+ RMA Rural Municipalities
of Alberta

Resolution 14-15F

Rural Utilities Act Amendment Regarding Rural Electrification Association (REA) Service Areas

November 26, 2015
Expiry Date:
June 15, 2018
Active Status:
Camrose County
5 - Edmonton East
Vote Results:

WHEREAS the cooperative movement has historically been a vital feature of Alberta’s economic development; and

WHEREAS all Albertans benefit from the distribution of utility services from Rural Electrification Association (REA) co-ops with safe, reliable and cost effective service; and

WHEREAS Rural Electrification Associations are instrumental in moving Alberta’s rural economy forward to be more innovative, vibrant and sustainable with 47,740 members, 350 direct or indirect jobs in rural Alberta, collectively purchasing over $13.5 million in goods and services, and currently hold over $180 million in assets1: and

WHEREAS under the Rural Economic Development Action Plan, the Government of Alberta identified the need to pursue options for Rural Electrification Associations to diversify their business model and enterprise portfolios to improve their economic viability and long-term sustainability in rural areas; and

WHEREAS Rural Electrification Associations are being forced from the community, 15 REAs sold to investor owned utilities since 2012, only 32 REAs out of an original 381 are still in existence of which six are large operating REAs while twenty six are small and contract out services; and

WHEREAS rural demographics are rapidly changing with the number of farms nation-wide having fallen from 84,315 in the 1950’s to 43,234 by 20102 which significantly impacts REAs’ economic bottom line; and

WHEREAS Rural Electrification Associations legislatively can only serve members and are restricted by wire owner agreements to supplying electrification services to rural residences and farm business.

Operative Clause:

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request that the Government of Alberta amend the Rural Utilities Act and Regulations to provide Rural Electrification Associations the exclusive right to serve all new members within their geographic service area.

Member Background:
  • Starting in the 1940’s rural electrification has been an issue, 1941 census reported 99,732 farms in Alberta, yet in 1945 only 496 of those had electricity.
  • Investor owned utilities (IOU) were not interested in expanding into the rural area.
  • 6 rural co-ops started in the early 1940’s
  • Government stepped in, in 1946
  • First REA cooperative was formed in 1947 and by 1951 there were 356 REAs operating3

The cooperative REA model has brought value to rural Alberta by being member owned, locally operated, uniquely responsive to customer need, has proven to be price and service level competitive, a local job creator and committed to re-investing in the community.

Rural Electrification Associations collectively save members 19 million dollars annually.4

Rural Electrification Associations provide a check and balance to IOU’s.5

The Rural Electrification Association landscape is changing rapidly with only 32 of the original 381 still in existence today, with 15 REAs selling since 2012 to IOU’s, with another sale in the process.  There are only 6 large fully operational REAs left, with a large enough membership and service area to operate their own electricity distribution systems. The other 26 REAs have small membership numbers and contract out the operation of their systems.

Rural Electrification Associations face challenges related to the decline in farm numbers, expansion of urban footprint to traditional rural areas, aging infrastructure, complexity of service regimes within the industry and governmental involvement.

Rural Electrification Associations are looking for the opportunity to increase market share by amending legislation to allow REAs within their service area the designated right to serve all customer classes and the right to manage REA service and delivery, to amalgamate across service areas in order to maintain that check and balance within the industry for all Albertans.

RMA Background:

6-03F: Support for Rural Electrification Associations

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request the Government of Alberta to revise the Regulated Default Supply Regulation, the Distribution Tariff Regulation and the Roles, Relationships and Responsibilities Regulation to reduce or eliminate the negative impact these regulations have on rural Albertans;

AND FURTHER BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request the Government of Alberta to support the regulatory jurisdiction of REAs boards of directors in decision-making matters of those associations.

ER1-02S: Rural Utilities

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties support rural electrification associations, natural gas co-ops, water co-ops, and municipally-owned utilities by urging the Government of Alberta to ensure existing legislation and regulations remain in effect and are enforced to allow member owned rural utilities and municipal utilities to continue to provide a competitive alternative to investor-owned utilities.

DEVELOPMENTS: In 2014, the Government of Alberta’s MLA Retail Market Review Committee (RMRC) Implementation Team released Enhancing the Retail Market for Electricity, which was intended to provide a follow-up of Power to the People, the RMRC’s 2012 report that included 41 recommendations for improving Alberta’s retail electricity market by empowering consumers and increasing competition among electricity retailers.

Included in the RMRC recommendations were several related to rural electrification associations (REAs). Some of these recommendations had the potential to compromise the viability of REAs, including requiring them to meet the same regulatory requirements as much larger investor-owned utilities (IOUs). For many REAs, the costs of meeting these regulatory requirements will be impossible to meet without having an expanded customer base, as REAs are currently only able to service agricultural operation and residences, both of which are shrinking demographics. The AAMDC wrote a letter to the Minister of Agriculture and Rural Development and the Minister of Energy, expressing their concern with the challenges that this increased regulatory burden would have on REAs, especially if REAs are not able to broaden their customer base beyond agricultural operations and agricultural residences.

Provincial Ministries:
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