Affordability and utilities minister tasked to review Alberta's electricity system and pricing

Alberta's premier says the affordability and utilities minister needs to improve power prices for consumers who are getting zapped in the pocketbook.

Minister Nathan Neudorf's marching orders, spelled out in a Wednesday mandate letter, ask him to study phasing out the default electricity rate that is driving up the cost of some consumer bills.

"It's not like electricity is an option," Neudorf said in an interview. "It's a life necessity. We no longer can live healthy, effective lives without electricity."

The regulated rate option, or RRO, is the default power price most customers pay if they do not sign a contract with an electricity retailer.

According to the province's Market Surveillance Administrator, 559,000 customers, or about 35 per cent of the Alberta sites with power, were paying the RRO as of March 2023. A disproportionate number of those people live in the Edmonton area, CEO Derek Olsmtead said in an email.

According to data on the Utilities Consumer Advocate (UCA) website, the RRO prices in Alberta in July were as high as 28 cents per kilowatt hour. That's more than double the winter price, when the government temporarily capped the RRO.

According to the advocate, Edmonton customers looking for a fixed-rate power contract right now could pay between 9.7 and 30 c/kWh.

As power prices have climbed, more customers have stepped away from the RRO. Olmstead said the number of RRO sites has dropped by about 22 per cent since 2019.

Neudorf was among the clients who made the switch. Although he has a contract at his Lethbridge home, the bills were climbing at his Edmonton condominium, he said.

It wasn't until the price tag hit $250 per month, and he was sworn in as minister, that Neudorf realized he was on the RRO.

Colette Chekerda is executive director of the Alberta Direct Connect Consumer Association, and president of Carmal Energy Advisors, which provides power advice to large, industrial customers.

Chekerda said the government should have looked at retiring the RRO long ago.

"There's certainly better options for consumers out there, and the regulated rate option has probably gotten in the way of some of those offerings being enhanced over the past several years," she said.

Chekerda said Alberta's deregulated electricity market, which is supposed to lead to more competition, has driven prices higher than in some provinces where Crown corporations are at the helm.