A power substation in the city's south end is shown in this News file photo. The provincial government is preparing to set a cap on electricity prices next summer. --NEWS FILE PHOTO
The Government of Alberta is preparing to set a cap for electricity prices next summer to protect customers from volatility in the power market.
It’s that volatilty, however, that has helped the City of Medicine Hat’s power exports top $100 million in profit over the last six years.
Premier Rachel Notley and Energy Minister Margaret McCuaig-Boyd made the announcement at 11 a.m. on Tuesday saying that consumers require protection from historic volatility that has been prevalent since the market was deregulated in the mid-1990s.
A top price of 6.8-cents per kilowatt hour will become regulated in June 2017 and be in place until at least 2021. If needed, said Notley, carbon levy funds might be used to cover costs to producers of the Alberta government offering.
“Families don’t want to be be spot market electricity day traders… they want bills to be predictable,†said Notley. “(The market) is broken and won’t bring in the kind of investment needed to meet Alberta’s power needs.â€
At that top rate, the cost to the average homeowner would be $40 per month, not including administration and other charges.
Critics have cast doubt on the province’s move to phase out coal power, pointing to a similar program in Ontario where power prices spiked in the following years.
On Tuesday officials said more details will be made public this week and discussions with power producers will take place over the next seven months.
Since the mid-1990s, customers have been able to access market pricing, but companies have had the ability to sell bulk power during shortages at prices up to $1,000 per hour.
Texas is the only other jurisdiction to use such a scheme, and sets a top export price of $10,000.
The City of Medicine Hat utility consumer rate is set based on an average of default rates throughout the province, but has sold heavily onto the Alberta grid at times of shortages, heat waves and extreme cold.
