Energy delivery charges include two components: transmission and distribution. Transmission charges cover the cost of moving electric energy from generating facilities through high-voltage transmission lines to distribution utility substation transformers. Distribution charges cover the cost of moving electric energy from these transformers through local, lower-voltage lines that carry electricity to the customer’s meters.
Rate riders are added to transmission and distribution charges which create variations in average monthly charges year over year. Rate riders are used to close the gap between expected operational costs and actual operational costs.
Transmission rates are approved and regulated by the Alberta Utilities Commission. The transmission charge on an electricity bill is based on how much electricity the customer has used. As shown in Figure 1, Alberta has seen an increase in transmission charges since 2004 due to the expansion of infrastructure. There have been a number of large transmission projects, which have led to an increase in costs being passed on to consumers. Some of these large scale projects include Heartland Transmission Project (AltaLink), Western Alberta Transmission Line (AltaLink) and Eastern Alberta Transmission Line (ATCO).
In 2016, monthly transmission charges paid by the average residential customer with 600kWh of consumption ranged from $18.31 (in EPCOR’s service area) and $22.19 (in ATCO’s service area). Transmission charges constitute between 15% and 25% of a customer’s total bill.
The Alberta Utilities Commission regulates distribution rates for Calgary (Enmax) and Edmonton (EPCOR) and for Fortis Alberta and Atco Electric. Distribution rates for Red Deer, Lethbridge, Cardston, Fort Macleod, Ponoka and Crowsnest Pass are approved by local municipal governments and town councils. Rural electrification associations have boards of directors that approve distribution rates on behalf of members.
As shown in Figure 2, Distribution costs vary with location and consumption. Distribution charges are higher for customers in rural Alberta than for customers in urban areas because of the low population density and longer distances between customer sites. In 2016, monthly distribution charges paid by the average residential customer with 600kWh of consumption ranged from $18.38 (in ENMAX’s service area) to $76.17 (in ATCO’s service area). Distribution charges constitute between 23% and 52% of a customer’s total bill.