Alberta government paid utility companies more than $8M last month to cover price cap pledge

The Alberta government paid electrical utilities more than $8.3 million last month as its consumer price cap was exceeded for the first time — with the biggest payment going to Enmax, owned by the City of Calgary.

April was first month where power prices exceeded NDP government's cap

The Alberta government paid more than $8.3 million dollars last month to electrical utility companies in Alberta. (CBC)

The provincial government paid more than $8.3 million last month to electrical utility companies in Alberta.

The payments were a result of power prices going above the province's price cap of 6.8 cents per kilowatt hour (kWh) for consumers. 

For customers who do not have a contract with a retailer, power prices fluctuate monthly. 

The changes can be substantial, depending on market conditions. Over the past seven years, prices have ranged from as high as 15.3 cents/kWh to as low as 2.7 cents.

In 2016, the NDP government announced it will protect consumers against higher power prices by capping the maximum they can pay at 6.8 cents from June 2017 until June 2021. 

Government expected this day would come

Charles Mainville with the Department of Energy said it was always anticipated that at some point during that four year period, prices would exceed the cap.

When that happens, the government pays utility companies the difference between the actual price and the 6.8 cent cap.

April was the first month that prices exceeded the cap.

Some utilities charged as much as 9.28 cents/kWh for the month.

Data provided by the Market Surveillance Administrator shows a total of $8.33 million was paid out to utilities in April by the government.

The biggest payment, $2.6 million, went to Enmax which is owned by the City of Calgary. 

Fortis was paid $2.3 million by the province and Epcor received $1.6 million in April.

Carbon tax money used

Mainville said the money comes from revenues raised through the province's carbon tax.

"Using the carbon levy is appropriate, as the price cap supports Albertans as the province transitions to a new electricity market system that is not only more stable but is more reliant on greener, healthier power sources," said Mainville.

The United Conservative Party is critical of the price cap.

Annie Dormuth, who speaks for the UCP caucus, said NDP energy policies mean Albertans will pay whether there's a cap or not.

"Albertans will ultimately pay the price — be it through taxes, increased debt or directly on electricity bills," said Dormuth.

She said the NDP put in place the policy "to politically shield themselves from the future price spikes that are coming as a result of their replacing plentiful, reliable forms of electricity with expensive, unreliable forms." 

Alberta is phasing out coal-fired power plants with less carbon-intensive forms of electricity generation like natural gas, wind and solar power.

Enmax says signing a contract could save public dollars

Enmax CEO Gianna Manes says Albertans who are concerned about the cost to the provincial treasury could help reduce those payments by signing a contract with a retailer. (Scott Dippel/CBC)

The president and CEO of Enmax said Albertans who are concerned about the cost to the provincial treasury could help reduce those payments by signing a contract with a retailer.

"The more customers actually sign onto contracts with companies who are already offering in many ways even lower rates than the rate cap is, the less the government will have to subsidize anyone," said Gianna Manes.

Enmax currently offers one year and three year electricity contracts for less than six cents per kilowatt hour.