Market watcher says multiple factors behind Albertans' surging power bills

Like many Albertans, Timothy Wong was surprised to see the number on his July utilities bill.

In June, his Epcor bill was $323, which was in line with previous statements. But in July, the amount jumped to $711, with the biggest chunk — $289 — for electricity.

"It was shocking, to say the least," Wong told CBC News on Monday.

Wong's Edmonton home has central air conditioning and though he said he relied on it more during the recent heat wave, he had a hard time believing that alone would make such a big difference to his bill.

Wong was right to think something else was going on. According to the provincial government and an energy market watcher, a combination of factors — including the summer's heat wave — have contributed to recent price increases for many Albertans.

Market changes

The expiration of power purchase agreements is one reason consumers on variable or floating rates have seen prices rise, said Sophie Simmonds, managing director of the brokerage firm Anova Energy.

Most of these agreements, which were designed to encourage competition between generators and ensure fair electricity pricing, expired on December 31 of last year.

Before the agreements expired, Simmonds said, between 40 and 50 per cent of Alberta's electricity market was fixed, so periods of extreme weather or low electricity supply only affected part of the market. 

"Now, periods of extreme weather, like the heat wave, are impacting 100 per cent of the electricity market for the first time," she said.

Though she could not say for certain, Simmonds said she does not expect generators to re-enter into power purchase agreements with the government.

"Because they're now achieving a much higher price point than they were when those agreements were first signed," she said.

Supply issues

Simmonds said other factors, including supply issues, are also contributing to higher prices.

As Alberta phases out coal-fired electricity, some coal plants are being converted to natural gas plants while others are being shut down permanently.

"We are removing large amounts of electricity generation from the grid whilst we're hitting all-time highs for electricity demand, so that's causing the price of electricity to go up," Simmonds said.

Unplanned infrastructure outages and lower supplies of hydro-generated electricity due to unseasonably low water tables from B.C. and the Pacific Northwest have also contributed to higher prices this summer, according to Margeaux Maron, press secretary to Dale Nally, the provincial associate minister of natural gas and electricity.

She said in her email also that some of the factors that have caused the increases are expected to be short-term.

Province removed rate cap

In 2019, the UCP government removed the former NDP government's rate cap on electricity.

The NDP has called for bringing back that cap, but Maron said doing so "is not a serious solution" and would be neither sustainable nor realistic.

"It would result in the exponential growth of rate cap losses for taxpayers to repay," she said in the statement.

"In the end, taxpayers and rate payers are the same people — footing the bill through rate riders on all utility bills or by government out of general revenue."

What to do about rising rates?

Christopher Hunt, executive director and advocate of the Utilities Consumer Advocate (UCA), said Albertans worried about high bills have options.

Reducing energy consumption is one obvious way to lower a bill, he said, but another is to shop around for a better rate.
 
"By default, Albertans have a regulated provider who services their local area and offers what's known as the regulated rate option," he said.

"But most Albertans also have the option of choosing a competitive retailer, who may offer a variety of fixed and variable price rate plans."

The UCA offers independent advice and tools on its website to help consumers make sense of the options.