When was electricity deregulated ?
Electricity has been deregulated in Alberta since 2000 in most areas. The exceptions are the City of Medicine Hat and some local electrification cooperatives. Marketers are selling long term contracts using advertising and door to door sales.
What costs make up my electricity bill ?
| Electricity Supply | -The electricity commodity that comes through the wires. The rate is set by the utility, or the electricity marketer, whomever you buy from. Electricity supply is the only part of the electricity system that is deregulating. All others will still be regulated. |
| Distribution | -The cost of delivering the electricity from the utility's border to your home or business. This pays for the construction and maintenance of the wires and systems. It is a regulated rate charged by the utility. |
| Transmission | - The cost that your electric utility has to pay to get the electricity from where it is generated to your utility's border. It is also a regulated rate charge. |
| Customer / monthly charge | -This is a fixed monthly charge and compensate the utility for the cost of making sure that you always have access to electricity. It pays for the cost of connecting and billing. |
Buy your electricity from the utility.
You can continue to buy electricity from your utility. If you do this, you will pay the Regulated Rate Option (RRO) set for each utility. This rate reflects the utility's cost of buying that electricity, plus the utility's administrative costs in buying and supplying that electricity. This rate is regulated by the Alberta Utilities Commission (AUC).
Buy from a electricity marketer
Marketers offer a variety of short and long term contract options. If you choose a fixed-price for your electricity over a fixed period of time, you will know your future electricity costs for that time period. If electricity prices rise above your fixed-price during the term of your contract, you save money. However, if electricity prices fall, your electricity costs may be higher than they would have been with a variable option.
If you choose to purchase from a marketer, your electricity will continue to be delivered to you by the utility. The utility will also continue to provide you with emergency response services. The option of buying from a deregulated supplier is not available in Medicine Hat.
Why would I buy from an electricity marketer ?
Either because you want to be sure what your electricity price will be month to month, or because you think electricity prices are going up. Marketers provide you with choice. You often have a choice between fixed or variable rates, short or long terms and sometimes other incentives or extras such as rebates, credits on your bill or air miles. Utilities cannot offer fixed term electricity contracts, except through deregulated affiliates. If you choose a variable term from a electricity marketer, you will likely benefit from lower overheads and operating costs. Marketers offering a variable rate often give a guarantee of a certain percent below the utility's rate.
How do I choose the best deal ?
How do I compare the utility rate with marketer's offers ?
This is the hardest part because you would have to compare a variable price that changes frequently in response to market prices, with a fixed price for 3 or 5 years.
In deregulation, electricity supply price depends on the balance of supply and demand, and will be reflected in the spot market price. This price will flucuate significantly from season to season, and there will be a different price for electricity every hour of every day of the year. Residential users still buying from the utility will pay that price through the Regulated Rate Opion (RRO).
How long does it take to transfer to a electricity marketer ?
The process is:
This means that the marketer won't be sure that they can have you for about a month, and won't switch you for about 2 months. The contracted price won't start till then either.
The bill will still come from your utility. The marketer you signed with informs the utility what rate to charge for the electricity supply.
Is there a risk of not having electricity supply ?
No. The utility in your area is responsible for ensuring that you have a supply of electricity, as long as you pay your bill. If the electricity marketer that you choose happens to go out of business, you will still have electricity supplied to you. You might revert to the utility's electricity supply price, or you might be required to sign with a different marketer. However, you don't have to worry about being without electricity (as long as you pay your bill).
I've signed a contract. Can I cancel it ?
Maybe. Here are your opportunities.
a) Without Termination Fees.
b)Termination Clauses
Some marketers include a termination clause in their contract for fixed terms. Read the contract carefully. These clauses usually include an exit fee. Calculate the fee and see if it makes sense to cancel by comparing the exit fee to what you would save over the contract term by getting a new contract at a lower rate.
c) At the end of the contract period.
You will receive a notice from your marketer about 90 days prior to the expiry of your contract. It will tell you that your contract will be expiring and will likely present a new offer. It is your choice whether or not to sign this new offer.
How do I complain about what happened to me ?
Does this apply to my business ?
Most of it does. However, buying electricity for a business is both more complicated and less costly than buying for a home. Some marketers also service businesses, but others don't.
Businesses that use more than 250,000 kWh of electricity annually do not have the option of the Regulated Rate Option.