Alberta's electricity 'rate of last resort' is coming Jan. 1 as response to volatile prices
CBC
On the first day of 2025, Alberta's default electricity rate is set to be replaced by the new "rate of last resort," in what the province says is a bid to protect consumers from a volatile electricity pricing landscape.
To understand the change, it's important to first understand how the landscape has looked until now for electricity rates in the province.
In Alberta, residents must choose how they want to pay for their electricity, much like a mortgage.
They can choose a contract involving a fixed rate or a rate that floats from month to month, from more than 50 retailers. If they don't sign a contract, they're automatically enrolled on the default regulated rate option from a local provider.
It all can be confusing for people who move to the province from other parts of the country, said Blake Shaffer, an economist with the University of Calgary who specializes in electricity markets.
"That's pretty foreign to most people, who have one provider and pay what they're told to pay," Shaffer said.
The default rate in Alberta — to reiterate, what residents are put on if they don't set up a contract — has long been called the regulated rate option, or RRO.
According to the Market Surveillance Administrator's last quarterly report, there were around 413,000 residential customers on the RRO as of June 2024.
"The name is perhaps a bit misleading. Because I think when people hear regulated, they think stable," Shaffer said.
Up until now, the RRO has been a variable rate — meaning prices fluctuate monthly, depending on the market price of electricity.
The fluctuating nature of the RRO is received differently by residents depending on current market prices, noted economist Joel MacDonald, founder of EnergyRates.ca, an energy price comparison website.
"At times of very low electricity, everyone says, 'free market capitalism. This is amazing. This is the best system in the world. Everyone should be like Alberta,'" he said.
"At times of very high electricity, people say, 'why do we have a deregulated market? This is capitalism at its worst. I'm paying so much for electricity.'"
The RRO reached record-high levels in July, August and September 2023, according to EnergyRates.ca.
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This First Person column is the experience of Shannon Flaman, who lives in Red Deer, Alta. For more information about CBC's First Person stories, please see the FAQ.
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