Alberta electricity prices to spike this summer
Calgarians can expect to pay double the rate, says Alberta's utilities consumer advocate
This summer's electricity bills are spiking along with the temperatures in Calgary.
Consumers can expect to pay almost double the rate for power this month in Calgary, and even more later on this summer if they're not on a fixed rate plan, according to the Alberta government's utilities consumer advocate.
The price hikes occur four times year, and are driven by dramatic changes in temperatures, and supply and demand, according to Jim Wachowich with the Consumers Coalition of Alberta.
Historic low prices in March, April, May and June have also contributed to the current consumer price shock, he says.
The lower spring prices were the result of several factors, including less industrial demand from the oil sector, to more available power because of testing at the Shepard Energy Centre coming online in southeast Calgary, according to Wachowich.
The expected price increase is more typical of what Albertans have been paying for the last 15 years since the market was deregulated.
While there is market surveillance and oversight from the provincial regulator — the Alberta Utilities Commission — ultimately it is difficult to prove whether prices are being raised fairly or not, he says. The system works like a stock market, with less disclosure required.
The price differences between Edmonton and Calgary are related to how the companies serving the two regions get their power.
"It can be the other way. Sometimes Calgary can be cheaper," Wachowich said.
Dealing with volatility in electricity bills was one of the issues the new premier campaigned on, and Wachowich says he would not be surprised to see Premier Rachel Notley return to a regulated energy market.
"Regulation is not a bad word, or dirty word." he said. "But do it right, fair, to those who it serves, the utilities and their customers."
The NDP election platform calls for "smart regulations" for Alberta's electricity retail system to provide more stable prices and to protect the financial interest from financial manipulation.
"The premier has said this week that she wants to study the problem. That's encouraging because she's recognized that there's a legitimate problem," he said.
Most markets have regulations, from the car you drive to the food you eat, says Wachowich, who says Alberta's population is not large enough to support a truly competitive retail electricity market.
"We don't see the market as operating in a functional way and this model was one advocated by Enron and other companies in the early '90s" said Wachowich.
The provincial government of the day from 1995 until recently did not want to do studies and accepted the advice of consultants "who were delivering a preconceived message of markets are good and we don't necessarily see it that way," he says.
"We can take that volatility out, that's something we can repair," he said.
But for consumers considering locking in to beat the market, Wachowich has a warning.
"The high price periods can be the worst time to lock in."
"Don't," said Wachowich, who compares power rates to interest rates.
"Never lock in when prices are so high, and don't do a fixed rate. Over time, with the ups and downs, you can't win or beat or outsmart the market."