The Alberta Electric System Operator (AESO) has released its preferred rate design for the Bulk and Regional Tariff redesign. This tariff is how the AESO captures fifty per cent of the costs necessary to pay for investments to the electricity transmission system. This redesign is needed to address a number of factors identified by the AESO. These include:
- The current tariff relies upon 12-CP (peak hour) rate for cost recovery for transmission costs, which has increased substantially.
- The increase to the 12-CP rate has caused some customers to avoid paying peak hour charges by changing when they consume power.
- Customers that can change when they consume power are not paying for the same sunk transmission costs, resulting in other customers paying greater transmission costs.
- The tariff needs to be redesigned so future investments to the transmission system reflect how it is being used and so costs can be recovered accordingly.
The AESO has indicated that its preferred rate design will see many customers, including residential, commercial, and industrial customers paying less transmission costs relative to what they currently pay. Those customers who will see a significant increase on their power bill will be part of a targeted engagement from the AESO.
The AESO has shared the following with AUMA regarding the rate design:
The new rate design strikes the right balance by facilitating:
- More appropriate allocation of costs to better reflect a customer’s use of the system (all customers paying their fair share of transmission costs)
- Placement of appropriate long-term price signals to encourage economic growth, preventing the loss of business, jobs and associated electrical load from the province
- Investor certainty and market confidence; by providing clarity of the path forward
- A minimally disruptive transition to the new rate design that mitigates challenges for the few customers who would see a significant rate increase.
As part of the rollout of the bulk and regional tariff redesign, the AESO will be hosting engagement sessions to discuss the impacts of these changes. More information can be found here.