The Alberta government is aiming to smooth out utility bill volatility through a stabilized default rate for customers who do not have a competitive contract for electricity and/or gas, and restrictions on how municipalities can calculate the fees they charge to utilities in lieu of property taxes. Proposed legislation in the newly tabled Bill 19 would amend the allowed parameters for local access fees, while further legislation is promised to convert the default electricity and gas rates from month-to-month variables to a firm two-year certainty.

“Unpredictable power costs make it hard for families to plan their household budgets,” says Alberta Premier Danielle Smith.

Currently, utility customers throughout the province pay sometimes widely divergent pass-through costs on their utility bills depending on the option that municipalities use to charge fees in lieu of property tax — which appears as a bill line item, labelled as local access fees. Alberta’s Municipal Government Act allows them to collect the fees based on: a percentage of transmission and distribution costs; a fixed rate per-kilowatt-hour or kilojoule of consumption; or, as is the case in Calgary, a combination of those two formulas. The Alberta Utilities Commission, the provincial regulator, must also grant approval for the fee collection model municipalities adopt.

Under Bill 19, municipalities could still choose the approach for collecting local access fee, but that would have to be pegged to a stable rather than variable utility rate. Notably, recent spiking costs in default utility rates that change from month to month are considered a prime reason why local access fees have been higher in Calgary than in Edmonton.

As it takes steps to stabilize default rates, the Alberta government also plans to give them a new name. In future, it will be known as the rate of last resort. This is presented as an effort to combat what the government terms a “false sense of protection” tied to the rate. Currently, about 32 per cent of commercial customers, 29 per cent of residential customers and 46 per cent of farm customers do not have a competitive contract and are subject to default rates.

“Addressing high, unpredictable fees on utility bills is an important step in making life more affordable for Albertans,” says Chantelle de Jonge, parliamentary secretary to Alberta’s Minister of Affordability and Utilities. “Alberta’s unique, deregulated electricity market gives Albertans the power to choose the best energy providers, plans, and payment options to fit their needs. By encouraging competition, these policies will help make utility bills more affordable.”

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