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What is happening to Alberta’s Electricity Market?

Starting January 1, 2017 Alberta’s electricity landscape will begin to undergo some major changes and you may be wondering about these changes and how they will affect you as a consumer.  The impact may not be as daunting or a negative as you might think.

There are 3 key principles that will be guiding this electricity transition; Consumer Protection, a Market Redesign, and the Phase Out of Coal Emissions.

Consumer protection will come in the form of a ban on door to door sales of energy products and a price cap on the default Regulated Rate Option (RRO) that will come into effect June 2017.  The ban on door to door sales applies to businesses selling furnaces, natural gas and electricity contracts, water heaters, windows, air conditioners, and energy audits.   The price cap will be in place for 4 years as a method to protect RRO consumers from the volatility of the energy only wholesale electricity market.  Consumers who choose a non RRO Competitive Retailer for their electricity already have the opportunity for price protection in the form of Fixed Rates.

The market redesign towards a Capacity Market will happen under the direction of the Alberta Electric System Operator (AESO) and will encompass 2 wholesale electricity markets. A market in which generators compete to sell energy and a market in which generators compete for payments to provide capacity on demand.  A Capacity Market will provide stability in prices and create a more investment friendly environment than the current energy only market.  New investment will be required as coal-fired electricity generation is phased out and new generation is required to replace its capacity on our grid. Price stability in the wholesale electricity market will have stabilizing effects on the prices for retail consumers.

The phase out of coal fired electricity will have direct impact on the companies that own current coal fired generating assets as well as the communities in which they operate.  Currently Coal Phase Out Agreements have been reached with Capital Power, TransAlta, and ATCO wherein the Alberta Government commits to $97million annually until 2030 and these companies commit to zero emissions from coal-fired power by Dec. 31, 2030, continue to invest in Alberta’s electricity sector and maintain a significant presence (head office and minimum number of employees), provide funds to support communities, respect commitments to employees.  The funding for these transition payments will be coming from the Progressive Conservative installed Emissions Reduction Alberta (previously branded Climate Change and Emissions Management Corporation) meaning the transition payments will not be coming from consumers electricity bills.

Now perhaps some perspective.  Yes these market changes combined with the Carbon Levy will increase Albertan consumers’ electricity costs.  Remember though that electricity in Alberta in 2016 traded at the lowest prices in 15 years and overall Canadians pay some of the lowest prices in the developed world for electricity.  Plus there is also the new agency, Energy Efficiency Alberta that will provide programs and services to help Albertans protect their pocketbook and lower their carbon footprint.

If you are a Floating Rate consumer you have been saving money all year and if you are a Fixed Rate consumer now is a great time to lock in a new rate.

Switch to Park Power

There are some positives to be seen as a consumer in the Alberta Electricity Market right now.

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