Alberta's regulated rate option expected to soar next month — to its highest level in history

Alberta's default electricity rate is expected to soar in August to its highest rate charged to customers in the province's history.

The regulated rate option (RRO) is currently 27.5 cents per kilowatt hour with ENMAX in Calgary and 28 cents per hour with EPCOR in Edmonton.

Pending approval from the Alberta Utilities Commission, it will increase to 31.8 cents per kilowatt hour in Calgary, and 32.5 cents per kilowatt hour in Edmonton.

Joel MacDonald, founder of energyrates.ca, says this increase means Albertans on the default rate could be seeing an average of $125 added to their electricity bills, compared to being on a fixed rate.

"This is an all time record high for the RRO, and also the first time that actual cost is flowing down to Albertans," MacDonald said.

That's because the last record was broken in February, when the rate rose to 29.6 cents per kilowatt hour in Calgary and 32.9 cents per kilowatt hour in Edmonton — but the province had a temporary price cap in place, so Albertans weren't charged more than 13.5 cents per kilowatt hour on their bills.

MacDonald said part of the reason prices are so high is because RRO customers are stuck paying back the $200 million deferral from this year's price cap. The latest data from the province's Market Surveillance Administrator shows 35 per cent of Albertan households are on the RRO.

"The hiccup is we're expecting this huge mass exodus from the RRO because it is so expensive and the obligation to repay those funds is only on our RRO customers," MacDonald said.

The more people switch to fixed or floating rates, the higher the bills for RRO customers, he said.

Cash-strapped Albertans hit hardest

Blake Shaffer, an associate professor in the department of economics at the University of Calgary, says cash-strapped Albertans are being hit the hardest by these unprecedented rates.

He says there are two groups of people who remain on the default rate: inattentive Albertans who don't realize they haven't made the switch, and Albertans with low credit who don't qualify for a cheaper fixed rate.

In his eyes, the provincial government should have changed that policy long ago.

"This cruel irony of, it's the poorest, lowest credit people in the province who don't have access to the cheap electricity rates — that seemed like an area that the government can, could have and should have stepped in to go and guarantee those folks."

Last week, Premier Danielle Smith sent a mandate letter to Affordability and Utilities Minister Nathan Neuford, asking him to research phasing out the default electricity rate.

Shaffer says it's always worth doing reform and looking at better options, but by the time that change would be implemented, Alberta will be past the crisis stage.

He says prices are forecasted to decline over the next year.

Until then, his advice is to switch to a fixed rate if you're able, and if not, look into bill support programs to help with the rising costs.