Electricity Pricing and Consumer Information
Electricity prices are based on supply and demand. Lowest-cost generators are dispatched first and the more expensive ones are only brought in as necessary to handle a higher load. These interconnected electric systems are known as a power pool.
How it works
Electricity prices are set every hour at the lowest price that brings on enough supply to meet the demand. When demand is low, the cost of electricity can be lower since only the lower-cost generators are running.
For each hour of every day the actual Pool price is a weighted average. Power distributors take energy from the power pool and pay the declared hourly Pool price for the energy they buy.
Most of the electricity traded in the province is not priced at the hourly Pool price; rather the price is set in a contract between the buyer and seller. An example of this is the Alberta Watt Exchange, they provide wholesale power purchasers with the option to buy quantities of power (one hour out, one day out, one month out, one quarter out, and one year out).
The Alberta Electricity System Operator (AESO) offers real time pricing reports (best viewed in Internet Explorer 10 or earlier).
How does this affect me?
Electricity retailers purchase wholesale blocks of energy and then repackage it into offers for Albertans. You have the option to choose between your regulated rate provider and power retailers.
The Regulated Rate Option (RRO) is the default rate for electricity. The RRO fluctuates month to month because it is based on short term market prices, just like the regulated rate for natural gas.
Large regulated rate providers submit their RRO for approval to the Alberta Utilities Commission (AUC). Rates for municipally owned utilities are reviewed and approved by their city councils. RRO rates for the Rural Electrification Associations (REAs) are reviewed and approved by their respective board of directors. RRO service is specific to your geographic location.
Albertans who have not chosen a power retailer as their electricity provider, by default, choose to accept service from the regulated rate provider that operates in their service area.
On November 22, 2016, the Government of Alberta announced that it is protecting families, farms and small business with a ceiling on electricity prices as the province makes necessary reforms to the electricity system. When fully implemented in June 2017, the government’s rate ceiling will ensure that Albertans pay no more than 6.8 cents per kilowatt hour – an available long-term contract rate – for electricity over four years. This rate ceiling will be automatically applied to the bills of consumers on the regulated rate. Albertans may also choose to continue to take advantage of an offer from any private supplier they believe better suits their needs.