by Shawn Crowle
Have you ever found yourself wondering how your electricity and natural gas prices are decided here in Alberta? You’re not alone. Understanding how energy prices are set can feel a bit complicated, but don’t worry – we’re here to break it all down in simple terms. By the end of this post, you’ll have a much clearer idea of what goes into your energy bill—and who knows, you might even uncover a few ways to save!
Electricity Prices: The Wholesale Market in Action
Electricity prices in Alberta are determined by the “wholesale market,” which is where electricity is bought and sold between producers and retailers. This system helps set the price you pay based on the balance between supply and demand.
By 2013, Camrose Energy was officially licensed to sell electricity in Alberta. Natural gas followed in 2016. But what’s remarkable is that even as the company grew, its values stayed the same: no pressure, no gimmicks – just honest, local service.
- The Wholesale Market: The price in this market can change from hour to hour, depending on how much electricity is being used (demand) and how much is available to supply that demand. The Alberta Electric System Operator (AESO) ensures that supply and demand are balanced efficiently, but the price can fluctuate based on these factors.
- The Pool Price: This is the price paid to electricity producers for the power they generate. It’s set every hour by taking the highest accepted bid in the market. Factors like the cost of generating electricity, fuel prices, and overall demand can cause this price to rise or fall.
- Your Retail Rate: In Alberta, you have the option of being on the Rate of Last Resort (RoLR) or choosing a guaranteed rate plan from a competitive retailer. The RoLR is a fixed rate that provides stability but is generally higher than rates offered by competitive retailers. If you prefer more control over your rate, you can choose a guaranteed rate plan, which gives you a fixed price per kilowatt-hour (kWh) for a set term, providing you with predictable pricing and protection from market fluctuations.
Natural Gas Prices: Driven by Local and Global Forces
Natural gas pricing works a little differently, but it still follows the same basic principles of supply and demand.
- The Reference Price: For natural gas, the Alberta government publishes a monthly reference price, which is a benchmark for what gas should cost in the province. This price is influenced by production costs and transportation expenses. It helps set the stage for the market prices you see on your bill.
- Market Influences: Just like electricity, natural gas prices are largely driven by supply and demand. If it’s a particularly cold winter, for example, demand for heating will go up, which can cause prices to rise. On the other hand, if there’s an oversupply of natural gas or mild weather, prices might drop.
- Global Factors: Natural gas prices aren’t just influenced by local demand. Things like international trade, especially with natural gas exports, can affect prices too. As Alberta expands its natural gas exports, global trends start to play a bigger role in what you pay for gas.
Who Makes Sure It’s Fair?
You might be wondering, “How do we know the prices are fair?” Great question! There are regulatory bodies in place to make sure everything stays in check.
- The Alberta Utilities Commission (AUC): This is the group that oversees the utility rates in the province, ensuring that delivery charges—those costs for maintaining and operating the infrastructure—are fair. They make sure companies aren’t overcharging customers for things like delivery services.
- Consumer Choice: n Alberta, you have the freedom to choose your electricity and natural gas retailer, which means there’s some competition to help keep prices in check. The Utilities Consumer Advocate is a great resource if you ever need help understanding your options or comparing plans.
Wrapping It Up
So, there you have it! Energy prices in Alberta are influenced by a mix of local market forces and global factors. The wholesale market, along with supply and demand, plays a huge role in setting prices for both electricity and natural gas. And with regulatory bodies like the AUC ensuring fair practices, you can trust that your energy prices are being monitored closely. By understanding how all this works, you’re better equipped to make smart choices about your energy use—and maybe even spot a few opportunities to save on your next bill.
Remember, energy markets are always changing, so it’s a good idea to keep an eye on things and check in with your energy provider when you have questions. After all, we’re here to help make sure you’re getting the best possible service at the best possible price.
P.S. If you ever need help understanding your bill or exploring ways to lower your costs, don’t hesitate to reach out to us. We’re always happy to chat about how you can save!
