Why Are Electricity Bills So High?

  • Home
  • Why Are Electricity Bills So High?

Let’s set the record straight: 60% of Albertans are not the ones complaining about the high costs of energy. It’s the other 40% that are hurting, and it’s no surprise why. That 40% still stuck on the utility Regulated Rate Option (RRO) are seeing prices increase to 17 cents/kWh this month! For customers on Direct Energy’s RRO, this is a 54% increase in just two months. The increase in the RRO price from ENMAX, EPCOR, and DIRECT will add upwards of $50 to $60 per month compared to that of a fixed rate.

Why do Alberta consumers continue to pay 17 cents/kWh when they can switch to a competitive retailer offering rates in the 8 to 9-cent range? If you’re one of them, what is holding you back?

‘Switch and Save’ was the basic message Dale Nally, Associate Minister of Natural Gas and Electricity, told consumers recently when he announced that the government was doubling the electricity rebates to help reduce the financial burden on families in Alberta dealing with the rising cost of living. He encouraged people to “check out the availability of lower contract fixed rates published by the Utility Consumers Advocate.”

We asked Kathleen Ganley, MLA for Calgary-Mountain View and the NDP Energy and Natural Gas Critic, to support Nally’s message and urge Albertans who are still on the government RRO to switch to a competitive fixed rate. The response from the NDP’s press office: “No Comment.”

Alberta’s energy supply market is indeed in crisis. Wholesale costs are spiking with increased frequency, and we have seen the Power Pool price increase by more than 100% over the last couple of years. Things will get better, and prices will return to normal by 2024. However, it’s essential to take a second to understand why. The closure of coal generation plants and conversion to natural gas has caused a temporary supply shortage. As coal plants convert and come back online, they also face increased natural gas prices (that must factor in the Federal Carbon Tax), pushing up the cost of generation.

The move by the NDP and UCP governments to support “greening the grid” has been applauded, and there has been an increase in solar and wind generation facilities added to the provincial grid. Alberta is moving quickly in its quest to decarbonize and invest in renewables. Today, corporations like TransAlta are one of Canada’s largest wind power producers and Alberta’s largest producer of hydroelectric power. At the same time, individual homeowners are investing in adding solar PV systems to their rooftops and taking advantage of the Solar Club benefits.

Although Alberta already has over 2200 MW of installed wind generation capacity, there is a crucial problem: Production last year ran at a rate of only 38% of available capacity; therefore, new battery technology solutions are now required. The wind doesn’t blow in the summer heat, leading to intermittent generation. The potential generation from green energy sources is simply wasting away – you can’t wave a magic wand and suddenly make the wind blow. In the short term, it’s wishful thinking that power prices will come down if the generation fields are sitting idle and baking in the sun. Moreover, you can’t cap the cost of production when wind generation is virtually at zero, and the Federal Government has increased the Carbon Tax. That doesn’t mean, however, that green generation is not worth the investment, as it does bring prices down when generation is strong and renewable energy sources are needed over the long term to help our society address Climate Change issues.

Savvy retailers have hedged the market and invested in long-term supply contracts. This is why retailers like NewGen Energy can offer discount term rates of as low as 9.84 cents per kWh compared to the August RRO price of 17 cents. We bought 3 and 5-year long-term contracts to guarantee the supply to protect our customers.

The crisis in the energy market doesn’t mean that there are no good deals to be found. Don’t hold off – just pick up the phone and ask NewGen Energy for a lower price.

NewGen Energy is an Alberta based utility retailer. We answer the phones in Alberta and not the Philippines or India or Guatemala. We pay taxes in Alberta and live here too. Support local Alberta companies and keep the money here.