Epcor, Enmax at odds over rules

Edmonton utility pushes for change

In the debate over retail electricity contracts and power price volatility, Edmonton’s Epcor Utilities and Calgary’s Enmax Energy are squaring off at opposite sides of the ring.

Soaring power prices this winter for customers who were not on contracts — about 70 per cent of consumers — led the province to set up an independent retail market review committee to suggest changes to Alberta’s unique open marketplace.

Two dozen companies and various associations signed up for the two weeks of hearings, which began this week in Edmonton and continue next week in Calgary.

The two biggest players in the game are Epcor — which buys power for 600,000 city and regional customers under the regulated rate option (RRO) and has chosen not to sell contracts — and Enmax, which has 250,000 EasyMax contract customers across the province and also provides RRO power to another 250,000 customers in Calgary.

Epcor says the recent price volatility, which saw rates of 15 cents per kilowatt hour in January — almost double the long-term average — can be smoothed out if the utility is permitted to buy future power over a longer period.

“Currently we must purchase all our power one month ahead, and this makes it subject to wide price swings,” said Doreen Cole, senior vice-president for electricity at Epcor.

“We are advocating (to the committee) that half of the RRO power be based on the monthly product, half on a longer-term purchase, and then blending those purchases to make up the final RRO rate.

“This should stabilize the volatility in the market,” she said.

Epcor’s suggestion would return the province to the situation in 2007.

At that time, that ratio of long-term and shorter-term purchases was required.

After July 2010, RRO providers were required to purchase all their electricity five to 45 days in advance of the delivery month. Epcor wants that extended to 90 days.

Cole said the gradual transition begun in 2005 was designed by the government to send consumers “price signals” that “would have them contemplate utilizing competitive retailers (selling contracts).”

Enmax says that is exactly the point. If consumers want price stability they should simply sign on to a contract, which in Enmax’s case offers a longterm price of eight cents a kilowatt hour.

“We don’t see a need to change the RROs because we know there is a solution, and that is the retail electricity marketplace,” said Rob Hemstock, executive vice-president for regulatory and legal services at Enmax. “Half the consumers in Calgary are on a contract with a retailer. When you give them the facts and explain to them what the choices are, they do react.”

Hemstock suggests that Edmonton’s relatively low number of contracts compared with Calgary may have something to do with less consumer education here.

“There is admittedly a lower level of understanding (about contracts) in Edmonton, where Epcor is the incumbent, and isn’t interested in making them understand. Then they are less likely to switch” to a contract from Epcor’s RRO service, he said.

Enmax is asking the retail market review committee to recommend that the province launch a program to educate consumers about contracts.

They also want all RRO providers to begin to do what both Enmax and Direct Energy already do when they purchase power — they buy it daily in small amounts.