Alberta To Impose Price Cap on Default Service Rates
November 23,2016
The Alberta provincial government is adopting a price cap of 6.8¢/kWh (Canadian $) on the Regulated Rate Option, in a move the government says is being undertaken to protect customers from "volatile" energy prices
The government is moving to shut down coal-fired plants, which is expected to contribute to volatility. Carbon regulation has also increased costs.
The market-based current RRO is about 3.8¢/kWh, but it has been as high as 15¢ (in 2012)
Global news reports that the provincial government is still determining what will happen if costs to serve RRO customers exceed 6.8¢/kWh, though the provincial government said that the government will pay the RRO provider the difference between the actual price and the ceiling.
Calgary Mayor Naheed Nenshi told the Calgary Herald that the rate cap was done without consulting the utilities, and that, as presented, it caps retail but not wholesale rates, as Nenshi noted failures associated with such policies in the past
Retail supplier ENMAX Energy noted that competitive retail suppliers already offer price protection versus the RRO.