Missed Summer Savings is a Learning Opportunity for Alberta Electricity Consumers
What would you rather pay for electricity? 6.8 ¢/kWh or 5.59 ¢/kWh?
Seems like a simple question, but about half of Albertans paid over 20% too much for their electricity during July. If you are on the government’s Regulated Rate Option (RRO) and paid 6.8 ¢/kWh, that includes you!
A lot has been happening in Alberta’s electricity market recently, so it’s not uncommon for the everyday consumer to feel a little overwhelmed and confused about what is the best choice out there for them.
First, it is important to understand that since Alberta’s electricity market deregulated in 2000, you now have upwards of 30 competitive retailers vying for your business. Each company has a different set of goals, values, programs, services, and most importantly, rates. Basically, you have a choice when it comes to who supplies you with energy. Regardless who you select as a retailer, the wires company you are assigned to will continue to deliver services, uninterrupted.
As mentioned above, there are also government regulated utility providers in the market, offering what is called the Regulated Rate Option (RRO) to consumers. About half of Albertans are signed up on the RRO. Currently, the RRO is being subsidized by the government, paid by our taxes.
The previous government actively promoted the regulated utilities and created this subsidy program which they called the RRO Cap. This artificially sets the RRO at 6.8 cents per kWh.
How does the subsidy work? Since it has been referred to as a “cap”, many assume that generators of electricity are being forced to lower their prices, reducing the cost of electricity overall. This is not how it works.
What is actually happening, is that generators and regulated providers are still charging full price for the electricity they sell as the RRO. The difference between the actual rate and the 6.8 ¢/kWh charged to customers is paid back to the regulated utility through a subsidy.
How is the subsidy for government regulated utilities funded? Initially this was paid out of the Carbon Levy. Today, since the provincial Carbon Levy has been cancelled, the subsidy is funded through your taxes.
How much is it costing tax payers? During July alone, Bill 16, which was originally introduced by the previous NDP government, will see about $20 million paid to the regulated utilities. During August it will go up to $22.5 million. The cost is significant and we believe the bill should be repealed.
For example, in August, Direct Energy is charging 8.683 ¢/kWh, ENMAX is charging 8.805 ¢/kWh, and EPCOR is charging 10.191 ¢/kWh. You can view the RRO rates for 2019 for each regulated provider here.
As always, the devil is in the detail. If you take the time to understand what is actually happening, you may be a little upset. This is your learning opportunity and if you take the time, you can pride yourself in being an informed consumer!
In this example, we compare the prices for EPCOR (Regulated Rate Provider) and Sandstone Energy (Competitive Market Participant) during July.
If you compare Sandstone Energy Rates against Direct Energy and ENMAX you will find the same differential, 5.59 ¢/kWh compared to 6.8 ¢/kWh. The only difference is that EPCOR gets a bigger subsidy from the government compared to the other two major utilities. Under Bill 16, in an effort to buy votes, the farming co-ops (REAs) were given an additional 10% subsidy.
How can Sandstone's price be so much lower? We are part of the UTILITYnet Group, a locally based Calgary company, founded in 1978.
Together with 20 other Energy Marketers, we are part of a loosely formed co-operative, whereby all overhead is minimized and shared. We do not have highly paid executives, we didn’t ship jobs out of the country, and the data processing, billing and customer care services are local and fully automated.
If you are on the government Regulated Rate the smart move is to switch over. Not only will you be saving yourself and other taxpayers money, you will be supporting a 100% local Alberta energy company!
The bottom line is easy to understand. Why pay 6.8 ¢/kWh when you could have paid 5.59 ¢/kWh? Plus, if the government decides to stop subsidizing the big utilities – then the savings differential will be even greater.
It doesn't matter if you choose to switch over to Sandstone Energy or another competitive offering, the key is switching off of the RRO. There are many options available that are below the 6.8 cent cap, you just have to look for them.
Make the switch today.
Seems like a simple question, but about half of Albertans paid over 20% too much for their electricity during July. If you are on the government’s Regulated Rate Option (RRO) and paid 6.8 ¢/kWh, that includes you!
A lot has been happening in Alberta’s electricity market recently, so it’s not uncommon for the everyday consumer to feel a little overwhelmed and confused about what is the best choice out there for them.
First, it is important to understand that since Alberta’s electricity market deregulated in 2000, you now have upwards of 30 competitive retailers vying for your business. Each company has a different set of goals, values, programs, services, and most importantly, rates. Basically, you have a choice when it comes to who supplies you with energy. Regardless who you select as a retailer, the wires company you are assigned to will continue to deliver services, uninterrupted.
As mentioned above, there are also government regulated utility providers in the market, offering what is called the Regulated Rate Option (RRO) to consumers. About half of Albertans are signed up on the RRO. Currently, the RRO is being subsidized by the government, paid by our taxes.
The previous government actively promoted the regulated utilities and created this subsidy program which they called the RRO Cap. This artificially sets the RRO at 6.8 cents per kWh.
How does the subsidy work? Since it has been referred to as a “cap”, many assume that generators of electricity are being forced to lower their prices, reducing the cost of electricity overall. This is not how it works.
What is actually happening, is that generators and regulated providers are still charging full price for the electricity they sell as the RRO. The difference between the actual rate and the 6.8 ¢/kWh charged to customers is paid back to the regulated utility through a subsidy.
How is the subsidy for government regulated utilities funded? Initially this was paid out of the Carbon Levy. Today, since the provincial Carbon Levy has been cancelled, the subsidy is funded through your taxes.
How much is it costing tax payers? During July alone, Bill 16, which was originally introduced by the previous NDP government, will see about $20 million paid to the regulated utilities. During August it will go up to $22.5 million. The cost is significant and we believe the bill should be repealed.
Understanding the Regulated Rate Option (RRO)
Every regulated utility has different rates, even though all consumers in the province actually are supplied from the same generators through the provincial grid. You will be surprised how different the rates are.For example, in August, Direct Energy is charging 8.683 ¢/kWh, ENMAX is charging 8.805 ¢/kWh, and EPCOR is charging 10.191 ¢/kWh. You can view the RRO rates for 2019 for each regulated provider here.
As always, the devil is in the detail. If you take the time to understand what is actually happening, you may be a little upset. This is your learning opportunity and if you take the time, you can pride yourself in being an informed consumer!
In this example, we compare the prices for EPCOR (Regulated Rate Provider) and Sandstone Energy (Competitive Market Participant) during July.
How can Sandstone's price be so much lower? We are part of the UTILITYnet Group, a locally based Calgary company, founded in 1978.
Together with 20 other Energy Marketers, we are part of a loosely formed co-operative, whereby all overhead is minimized and shared. We do not have highly paid executives, we didn’t ship jobs out of the country, and the data processing, billing and customer care services are local and fully automated.
If you are on the government Regulated Rate the smart move is to switch over. Not only will you be saving yourself and other taxpayers money, you will be supporting a 100% local Alberta energy company!
The bottom line is easy to understand. Why pay 6.8 ¢/kWh when you could have paid 5.59 ¢/kWh? Plus, if the government decides to stop subsidizing the big utilities – then the savings differential will be even greater.
It doesn't matter if you choose to switch over to Sandstone Energy or another competitive offering, the key is switching off of the RRO. There are many options available that are below the 6.8 cent cap, you just have to look for them.
Make the switch today.