For nearly 40 per cent of Albertans who are on a regulated rate option (RRO) for their electricity, bills are going up starting April 1.
“I like to refer to the RRO as the ‘do-nothing option,'” explained Lianne Redmond, director of Encor by EPCOR. Encor is the utility retailer’s competitive (or fixed rate) electricity product.
“If you haven’t called your utility provider or if you haven’t called a competitive retailer, then you are still on the RRO.”
A three-month program put in place by the provincial government to put a ceiling on power costs and help Albertans through the more expensive winter months is ending.
The program capped power charges at 13.5 cents per kilowatt hour for January, February and March 2023 but the real cost of power was somewhere between 20 and 33 cents.
“Customers are going to have to pay the full price of their power for April and they’re also going to have to pay a deferral,” Redmond said.
“For instance, the difference between the provincial program of a ceiling and what the actual price of power is, that’s going to have to be paid back by consumers from April of this year to December 2024.”
She expects the average family will have to pay back at least $200 in deferral power payments over that 21-month timeframe.
“This deferral is going to be spread out over the remaining consumers on the RRO. So it’s really better for you if you leave the RRO and go to a competitor.”
People can avoid having to pay those deferral payments by switching to a fixed-rate option, Redmond said.
Alberta’s Utilities Consumer Advocate explains on its website: “Customers who don’t sign a contract for natural gas or electricity are served by a regulated retailer. The regulated rates are reviewed and approved by the AUC and can change from month to month.
“From January to March 2023, a rate ceiling of 13.5 cents was implemented to alleviate the costs of consumers on the Regulated Rate Option (RRO) during the cold winter period.
“The difference between the approved regulated rates and the price ceiling will be collected over a 21-month period (April 2023 – December 2024). This will be done by adding a small amount (approximately 2-4 cents) to the monthly regulated rate. This will be about $10-$20 per monthly bill.”
Joel MacDonald, founder of energyrates.ca, also thinks it’s wise to move to a fixed-rate electricity contract right now.
“Currently, most of the major competitive retailers have no-fee 30-day exit clauses. So it’s not like a cellphone contract or cable contract … You have complete flexibility.
“We also know that there’s a lot of uncertainty in the electricity market right now. And, with the transition from thermal — especially coal-based generation — to newer, green energies, we expect there to be a lot of shifts both in electricity supply as well as demand — EVs (electric vehicles) coming onto the grid.
“We’re expecting a huge amount of uncertainty in the electricity marketplace and with uncertainty comes very high costs,” MacDonald said.
Redmond also said fixed-rate contracts don’t lock customers in like other industries’ contracts.
“Our contracts and most in the (electricity) industry are actually carefree,” she said. “You can leave at any time. There’s no penalties, no issues at all. If you move or you want to move to a different rate or you want to go back to the RRO, you can absolutely do that with absolutely no penalty. You can do it online or give us a call.”
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On Wednesday morning, EPCOR’s call centre and website were “receiving higher than usual call volumes” as customers reached out “to get information about their electricity options.”
In an email to Global News, EPCOR said: “Our customer care team is making adjustments and working diligently to support customers and we appreciate their patience.”
“Our call centre and our website were absolutely inundated,” Redmond said Wednesday afternoon.
“All of our phone lines — which I don’t think has ever happened — is actually at capacity. And our website, which actually is ramped up to see a lot of volume, I think we’ve seen historical volumes.
“Very much unprecedented volumes.”
She said customers wanted to ask questions about their options and some wanted to switch from an RRO to a competitive retailer.
“We’re doing our best to get to everyone,” Redmond said. “It really won’t cost you that much just to wait a couple of days.”
Redmond said people don’t necessarily have to make the change before April 1, as the deferral payments are spread out throughout the entire month.
MacDonald said it’s always good to refamiliarize yourself with your electricity plan, and now is a great time to re-evaluate or investigate.
How do you know if you’re on RRO or a fixed rate?
“You are billed by your retailer. Look at a recent electricity or natural gas bill, take a look at who your retailer is on the top left side. If it says Direct Energy or ATCO or Encor by EPCOR — which is EPCOR’s competitive retail product — nothing is going to change for you… The April 1 timeline isn’t affecting you,” MacDonald said.
If you don’t see those providers on your bill, you could be on the RRO. It may also appear under the “details of your charges” section of your bill.
“For the last three months, there’s been a rate deferral program. A lot of people have referred to it as and I believe it may have been marketed as a rate cap,” MacDonald said.
“But my definition of a rate cap is it’s the most that someone can charge you and you don’t have to pay anything above that. That’s not the product that was put in place. The product that was put in place was a deferral.
“That was a three-month program. For each of those three months, January, February and March of this year, electricity was at least 20 cents and consumers paid 13.5 cents. Starting April 1, those deferral payments will have to start being paid.”
MacDonald estimates about half of Edmonton residents are on the RRO. If they can find a competitive electricity option with a fixed rate of between 12.5 and 13.5 cents, he says consumers should take that plan.
Erin Michael is one Edmontonian considering switching providers. She thought the provincial program was going to save her money.
“I was under the impression we were just receiving essentially a discount on the rates for the winter. I understood it was temporary,” Michael said.
She said she was “a little perturbed” to find out it was actually a deferral rather than a rate cap.
“Having to essentially pay back something that you used already that you weren’t aware you’d be charged down the road for was misleading, I would say.
“There’s going to be people who aren’t aware what the program was and are going to be shocked they have to pay it back. It’s really going to affect a lot of people that are already affected by the rising costs of everything else.”
MacDonald expects more Albertans will make changes to their power provider.
“We could see a mass exodus from the RRO product … consumers searching out a product that gives price certainty. For example, there are several great Alberta-based electricity retailers with fixed-price options in and around 12.5 cents, guaranteed price.
“I would struggle to see where anyone wouldn’t want cost certainty in a current high-volatility time right now and still have that ability to exit at any point.”
MacDonald said there’s nothing keeping consumers on the RRO.
“If you’re looking to save and not have to pay back for that (three-month) period, you could leave the product. That could start a vicious cycle of people not just not paying back for the electricity they used during the deferral program, but also what other people were using and then seeing that on their bill, they could start leaving.”
While most fixed-rate plans require a credit check, the RRO doesn’t, which is why it’s considered a backstop or last option for some Albertans.
“You could see a situation whereby those who are most disadvantaged, with low credit scores and can’t leave the RRO, have to pay back both their deferral amounts as well as the amounts of the more astute or higher credit individuals who have left the RRO,” MacDonald explained.
“If you’re on a very strict budget, deferrals don’t necessarily help because you know, ‘I’m not going to have more money in six months’ time. Pushing this down the road isn’t necessarily the most strategic thing to do for my budget.’
“Whereas a hard rate cap – or there were monthly rebates that were put in place by this government as well – those help definitely, 100 per cent, everyone,” MacDonald said.
Barry, whose last name Global News has agreed not to use, has been trying to contact his utility provider, EPCOR.
“We have the ability to change this over and we can’t get ahold of anybody to do it,” he said on Wednesday.
He’s trying to switch from a residential RRO to the fixed-rate option.
“If there’s a whole bunch more people who sign up, that’s even more of a bill for the people who can’t pass a credit check, to the people who are suffering.
“That’s a real problem. There’s probably thousands of people in Edmonton that (use) EPCOR that can’t. For them to put the total bill on people who are already struggling is just ridiculous. It’s a sin as far as I’m concerned.”
Global News asked Redmond about this concern on Wednesday.
“Really, this is a provincial policy and it’s a provincial regulation that came down and EPCOR as a company is just abiding by this regulation,” she said. “I can tell you that we’re always in conversation with the government and we always have the best interest of our customers at heart.”
Barry was shocked to learn the government’s three-month program wasn’t lowering his power costs at all but simply kicking them down the road.
“To defer payments like that isn’t helping us,” he said. “What that just did is just made it worse for us in the months to come.
“I think all of us were misled. Three months later, to get a letter like the one I got from EPCOR, it just added fuel to the fire,” Barry said.
“The province should have covered the difference… If they were going to do anything, they should have just stepped in, period, and either helped or not helped.”
In a statement, Matt Jones, the minister of affordability and utilities, pointed to those $200 electricity rebates being provided to Alberta consumers, directly to their bills, this year. That’s $75 a month in January and February and $25 a month in March and April.
There are about 800,000 consumers on the RRO, Jones said.
“Families, farms and small businesses on the Regulated Rate Option are being protected from high electricity bills this winter as part of the Affordability Action Plan.
“Deferred electricity costs will be recovered over a 21-month period, from April 2023 to December 2024, to ensure that electricity costs remain stable and affordable for Albertans. To ensure that this protection could be provided at no interest to Albertans, the government extended no-interest loans to RRO providers as part of this program,” Jones said.
He added the government is monitoring and reviewing the RRO and the electricity system.
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