new formula that meets the approval of the Utilities Consumer Advocate and the Alberta Consumers Coalition.

The issue arose after the province changed regulations in January to increase the window for electricity procurement from 45 days to 120 days in a bid to reduce the volatility of the deregulated electricity market.

The theory is that if utilities can purchase electricity for consumers on the “regulated rate option” (RRO) over a longer period of time, the rate won’t be as severely affected by spikes on the spot market.

AUC spokesman Jim Law said when Enmax moved to the 120-day plan for the month of July, it imposed conditions the consumer groups believed would result in higher customer prices.

The new formula put forward by Enmax was approved by an independent adviser in April, despite the consumer group objections, but the AUC overturned that decision Thursday. It directed Enmax to negotiate a new plan that meets the approval of the consumer groups, Law said.

“Essentially the price-setting plan is a negotiated contract and ... Enmax cannot make a unilateral change without an agreement with the consumer groups,” he said.

Enmax deferred questions about the decision to the AUC, but said that it follows a structured process set out by legislation — and approved and overseen by the AUC — to buy electricity from power generators to supply electricity to customers who don’t have retail contracts.

“We work with customer representatives and an independent adviser to ensure that the RRO we set is calculated fairly and correctly,” said Enmax spokeswoman Doris Kaufmann Woodcock.

Utilities Consumer Advocate Rob Spragins said the AUC decision was good for consumers.

“Basically, the concern that we had is that consumers would end up paying some financial compensation to Enmax if the decision went their way and that would essentially outweigh the benefits of the 120-day (price-setting plan) so on a net basis I think consumers are better off,” he said.

But Spragins said he is not certain the move to the 120-day procurement period will actually reduce electricity prices for the 70 per cent of consumers who have not yet signed fixed contracts with electricity retailers.

Consumers already have the ability to manage the risk of volatile prices without any risk to themselves by signing contracts, since most contracts now being offered charge no exit fees, he pointed out.

A person who signed on to one of the five-year, fixed rate plans on the market five years ago would have saved $200 to $250, he said.

“That’s a significant amount of money, particularly if you are a vulnerable consumer,” he noted.

“Why aren’t consumers making these choices?”