WHEREAS municipal government buildings and recreational facilities are to benefit the people of Alberta; and
WHEREAS demand meters are the currently accepted practice of tracking peak demand and electrical usage; and
WHEREAS there has been a significant recent rise in electrical rates either by distribution and/or transmission charges and/or electric rates and/or carbon surcharges; and
WHEREAS demand meters are reset on an annual basis; and
WHEREAS when a system requiring electricity is connected to the grid and a peak demand is established, the premises is then billed on that peak for the next consecutive twelve-month period;
THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta request that the Alberta Utilities Commission create a separate rate class for municipal buildings and recreational facilities and require that all demand meters are reset and billed accordingly on a monthly basis.
Demand meters are the current accepted practice of tracking peak demand and electrical usage on commercial, industrial and recreational facilities. The majority of rural municipalities own or support recreational facilities as a provision of services to their residents. There have been recent significant rises in electrical rates either by distribution and/or transmission charges and/or electric rates and/or carbon surcharges. As many recreational facilities are not utilized 24/7 like commercial or industrial facilities, this results in demand meters negatively impacting communities of all sizes as they pay a portion of their power bill on the peak utilization and not just on their consumption.
This drain on municipal resources has resulted in the rural municipalities’ request to the Government of Alberta for a change in rate structure and operations of demand meters to recognize that recreational facilities are separate from commercial and industrial users.
RMA has no active resolutions directly related to this issue.
Alberta Utilities Commission
Regulated utilities must apply to the Alberta Utilities Commission (AUC) for approval of their future operating and capital costs. Once approved, these costs are recovered from rates charged to their respective customers in their approved tariffs. Utilities’ applications are considered in a fair and open regulatory process—formal proceedings in the form of extensive, evidence based public hearings which bring the utilities and other interested parties before the AUC.
In the near future there will be relevant proceedings for the Rural Municipalities of Alberta (RMA) to participate in and to advocate their position. The AUC expects all distribution utilities to file Phase II rate design applications in 2019, which are the best proceedings for a participant such as the RMA to make the case for the establishment of new rate classes or changes to rate designs (e.g., moving away from demand-based charges).
Please note that the timing of the above-noted applications, as well as the extent of issues addressed in the applications, may be affected by the recently initiated AUC Electric System Distribution Inquiry. The RMA should follow the AUC’s communications on this inquiry (Proceeding 24116) to remain informed about when the Phase II applications will be filed.
The RMA should also register in the Electric System Distribution Inquiry. The Commission has asked for comments from registered parties on the scope and timing for the inquiry. As part of this, the distribution utilities will provide input on whether the upcoming Phase II proceedings should still be filed on their originally-scheduled timelines, or whether those applications should be held off until after the inquiry has concluded. The AUC will need to provide guidance on these matters as part of its process-related communications for the inquiry.
The purpose of the Electric System Distribution Inquiry is to map out the key issues related to the future of the electric distribution grid, to aid in developing the necessary regulatory framework to accommodate the evolution of the electric system. The evolving nature of electric generation, consumption, storage and the system in general has significant implications for the grid, incumbent utilities, consumers, grid managers and the regulatory framework. These are among the central matters the AUC will examine in its distribution inquiry.
The changing energy system raises fundamental questions about traditional planning approaches, rate structures, cost-recovery mechanisms, incentives and the evaluation of prudent utility costs. A key issue for the AUC in the Electric System Distribution Inquiry is whether the current approach to rates and rate design needs to be re-evaluated.
The Commission has already invited interested parties to provide comments on the matters the Commission intends to examine in this inquiry, details of which are provided on the AUC website. Some municipalities have registered. The AUC was in contact with RMA by phone on January 9, 2019, and covered three points:
Alberta Energy (AE) is not involved with the independent regulatory decisions of the AUC, which includes its rate setting power. A change of rate classification or new rate class would require consultation between the AUC, each distribution service provider, and consumer groups during a formal hearing. AE is currently in the early stages of a distribution policy review in which rate classification changes may be a consideration. Any recommendations would require to be approved by the AUC and structured within each distribution service provider’s rates to ensure they are just and reasonable to consumers.
In 2021, the Alberta Electric System Operator (AESO) reached out to RMA to discuss proposed changes to the Independent System Operator (ISO) tariff, which consists of the rates, terms, and conditions that apply to persons who receive system access service from the transmission system. The AESO recovers bulk system costs based on a 12 coincident-peak (CP) methodology. Due to recent peak rate increases, 12 CP no longer incentivizes the drivers of transmission costs to adjust with changes occurring in the landscape of Alberta’s electricity system. Further, the AESO has reported an increase of large industrial electricity consumers avoiding consumption during peak rate hours, which has shifted a larger portion of costs to consumers who are not necessarily able to avoid using electricity during peak times. According to the AESO, the current ISO tariff rate design should be updated to address these changes while still providing clear and stable price signals to consumers to support effective business decisions.
The AESO has not indicated any plans to create a separate rate class for municipal buildings (as requested in the resolution); however, the AESO has stated that changes to the ISO will reduce the opportunity for companies to shift costs to others by avoiding peak rate hour times and this has the potential to decrease electricity costs for municipal buildings.
As the AESO has not indicated any plans to create a sperate rate class for municipal and recreation facilities, RMA assigns this resolution a status of Intent Not Met.