As prices fall, some to now pay back provincial utility deferrals

By COLLIN GALLANT on April 1, 2023.

cgallant@medicinehatnews.com@CollinGallant

Utility prices are set to plunge in April, though added power charges for some customers will help pay off a provincial rate cap put in place over the winter.

The spectre of record high power prices in the winter led the provincial government to establish a deferral program last fall.

That resulted in 25 to 65 per cent lower energy charges on bills from January through March, but the difference will be recovered by distributors over the next 21 months.

That includes the City of Medicine Hat, where four in five utility accounts have fixed-rate contracts and will avoid the charges. But, up to 6,000 accounts will have to make up between $6 million and $8 million in deferred charges by the end of next year.

“The City of Medicine Hat follows the same process as other retailers within the province,” reads a statement from the utility department. “Each month COMH submits a monthly filing to the Market Surveillance Administrator related to the recovery period each month … the deferral calculations are acknowledged and approved by the MSA.”

Default pricing, or Regulated Rate Option rates in Medicine Hat are announced on the first business day of the month.

The city is also set to release its next fixed power price offering on April 3 (the rate is reset quarterly, but then in effect for 12 months).

That could drop steeply, according to administrators who told a council committee meeting last month the premium on natural gas that flowed onto the North American energy market had evaporated after milder winter and fears about market turmoil caused by the Russia-Ukraine conflict failed to materialize.

Alberta natural gas futures that were in the $5 per gigajoule range last fall are now in the $2.50 range, said utility division head Brad Maynes, while longer-term power prices are also back to 12 cents per kilowatt or less, essentially prepandemic pricing.

“It’s really quite amazing,” he told the utility and infrastructure committee meeting during a March update on commodity pricing.

That comes after power shot above 30 cents per kilowatt in January, setting an all-time record in the province by 50 per cent.

Under the province’s deferral program, customers with RRO contracts would not be charged above 13.5 cents per kilowatt hour from January to March, though the difference would be spread out and added onto bills until December 2024.

Other large providers in the province included a 2.5-cent recovery charge in their submissions to regulators this month for April’s RRO rate setting.

Those filings seek to put the combined RRO price for power between 17.5 cents and 20.1 cents, including the recovery charge. The City of Medicine Hat utility department sets its RRO rate at the average of other providers, and will also include a recovery charge that was submitted to the regulators, local officials confirmed to the News.

In February, Epcor estimated the cost of the program related to its customers to be $135 million, Enmax $32 million and Direct $32 million, amounts that would be applied back to bills of those who remain on RRO pricing.

The April billing period will also see an increase to the federal carbon levy. It will rise from $60 to $75 per tonne, resulting in an additional 70 cents per gigajoule after April 1 and a total cost of $3.33. However, rebates will also rise accordingly, with single individuals receiving $722 and a family four getting $1,544.

Electricity in Alberta is not subject to a consumer carbon levy as power production is charged at the industrial level through the provincial TIER system.

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