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Alberta government announces plan to protect consumers from power price swings

The Alberta government is proposing measures that aim to protect power consumers from wild price swings. Alberta Premier Danielle Smith speaks to reporters on the sidelines of the Canada Strong and Free Network event in Ottawa, Friday, April 12, 2024. THE CANADIAN PRESS/Spencer Colby

EDMONTON — The Alberta government is proposing measures, to take effect in January, that aim to protect power consumers from wild price swings. 

Premier Danielle Smith told a Thursday news conference the default power rate — currently called the Regulated Rate Option — is misleadingly named because it can vary monthly according to weather and global events. 

She said her United Conservative Party government aims to introduce legislation this spring renaming it the Rate of Last Resort so consumers can better understand what they've signed up for. 

"We think this will send the right message to Albertans that this is the rate to sign up for only when there are no other options available, because everyone in our province could use some clarity and certainty about costs right now," she said.

Smith said her government is also planning to have the Rate of Last Resort set every two years for each provider so that there isn't so much volatility. 

Smith said in 2023, the Regulated Rate Option averaged 22 cents per kilowatt hour. However, she said the Market Surveillance Administrator, a public agency that oversees the province's electricity and retail natural gas markets, has estimated the average price would have been half that had the new policy been in place. 

"This will essentially become the price to beat," she said of the reworked default rate. 

Nathan Neudorf, the minister of affordability and utilities, said retailers in the province's unique deregulated market will in turn be encouraged to lower rates for other options.

Neudorf said the new rules are meant to protect those who aren't able to move off the Regulated Rate Option because their location or poor credit scores mean they can't qualify for competitive rates.

The default rate in the province is set by the Alberta Utilities Commission, and retailers can purchase electricity up to three months in advance.

"Giving them the ability to buy up to two years will stabilize that price," said Neudorf, who acknowledged the new rules "may have an impact on retailers."

New Democrat Opposition Leader Rachel Notley told reporters later Thursday the UCP is still "bumbling around" trying to fix the problem it created when it scrapped the electricity price cap in 2019.

"There's nothing in this plan to protect citizens this summer from the kind of massive price spikes that we saw last summer," said Notley, who added the promised stability is only helpful if prices aren't inflated. 

"Since we don't know what the formula is that they're going to use, we can't actually be sure that they won't be inflated," said Notley.

She said a decreasing number of customers who have no choice but to stay on the regulated rate option will be left repaying larger shares of the cost of a temporary price cap put in place by the UCP last year.

"What will happen is that the most vulnerable, lowest-income folks will be left to deal with the larger pool of deferred costs created by Danielle Smith." 

Although tens of thousands of people have moved away from the Regulated Rate Option, Neudorf said the province's population growth has replaced them with new customers. 

"We don't anticipate it impacting them negatively. We're still on target to have that repayment come off at the end of this year," he said.

Approximately 29 per cent of residential customers get their power through the Regulated Rate Option.

The government plans to require providers to confirm with customers whether they want to sign on to a competitive rate or stick with the default. 

It would have providers share with customers how to access Utilities Consumer Advocate resources and remind them of their options on their monthly bills. 

This report by The Canadian Press was first published April 18, 2024. 

Lisa Johnson, The Canadian Press

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