The Regulated Rate Option (RRO) is really a default rate for energy usage and applies only to the ENERGY portion of the monthly electricity bill. Any energy consumer in Alberta who does not have an energy contract with a retail energy provider is on an RRO.
The process for determining the RRO varies with different types of electricity providers. The Alberta Utilities Commission (AUC) regulates Alberta’s for-profit electricity providers and certain municipally owned electric utilities. With Rural Electrification Associations (REAs) the RRO is either provided by their respective contracted energy supply company, or the elected Board of Directors establishes the RRO for members. Battle River Power Coop’s RRO is calculated by a third-party consultant that considers factors like estimated consumption, allowances for loss, the Alberta Electric System Operator volumes, and price risk. The information is modeled to verify and validate the calculated monthly rate which is authorized by the Board of Directors.
Another method of establishing the RRO for REAs is evident in the cooperation between Battle River Power Coop and West Wetaskiwin REA, and Battle River Power Coop and FENN REA. Agreements are in place in which Battle River Power Coop, as the billing agent for both REAs, provides services that include provision of the RRO.
Electricity is purchased from the Power Pool of Alberta, the not-for-profit entity responsible for the operation of the wholesale electricity market in Alberta. The wholesale price of electricity fluctuates depending on supply and demand.
In 2017, the previous provincial government instituted a retail rate cap of 6.8 cents/kWh. When rates exceeded the cap, the government paid the provider the difference between the lower actual price or the reference rate and the cap for each kWh of electricity consumed by their price cap eligible customers. The price cap was removed by the present government with the passing of Bill 21 (An Act to Cap Regulated Electricity Rates). The current government explains that the price cap program was designed to protect Albertans from volatile electricity prices while the province transitioned to a capacity market for electricity. With the government’s decision to halt the transition to a capacity market and maintain an energy only market, the price cap is no longer needed. This means that Albertans on the Regulated Rate Option (RRO) will experience variations in monthly energy rates going forward.
Battle River Power Coop operates as an electricity cooperative with a focus on serving members rather than generating profits for stockholders. The RRO reflects the real cost of providing electricity to members.
Members are free to purchase electricity services from a retailer of their choice. For a list of retailers, visit www.ucahelps.gov.ab.ca or call 310-4822 (toll free in Alberta).