Provincial legislation designed to cap electrical rates for Albertans could have an adverse affect on business, says Highwood MLA Wayne Anderson.
The provincial government passed third reading of Bill 16 on June 1, to limit electrical prices for Albertans on the regulated rate option to 6.8 cents per kilowatt hour over the next four years. Once signed by Alberta’s Lieutenant Governor, Bill 16 will be effective from June 1, 2017 to May 31, 2021.
“We’re taking a number of steps to keep prices low,” said Alberta Minister of Energy Margaret McCuaig-Boyd during a press conference. “But, in the event prices were to spike, the cap would automatically prevent the rate from going over 6.8 cents, giving Albertans even more peace of mind.”
Bill 16 comes after the provincial government promised last year to cap electrical rates for families, farms and small businesses in Alberta, she said.
Over the past six years, electrical rates have gone well over the cap. At times prices have run as high as 15.3 cents per kilowatt hour, sometimes increasing by 65 per cent from one month to the next, said McCuaig-Boyd. The new act would protect Albertan families, farms and small businesses – with consumption up to 250,000 kilowatt hours – from paying unstable rates, she said.
McCuaig-Boyd said electric rates in Alberta are currently the lowest they’ve been in almost a decade – hovering between 2.7 and 3.5 cents per kilowatt hour according to the Alberta Utilities Commission. In the event they rise, McCuaig-Boyd said there will be some protection in place.
“Our government is committed to making life more affordable,” she said. “This proposed act does just that.”
McCuaig-Boyd said if prices rise over the 6.8-cent cap, the government will cover the additional costs with the carbon tax.
“Carbon levy funds are appropriately used for this, because it supports the predictable and affordable transition to greener and healthier power sources that we laid out in the Climate Leadership Plan,” she said.
McCuaig-Boyd said she doesn’t expect the Province will be on the hook for much, because there is a lot of cushion under the 6.8-cent mark at this time, and market forecasts do not predict any sudden increases.
The cap will be in place for the next four years as the provincial government designs its capacity market, intended to launch in 2021, she said.
According to the provincial government’s website, a capacity market will pay private power generators through auctioned contracts, which would reduce wholesale volatility, provide opportunities for energy investors and maintain consumer choice for electricity providers.
Highwood MLA Wayne Anderson said Bill 16 won’t be as beneficial to Albertan families as the government would have them believe.
“Consumers are already protected by the industry themselves,” he said. “They can actually go in right now and sign a long-term rate contract, and it’s much less than the capped rate.”
Anderson said the capped electricity rate is an attempt to mask the potential huge increasing of electrical fees for private consumers over the next four years as the capacity market model takes shape.
“They’re following the Ontario model, and we saw that fail miserable because of their extreme push towards renewables over a short period of time,” he said.
Anderson’s biggest concern though, is the impact on businesses, which won’t be protected by the act to cap electrical rates.
“Big businesses, big manufacturers like Sprung Structures and others who are in my constituency are not protected at all by anything,” he said. “Businesses are going to be in jeopardy, and that’s my big concern. There’s just no rationale for this.”
He said statistics show Ontario lost about $6-8 billion of investment in the last six months due to volatility in the market for large businesses and manufacturers. Some companies are closing their doors and setting up shop in the US, where electrical rates and tax rates are less, he said.
“I hope Alberta doesn’t face the same situation,” said Anderson. “We’ve already lost the oil and gas market. If we lose the manufacturing sector it’s going to be difficult for us.”
