Power problems: Why Alberta may ditch regulated-rate-option electricity as big bills loom

When it comes to paying for electricity in Alberta, people with little money and/or bad credit have little choice but to go on the regulated-rate-option (RRO).

As part of a plan to help Albertans deal with the rising cost of living, the UCP government says it will put a ceiling on that rate.

But an economist and the NDP are pointing out that their ceiling is more like a deferral.

Albertans have three options for buying electricity: The variable rate fluctuates based on market price, a fixed rate that's predetermined based on contract term and the RRO where the utilities commission sets the price.

Albertans who can't afford a deposit or have low-to-no credit are put on the RRO plan.

The UCP's minister of affordability and utilities says new legislation will help people on the RRO.

"Seniors, vulnerable Albertans, and rural Alberta, they can't handle the bill shock that they may be getting in January and February, so we wanted to provide them some stability," Matt Jones said.

Last March, the RRO was 10.7-cents-per kilowatt hour. It's since jumped up to more than 24 cents. It could reach up to 30 cents per kilowatt hour by March, experts predict.

Alberta is imposing a price ceiling for the RRO, so when the rate goes above 13-and-a-half cents per kilowatt hour, you'll only pay the 13-and-a-half cents, right now.

But any costs above that ceiling will be tacked on to future bills. In other words, instead of paying now, you'll be paying later.

"This program provides stability and manageable bills for customers on the RRO," Jones said.

Economist Blake Shaffer says while he likes the smoothing out of the bills, the province isn't considering which customers are on the RRO.

He believes people who can get off the RRO will do so before the deferred costs need to be paid up, leaving the most vulnerable to pay.

"I'll go get a fixed rate when prices are cheaper so I don't have to pay back that two, two-and-a-half cents for the next 21 months," he explained of how some may react.

"And if you continue that argument into the absurd element of one consumer left, you've got one person paying about $200 million on their bill."

Alberta's NDP called the UCP plan a payday-lending scheme.

"It's not a well-designed program. I think what people could potentially use right now is an actual rate cap or a real rebate or something of that nature," Energy Critic Kathleen Ganley said.

Jones said the province is now examining the future of the RRO and it could be eliminated altogether.

"The reason we're having that discussion is because we're seeing, not just historic prices but extreme volatility, and we know that this would be a complex undertaking to either reconfigure or transition off the RRO," Jones said.

"So, we are having preliminary discussions with RRO providers, with experts, and with Albertans."