WHEREAS Alberta’s electricity transmission and distribution system is facilitated by various service areas, serviced by different companies, resulting in a disparity in pricing; and
WHEREAS electricity 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 2021, the average residential customer with 7200 kWh of consumption paid between $239.28 (ENMAX) and $339.72 (ATCO) per year in transmission charges; and
WHEREAS in 2021, the average residential customer with 7200 kWh of consumption paid between $308.40 (ENMAX) and $1,007.16 (ATCO) in distribution charges; and
WHEREAS the costs of transmission and distribution impact both purchased and solar energy, resulting in economic challenges to micro-generation;
THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta advocate for the Government of Alberta to adopt a new electricity pricing model for transmission and distribution that eliminates the disparity in pricing across Alberta.
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 transmission and distribution.
Transmission charges are typically between 14% and 20% of a customer’s total bill and cover the cost of moving electric energy to utility substation transformer from generating facilities through transmission lines. This charge is based on how much electricity has been used.
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 a large, sparsely populated areas. In some parts of the province, transmission and distribution 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. This advantage can be as high as three to one, as seen in the charts below. British Columbia and Saskatchewan have successfully built and operated transmission and 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 transmission and distribution rates, in areas already experiencing a disparity, result increased energy poverty for many Albertans.
7-19F: Utility Distribution Rates in Rural Communities and Public Facilities
THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta (RMA) requests the Government of Alberta review regulatory requirements relating to transmission and distribution rates of utility companies;
FURTHER BE IT RESOLVED that RMA requests the Government of Alberta review the requirement that public facilities are charged commercial rates and bills based on peak demand.
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Affordability and Utilities
Distribution and transmission charges cover the cost of installing, operating, and maintaining the infrastructure used to transmit electricity to customers. As a result of greater geographical distances and lower population density, distribution rates in rural areas are typically higher than in urban areas.
The Electric Utilities Act requires that each owner of an electric distribution system prepare a distribution tariff for the purpose of recovering the prudent costs of providing electric distribution service by means of the owner’s electric distribution system.
While changes to the current approach of assigning distribution costs to each specific region serviced by a distribution facility owner are not being actively considered at this time, I have noted your comments for consideration as the Ministry of Affordability and Utilities proceeds with the implementation of our mandate of providing an affordable and reliable electricity system for Albertans.
The Government of Alberta acknowledges that rural areas are facing higher distribution charges than urban areas. RMA recognizes that the new pricing model will require significant work to determine which model will be best for Albertan municipalities, however the Ministry of Affordability and Utilities notes that the current model is not being reviewed or considered for change. Based on the mandate that was provided to the Ministry recently, RMA and its members believe that this is a key solution to making utilities more affordable for rural Albertans.
RMA appreciates the Minister of Affordability and Utilities plan to include this in the implementation of their mandate. However, until meaningful action is taken, this resolution is assigned a status of Intent Not Met.