The true reason for high electricity bills.

 In Electricity Pricing

Good day!

As many of you already know, your electricity bill includes charges for transmission/distribution costs, municipal access fees, as well as the cost of electricity you have used. It is important to know that while the price of electricity has been lower since deregulation, the additional fees have not. Below is a letter written by Nick Clark, a partner of UtilityNet, which was sent to Alberta opposition party leaders. The information in the letter will be of interest to you but also to your individual legislative members. Please feel free to distribute this information to your MLA and let them know where the problem truly is with electric utility costs. Only by asking the right questions and making our legislative representatives work for us can we hope to see change in this area.

Dear Brian, Ric, Greg and David,

As leaders of the opposition, I hope you find this letter of interest and we trust that this information will be of help to you in your quest to be of service to your constituents.

For years the NDP, as a party, has been fixated on re-evaluating the “Regulated Rate Option (RRO)” pertaining to the energy price-setting-policies that impact what consumers pay for electricity (in particular those who are still on the old regulated rate plan).  Un-knowledgeably, the NDP often talks about “Smart Re-Regulating the Industry”; yet they turn a blind eye to the real problem: Regulated Distribution Costs!   In simplistic terms; a consumer’s utility bill is made up of three parts. (1) the cost of Energy (which was Deregulated by way of generation and retail), (2) the cost of Distribution (which is still Regulated) plus (3) the Local Access Fees (as set by the local municipality as a franchise access tax, which the individual municipalities have control over).

Are consumers mad about the high cost of their monthly utility bills?   Sure, some are.   To understand the problem there are only two things you need to know:

A.   The Positive News: The cost of energy is at an all-time low.  Why on earth would anyone in their right mind what to re-regulate it!  Under deregulation (and the competitive market structure), consumers are paying less today than they were in 2000 (that’s 15 years of inflation let alone market forces).  There is no need to change existing policies and disrupt the competitive market.  It is working and consumers are benefiting.  The only cost on the consumer’s utility bill that has actually gone down is the portion that was deregulatedthe cost of energy.

B.   The Problem: The cost of distribution has increased by 100% over the last 10 years.  Some consumers today are paying as much as 3 to 4 times for the regulated wires distribution fees compared to the cost of energy they consume.  (Remember this is the regulated part of the equation – and has absolutely NOTHING to do with the parts of Alberta’s energy industry that were deregulated, specifically generation and retail.)  Consumers in the ATCO Electric territory are paying twice as much for distribution fees compared to rural consumers in the FortisAlberta territory (both are rural) and over 300% more for the distribution services compared to a residential consumer in the City of Edmonton.

Are your constituents mad over the cost of their utility bill?  They should be!  But make sure you are focusing your anger in the right direction.

As a sidebar note:  The following should also be of concern to your political parties and hopefully you can bring pressure on the NDP to do the right thing.  If they want to focus on “Getting it Right” here is something that they should be looking at:

Outsourcing Jobs:  We all know that firms like Shell laid off 700 people, Tervita Corp cut 15% of its work force, TransCanada is scheduling to lay off 20%, Cenovus is cutting 540 jobs, and the list continues.  Ok, in a tough economic time such as now, why then has the Department of Energy and the AUC turned a blind eye to utilities like ENMAX outsourcing IT jobs to the Tata Group in India; ATCO sold its IT division to Wipro in India; Direct Energy outsourced billing and customer care to HCL in India; and as well, Just Energy’s customer care and billing operations are centered in Ontario and Connecticut in the States.  Our provincial regulators are allowing the utilities and the big box retailers to continue to profit and benefit by doing business in Alberta and at the same time exporting jobs out of the province: this needs to stop.  Albertans can fulfill these jobs! Alternatively, and possibly simultaneously, stop allowing further rate increases in distribution tariff fees until this problem is resolved.
As the opposition parties; please take a stand.  Protect Alberta jobs and try to convince the NDP to bring back the utility jobs that ENMAX, DIRECT, JUST and ATCO have shipped out of the province.

Thank you.

Regards,

Nick Clark, Managing Partner
Utility Network & Partners Inc.
1316  9th Ave SE., Calgary AB, T2G 0T3

Please feel free to send any information or questions you might have to your own MLA. Please use the MLA Directory to find your representative’s contact information.

Thank you and have a wonderful day!

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