Albertans have overpaid for power since the province deregulated electricity, report says — the number will absolutely shock you

‘Way more volatility’

The AFL says that electricity needs to be treated differently as a commodity.

As a part of their recommendations, the organization suggests creating a crown corporation, Alberta Power, which would take control away from a small group of private companies that currently own 54% of the province’s power generation.

McGowan explained that the provincial government’s efforts to help have resulted in lower prices but there is “way more volatility” in Alberta. This volatility, which started to pose problems in the early 2000s, has meant that it’s been harder for Albertan families, especially lower income families, to plan their budgets, according to the report.

Before 2001, Alberta had a "healthy balance of private and public enterprises" that protected the public from "corporate market power." Since then, deregulation has meant higher and more volatile prices, leaving Alberta with the most fragile grid in North America, the report explains.

The AFL believes that families are negatively impacted in two ways — one, by having to pay higher electricity rates, and two, potentially losing out if Alberta as a province can’t attract or retain companies that rely on inexpensive and clean electricity.

Empower your investments with Qtrade

Discover Qtrade's award-winning platform and take control of your financial future. With user-friendly tools, expert insights, and low fees, investing has never been easier.

Start Trading Today

Is re-regulation the answer?

AFL’s report suggests that re-regulation is the way forward.

This could include a combination of traditional Cost of Service and performance-based regulation, currently applied by the Alberta Utilities Commission to the transmission and distribution segments, as well as long-term contracts.

The goal would be to ensure lower, more stable prices, and increased reliability — while keeping incentives to reach electrification goals.

Alberta’s minister of affordability and utilities, Nathan Neudorf, told CTV News that a regulation change is not coming under a UCP government, claiming it would cost taxpayers billions of dollars and be a deterrent to investors.

“We are proud that Alberta is the only province free from debt on power generation projects, which frees up public dollars to directly support Albertans,” he said.

Neudorf adds that there is work to do to make sure the grid is stable, but that the government thinks it can provide — and often does — the lowest power costs available.

Relying on the market

Other experts believe the answer lies somewhere in the middle.

University of Calgary Associate Professor Blake Shaffer told CTV News that “The past three years have been extreme and so Albertans have every right to be upset. Especially those who have been on floating rates and exposed to that volatility.”

“[The provincial government] certainly [wasn't] the reason prices came down — that was supply. But I also wouldn’t blame them for prices going up.”

Shaffer says the real issue was the ending of power purchase agreements in 2021.

“What happened was power reverted to a few companies or power plant control, and you had a tightening of concentration, and that just led to offer prices rising,” he told CTV News.

Shaffer predicts that the market will balance itself, and that if the analysis was redone for the coming years, it may point to a benefit on the energy front.

Sources

1. CTV News: YAlbertans overpaid on electricity bills for decades: report (October 29, 2024)