The province on Jan. 1 will replace the regulated rate option for power pricing with its 'Rate of Last Resort,' a default long-term price the government says is meant to ease monthly fluctuations.--NEWS FILE PHOTO
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The province will move to one-rate, two-year default power pricing on Jan. 1 – an issue that drove the City of Medicine Hat to bring in lower interim pricing last year.
The “Rate of Last Resort” replaces the regulated rate option, which stands in place as a default price for Alberta customers without contracts.
That system, which adjusted rates monthly, was panned by Premier Danielle Smith in late 2023 when RRO rates rose substantially higher than contract offerings.
A new name, she told reporters in the spring, denotes that default pricing, though “regulated,” may be more expensive than contract prices, and longer terms would remove fluctuations.
A settlement of how the rate determination with major distribution companies works was published late Friday by the Alberta Utilities Commission.
It show rates in the 12-cent per kilowatt range – about one-third higher than default prices this fall, but the single price will be in place over the higher priced cold winter months and summer, when prices rise.
That agreement will be in place through the end of 2028, though the rates will be updated after two years on items of cost forecasts and other factors, but with mid-term increases capped at a maximum on 10 per cent.
The 2025 rates are laid out for three major distribution companies – Epcor (12.01-cents per kilowatt hour), Enmax (12.06-cents) and Direct Energy (12.01-cents) – and will be in effect through 2026.
In Medicine Hat, which can act independently on rates, a system of averaging the RRO rates for a local default price was in place from 2012 to 2023.
This year, a local blanket default rate has been determined as the rolling forecasted average of wholesale power prices, a price paid by marketing companies that adds markup to contract offerings.
The rate in Medicine Hat for December, 7.91-cents per kWh, is to be largely unchanged from the current quarterly rate that will be reset Jan. 1.
That pricing formula is considered an interim rate designed to stand in place until a permanent formula is adopted following a third-party review of the energy division received late last month.
Budget talks for the coming year this fall outlined the use of that interim rate in forecasts, though administrators expect city council direction on go-forward pricing in the new year.
As well Monday, the city released its natural gas rate for home and small to medium commercial customers at $2.25 per gigajoule, up from $1.86 in November.
