'It's broken': Smith urges Albertans to get off of 'misnamed' regulated rate option power

Alberta Premier Danielle Smith shares the government's vision for the Alberta economy at a luncheon hosted by the Edmonton Chamber of Commerce in Edmonton on Thursday July 20, 2023. THE CANADIAN PRESS/Jason Franson

Alberta's premier says anyone who can ditch the regulated rate option (RRO) for electricity should do so, while her government works on ways to help people struggling with high utility bills.

Danielle Smith told reporters in Edmonton Thursday that while she loves the province's free market in generation and retail of power, "regulated" distribution and transmission is "not working very well."

"If you look at your power bill, that's one of things that has escalated the most," she said.

"The regulated rate option is misnamed. It's not regulated and it is not a protection for consumers. And there are a lot of people who are getting really hurt by that because they think they're protected because it's a regulated rate, and it is the most volatile rate."

This month, the RRO hit 28 cents-per-kilowatt-hour, while fixed rates are about half of that.

Still, about 35 per cent of Alberta households are on the RRO.

Smith said many of those people are seniors, renters, students, and people with little to no credit who are being hurt by a bad system.

"It's broken. The fact that it's going up to 30 cent-per-kilowatt-hour shows it's not working," the premier said. "We have to find a way to get that group of individuals onto a longer-term contract to be able to bring their prices down."

She said people who are able to lock in lower prices with a fixed-rate contract should do so as soon as possible.

Finding ways to reduce utility bills for Albertans was one of the tasks Smith gave Affordability and Utilities Minister Nathan Neudorf in his recently released mandate letter.

Neudorf said he doesn't want to reduce choice in the market, so the RRO will likely remain in some form for people who choose to gamble on it.

He pointed out the RRO may actually be cheaper over a five-year period but said many Albertans need a more stable bill.

"Electricity really isn't a luxury," he said. "Hopefully, we have a number of solutions ready for this fall's legislative session or next spring's legislative session."

During the last election, the NDP proposed a rate cap on the RRO as a way to help people struggling with fast-rising bills.

“I have door-knocked thousands and thousands of doors and Albertans told us that the power prices and the cost of living is hurting them," NDP energy and climate critic Nagwan Al-Guneid wrote in a statement.

"The UCP had removed the cap on electricity prices and the cap on car insurance prices, and Albertans’ bills exploded."

Smith also spoke Thursday about importing electricity from B.C. and Manitoba, and using small nuclear reactors to lower prices, but the NDP is encouraging renewables in Alberta.

"A more diversified grid is an affordable grid," Al-Guneid said on Twitter.

"Wind and solar energy is the cheapest source for electricity. This gov't needs to reduce red tape on renewables and tech development to increase low-cost supply into our grid. AB is leading in renewables."

Neudorf said he hopes to have affordability plans, including restructuring and possibly renaming the RRO, by the end of the year.

With files from CTV News Edmonton's Nicole Weisberg and CTV News Calgary's Kevin Green