By Leah Murray

Province and City of Medicine Hat negotiating electricity rate cap

May 23, 2017 | 5:46 PM

MEDICINE HAT, AB — The Alberta government has announced plans to cap the price utility customers in the province pay on Tuesday.

If passed, the Act to Cap Regulated Electricity Rates would ensure residents, farms and small businesses who have Regulated Rate Options (RRO) would not pay more than 6.8 cents per kilowatt hour.

The program would come into effect on June 1, 2017 and run until May 31, 2021.

This is being done as the province moves away from a free-market price of electricity to a capacity market.

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Energy Minister Margaret McCuaig-Boyd said the changes are necessary to attract investment as the province shifts from coal-fired power to renewables by 2030.

“Right now the market is in a trough. Prices are at the lowest they’ve been in almost a decade. But, the current market, which is an outlier in almost all of North America, is designed to be volatile,” said McCuaig-Boyd. “At the same time we need new investments in power generation if Alberta is going to continue to enjoy a reliable source of power at stable and affordable prices.”

The cap price is currently only available to utility customers in the province who have a Regulated Rate Option contract.

Utilities in Medicine Hat are owned by the city and there are no RRO contracts offered.

The city said it is negotiating with the province on offering a rate cap for residents here.

“We don’t have the specifics worked out entirely, but we are quite confident those conversations have moved forward in a progressive way,” said utilities manager Jaret Dickie. “So, we’re quite confident we will be eligible for the price cap.”

August of 2015 was the last time the cost of a single kilowatt hour of electricity climbed above the 6.8 cent mark.

The actual cost of the program is still to be determined.

If the price of electricity does not exceed the 6.8 cent per kilowatt hour, it could theoretically not cost the province anything.

Other estimates have put the costs as high as $1 billion, but the province said it won’t speculate on the cost at this point.

Money to cover the cost of electricity if the price does exceed the cap would come from carbon tax revenues.

There are concerns that as the government phases out coal power in favour of renewables the cost of electricity will sky rocket similar to what happened in Ontario.

The Alberta government says they’re taking a different path with a capacity market and Ontario is now considering the same.

“Ontario chose a much different path, with a fixed price for renewable power, and prices skyrocketed. Alberta will use a competitive auction to ensure the lowest cost option for renewables,” read a statement from the Energy Ministry.

“…In fact, Ontario’s Auditor General has said consumers would have saved over $9 billion if the government had used a competitive bidding program (as Alberta is) from the beginning.”

If approved, the capped rates will go into effect on June 1, 2017.