Understanding Electricity Costs
Electricity. You use it daily. But, chances are, you don’t think much about it until it’s time to pay the bill. So, what do those charges really mean? What does electricity actually cost? And what value are you getting?
Frequently Asked Questions
Why do I pay delivery charges even if I don’t use electricity?
Even if you don’t use electricity, the poles, wires, substations and meters are there in case you need them. It’s like having cable TV or telephone services. You pay a fixed fee so you can watch TV or use the phone whenever you want.
My house has been here for 40 years, I must have paid for the capital cost of the power lines by now.
Over the years you’ve probably paid the initial capital costs to install the power service; however, all electric facilities have ongoing capital costs. To maintain safe, reliable electricity, your power lines need to be upgraded and rebuilt as time goes on. It’s like financing a new car with a loan to be paid off over 12 years. By the time the loan is paid off, you’ll probably need to buy a new car or pay to upgrade the old one.
I can choose my energy retailer, why can’t I choose a different electricity distribution company?
Think of electricity like shopping online. You can buy your product from any number of suppliers. The supplier then uses a delivery company to distribute the product to you. Well, we distribute electricity. Energy retailers use the same distribution company in a service area because it would be impractical to build another set of power lines and facilities.
How do I know my delivery charges are reasonable?
To make sure your electricity charges are fair and reasonable, they are regulated by the Alberta Utilities Commission (AUC). The rates (tariffs) we charge are all approved by the AUC in an open, public process.
How does ATCO’s electricity distribution division make money?
In the regulated utility business, shareowners invest in building, upgrading and maintaining a reliable distribution system. The Alberta Utilities Commission regulates and approves the return they are allowed to make on that investment. There is no guaranteed profit. If we fail to earn the regulated rate of return, we can’t recover our losses.
Why do different distribution companies have different delivery charges?
In Alberta, customers are served by six major distribution companies. Each has its own defined service area. The rates the distribution company charges depends on how big its system is, how new it is and how many customers share it.
Our electricity distribution service area covers nearly two-thirds of Alberta. It also includes some of the most difficult terrain. Because our service area is large but sparsely populated, one kilometer of distribution line serves about three people. In urban centres, one kilometre of line serves approximately 65 people.
Why does ATCO collect transmission costs?
Your electricity delivery system has two parts: the local low-voltage distribution system and the high-voltage transmission system. The high-voltage transmission system sends power from generating facilities, such as hydro or natural gas plants, to the local distribution systems.
The Alberta Electric System Operator (AESO) oversees the transmission system and bills distribution companies for using it. The rate is set by provincial government policy and is the same no matter where you live in Alberta. Distribution companies collect the transmission costs and then submit them to the AESO.
What are rate riders?
Rate riders are temporary charges or credits set by the Alberta Utilities Commission. They help account for changes between interim and final rates. Riders exist for various reasons and periods of time. There may be several riders on your bill at any given time.
What is the local access fee?
Your municipality sets a local access fee as a charge for using municipal property for electric facilities. The fee can also include the exclusive right to provide distribution services in the municipality. We collect this amount on behalf of your town or city and then submit it to the municipality.
What is the REA tariff?
You’ll see this charge on your bill if you are connected to an electricity distribution system owned by a Rural Electrification Association (REA). You pay an REA tariff instead of a distribution tariff. The fee is for the delivery of power.