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Preamble:
WHEREAS Alberta’s electricity distribution system is facilitated by various service areas, serviced by different companies, resulting in a disparity in pricing; and
WHEREAS electricity delivery prices, which are regulated by the Alberta Utilities Commission for residential, farm, and commercial customers, are extraordinarily high in some service areas; and
WHEREAS in 2024, annual distribution charges paid by the average residential customer with 600kWh of consumption ranged from $387 (EPCOR service area) to $1,211 (ATCO service area)1; and
WHEREAS 60% of energy demand in the ATCO service area is driven by industrial customers, benefitting the entire province through direct and indirect employment and income taxes;
Operative Clause:
THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta advocate to the Government of Alberta to adopt a new electricity pricing model for distribution that eliminates the disparity in pricing across Alberta.
Member Background:
The Alberta Utilities Commission (AUC) reviews the costs of electricity delivery in the province, and ensures all charges are fair and reasonable. However, there is an unfair disparity in electricity delivery charges across the Alberta; namely, in distribution.
Distribution costs are typically between 22% and 47% of a customer’s total bill and cover the cost of moving electric energy to the customer’s needs from substation transformers to local lines. One kilometer of distribution line will service many more customers in urban centres than in large, sparsely populated areas. In some parts of the province, total delivery charges make up nearly 70% of customers’ electricity bills.
Business and residential customers endure economic penalties based on geographical and population density disadvantages in large areas of the province. British Columbia and Saskatchewan have successfully built and operated distribution systems which more evenly distribute delivery service costs.
In Saskatchewan, all cities, towns, and villages pay a set rate for transmission and distribution. All rural areas pay a marginally higher rate. In British Columbia, all electricity costs including transmission and distribution are equalized across the entire province.
As the electrical grid for Alberta operates as a single entity, it would be reasonable to distribute costs equally across the province. Alberta’s model disadvantages communities at the border between service providers. In doing so, it minimizes competitiveness to attract businesses in Alberta outside of urban centers. Continual increases in distribution rates, in areas already experiencing a disparity, result in increased energy poverty for many Albertans.
RMA Background:
RMA has no active resolutions directly related to this issue.
Alberta Affordability and Utilities
Alberta’s government recognizes concerns regarding difference in electricity distribution charges across the province and the impacts this may have on some rural customers and communities. As noted in the resolution, these differences are primarily driven by underlying cost factors, including geography, population density, and the infrastructure required to deliver electricity over large distances.
Alberta’s electricity system is structured as an unbridled and regulated framework. Distribution rates are set by the AUC under a performance-based regulatory framework, and rates are established separately for each utility and adjusted over time using formula-based mechanisms that encourage efficiency. This differs from jurisdictions such as B.C. and Saskatchewan, which operate under more vertically integrated and publicly owned electricity systems, enabling different approaches to province-wide cost allocation. Other provinces have made different policy choices, but those come with trade-offs that must be considered.
To provide relief, our government is looking to advance a $50 monthly rebate on electricity bills to residential customers in ATCO Electric’s service area beginning in early 2027. This rebate will provide interim relief while we work on a long-term solution to address distribution rate disparity for more customers.
Thank you for your continued advocacy on behalf of rural communities and for sharing your perspective on this important issue.
Development:
The Minister’s commitment to a $50 monthly rebate for one distribution service area may offer limited short‑term relief to some Albertans; it does not constitute a meaningful response to the inequitable electricity distribution charges faced by rural Albertans as a whole. This measure falls far short of addressing a systemic and solvable problem of distribution pricing.
Alberta’s regulatory framework provides the Government of Alberta and its regulatory bodies with significant authority over utility rate design. The Alberta Utilities Commission (AUC) operates a structured process to review rate applications, assess evidence from utilities and interveners, and approve alternative rate designs where justified. This includes the ability to adopt more equitable pricing models that reflect the disadvantages identified in Resolution 8‑26S. The tools exist, however the Minister’s response does not express a willingness to explore them.
The Minister notes that Alberta’s formula‑based mechanisms “encourage efficiency.” Yet these same mechanisms have produced some of the highest and most unevenly priced electricity distribution rates in Canada. These disparities create barriers to investment, business development, homeownership, and community growth – all of which are essential to the economic vitality of rural Alberta.
Equally concerning is what the Minister’s response does not address. Municipalities are currently classified as “ineligible interveners” under AUC Rule 022, meaning they cannot meaningfully participate in proceedings that determine distribution rates for their own residents. This exclusion adds another layer of inequity to a system already producing disproportionate burdens for rural customers. Allowing municipalities and municipal associations to participate in rate design discussions would materially improve the fairness and quality of regulatory outcomes.
Resolution 8‑26S and RMA’s accompanying Resolution Report outline several viable pathways toward equitable distribution pricing – including province‑wide equalization models, targeted affordability programs, capital cost buy‑downs, industrial‑residential balancing, and pilot projects to test such long‑term solutions. None of these options were addressed in the Minister’s response. As such, RMA is assigning this resolution the status of Intent Not Met.
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