In the past, electricity rates in Calgary and other parts of Alberta had some of the lowest prices in North America.
However, in recent years, the cost of electricity has been increasing, resulting in higher utility bills for residents.
In 2017, electricity prices were approximately 2.88 cents per kilowatt-hour (kWh), but in 2021, the prices ranged from seven to 10 cents per kWh.
Unfortunately, since July 2021, electricity rates in Calgary have consistently exceeded 25 cents per kWh, reaching as high as 29 and 33 cents per kWh in early 2023.
This increase in electricity prices has had the most significant impact on households with low credit and minimal savings.
To make matters worse, the rebate offsetting these high costs expired in April 2023, leaving consumers to deal with the increased expenses independently.
Why are electricity rates in Calgary so high, and what is the ultimate solution?
Why are Electricity Rates in Calgary High?
1. End of the RRO Price Cap
Between January and March 2023, the Alberta government used the “RRO cap” to limit how much electricity companies could charge for electricity rates.
The difference was deferred if the actual electricity rate was higher than the capped rate.
To cover this deferment, the government loaned utility companies about $200 million.
Every month, the RRO rate changes based on the price of electricity on the market and Alberta’s supply and demand.
This is done so that the loan can be paid back.
For instance, the RRO rates will be increased by 2-4 cents each month, or approximately $10-$20 per monthly bill.
However, the cap already ended in April, while the repayment period will continue until December 2024.
After the RRO ended, electricity prices surged again, reaching nearly 32 cents per kilowatt hour in August.
Thus, the repayment plan has had a noticeable impact on the electricity market and contributed to the record-high electricity rates in Calgary in July 2023.
2. Extreme Weather and Wildfires
The province of Alberta has been experiencing heat-related weather events like heat waves and wildfires more frequently and severely.
During these events, the demand for electricity rises. Though air conditioners were not very common, this has changed over the last decade of extreme summers, affecting electricity demand significantly.
For example, in 2021, temperatures reached close to 40 degrees, which led to an increased demand for electricity due to air conditioner usage.
On the other hand, when it’s rainy or windy outside, people use less electricity, bringing down prices. Whereas in winter months, when the weather is milder, energy prices remain low.
Wildfires were also a big problem in the summer, burning over a million hectares of land and forcing thousands of people to leave their homes.
The fires also stopped oil and gas production, making it harder to export natural gas to the United States.
As a result, gas prices in Alberta went up in May 2023. Fortunately, production levels improved in June 2023.
3. Increased Market Markup
A recent report by the University of Calgary’s School of Public Policy revealed that Alberta’s electricity companies made a significantly higher profit last winter due to increased rates.
According to the study, private profits were the primary driving factor behind the increase, with companies going from making $9 per unit of energy in 2020 to $35 per unit of power in 2021.
So despite customer complaints about fees and taxes, private profits were the leading cause of the increase.
Furthermore, the ongoing conflict between Russia and Ukraine has had a global impact on energy prices.
The European Union has introduced a plan to cease importing energy from Russia, leading to a greater demand for natural gas produced in North America.
As Alberta exports more natural gas to the U.S. to meet this growing demand, the higher the natural gas prices will become.
4. Carbon Tax
Governments impose a carbon tax on fossil fuels to encourage people and businesses to produce fewer greenhouse gases.
For every ton of greenhouse gas that businesses produce, the government sets a price. The reason is to motivate energy companies to switch to cleaner energy or use better technology to reduce emissions.
Currently, the Carbon Levy price is $65 per tonne of CO2, which will increase to $170 per tonne of CO2 by 2030.
This increase will make it more expensive for power plants to produce electricity, which could lead to higher energy prices for consumers.
So, to offset their losses, power plants may raise their prices, and as a result, energy retailers may also increase their rates, which could lead to even higher prices for consumers.
It’s Time to Transition to Solar Energy Today
Despite high electricity prices, Alberta is an excellent place for solar energy investment.
The province is the second sunniest province in Canada, with Calgary being one of the sunniest cities, with 2405 hours of sunshine and 333 sunny days a year.
Going solar means your monthly bills become more predictable and steady compared to traditional electricity bills, which fluctuate considerably.
Plus, solar panels only require a little maintenance or fuel costs since they rely on sunlight.
Residential solar energy are also great because they produce electricity where you need it without relying much on expensive power supplies.
Imagine saving a lot of money in the long run inspite of unprecedented electricity rates in Calgary.
Panel Upgrade Experts can guide you to your solar journey. Our team is dedicated to helping you create a greener future with solar panels.
Don’t hesitate to contact us today with any questions.