Capped power spikes in popularity
By COLLIN GALLANT on January 31, 2020.
cgallant@medicinehatnews.com
City utility officials say they’ve seen a 1,700 per cent increase in customers who have signed up for a set power rate since a provincial cap of consumer electricity prices was removed two months ago.
The program has been offered by the publicly owned utility company since 2012, but only about 100 customers took part until last fall.
Local consumers had little incentive to make the switch considering the two-year-old provincial cap and local set rate were both set at 6.8-cents per kilowatt hour.
But, the number had grown to above 1,800 as of Thursday, and officials are expecting interest to only grow as high prices are expected in February as well.
“It has certainly grown in popularity since the rate cap went away,” said Jaret Dickie, the manager of the utility business support office.
“Our mission is to let customers know there are options available to (contain costs). It’s still a matter of the customer’s choice, but we’ve seen a lot of people asking the questions.”
The city’s default power price in January is 7.995-cents per kilowatt hour, about 1.2 cents above the set price.
An average house that used 500 kWh during the month, would save $6.
Dickie said that might not seem like much, but it provides some cost certainty, and the rate is also available to small and medium commercial customers as well.
“It’s not significant in any month, but it does add up,” he said.
The city’s default price can drop below 6.8-cents, and customers who sign up must remain on it for at least six-months.
However, prices are expected to remain high this winter, and typically rise in the summer as well.
The city’s default commodity rate, used by 92 per cent of local customers, is adjusted monthly as the average price offered across the province by major distribution companies.
A separate floating price for major industrial and commercial customers in the city is set at the average grid price from the previous month plus a premium.
That could be set above 15-cents per kilowatt in February, but Dickie said most large power users have negotiated price contracts with the city utility.
The previous NDP government set the consumer price cap at 6.8-cents (equal to the previous 10-year average for power) as a way to guard against rising cost of phasing out coal-fired generation.
It was paid for with carbon levy funds, and only 6.8-cents showed up on customer bills, as the difference was made up directly to utility companies.
That was ended after a review by the United Conservative government, which also cancelled the provincial carbon levy.
The local rate comprises total cost recovery including amortization of power plant equipment, plus a rate of return for the city. Most of the city’s exceptional profits from the power generation unity (likely above $40 million in 2018 and 2019) come from exporting power onto the Alberta grid system.
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