Want help deciphering why electricity costs what it does in Alberta and how much of your money goes to things other than energy? This article will help you understand your next electricity bill.
How utility charges work in Alberta
Your electricity bill is split into three main charges:
- Energy charge – A charge for energy consumed during your billing period, excluding costs for delivery and administration. The more energy you use, the higher the charge.
- Delivery charges – The charge for transporting this energy to your home. This includes a fixed charge and a variable charge (the cost to operate and upkeep underlying infrastructure). You’ll find more details on this in the breakdown below.
- Taxes and fees – Charges that are neither energy nor delivery, such as federal taxes, administration and transaction fees, and municipal fees.
Components of your electricity bill
Energy Charge
Charge for how much energy you used during your billing period. This is usually calculated in cents per kilowatt-hour (¢/kWh) according to your rate.
Administration Fee
The charge from your provider or retailer for the cost of billing and customer service. This charge is set by your retailer and is a fixed rate (monthly or daily). It does not depend on your consumption.
Delivery Charges
- Transmission Charge: Cost of transmission lines, which connect electricity over long distances across the province. The fee for this service is regulated, changes every few months, and is paid to transmission companies. This charge fluctuates with your consumption.
- Distribution Charge: Cost of bringing the electricity to your home. The fee for this service is regulated, changes every few months, and is paid to distribution companies. While a portion of this fee is based on your consumption in a given billing period, another portion is fixed.
Rate Riders
The Alberta Utilities Commission (AUC) is the regulator of the Alberta electricity market and uses tariffs (Transmission and Distribution charges noted above) to cover the cost of services that are required to ensure the system meets Albertan’s needs.
Often, the expectations of costs when setting tariffs don’t meet reality: rate riders are additional charges or refunds to take into account differences between actual costs and the approved tariffs.
As a result, there are many different rate riders that come up on your bills from time to time. You can visit the AUC for a full list of rate riders and more details how each rate rider is set.
Balancing Pool Adjustment
Confusingly, the Balancing Pool Allocation is one such rate rider, but it often shows up as a separate line item on utility bills. Its main purpose is to help manage and stabilize the electricity market. If the Balancing Pool needs to cover a deficit, you might receive a charge. If there’s a surplus, you might see a credit.
Municipal Fees
Municipal Fees or Local Access Fees are imposed by your municipal government (e.g., the City of Calgary) on the utility company for the right to access public land and infrastructure, such as roads and rights-of-way, to deliver electricity to your household. This fee is typically passed on to consumers as a separate line item on their utility bill.
GST
A federal tax applied to most goods and services in Canada. The 5% is calculated based on the total amount of your electricity bill.
Shine a light on your energy expenses
Now that you know what the average electricity bill looks like, why not see how your costs compare? Request access to the Jotson™ app and connect your utility provider to see a detailed breakdown of the taxes and other embedded costs that impact your energy expenses.
You may also be interested in our breakdown of natural gas charges.
