Electricity delivery charges include energy components (transmission and distribution) and non-energy components (local access fees).
- Transmission charges cover the cost of moving electric energy from generating facilities through high-voltage transmission lines to distribution 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 associated with distribution and transmission charges are included in the monthly energy delivery charges. Rate riders are used to reconcile previously forecasted costs that were incorporated with rates with the actual costs of operation. Rate riders may be credits or additional charges depending on if actuals were lower or higher than forecasted.
Transmission rates are approved and regulated by the Alberta Utilities Commission. The transmission charge on an electricity bill is based on the customer’s energy consumption (kWh). In the ATCO Electric and FortisAlberta transmission service areas, in addition to energy consumption, the transmission charge is also based on the required demand level (kW).
As shown in the transmission charges graph (Figure 1), Alberta has seen an increase in transmission charges since 2013. In 2021, the average small business customer with approximately 3,000 kWh of consumption and 4 kW power demand paid monthly transmission charges ranged between $47.11 (in Fortis Alberta’s service area) and $110.16 (in EPCOR’s service area). Transmission charges constitute around 18% of a small business customer’s total bill (from the Alberta Electric System Operator (AESO) report).
The distribution charges include energy charge ($/kWh), fixed charges ($/month, except for FortisAlberta), and demand charges ($/kW/day for ATCO and Fortis Alberta).
The Alberta Utilities Commission regulates distribution rates for Calgary (Enmax) and Edmonton (EPCOR) and for Fortis Alberta and ATCO Electric areas. Distribution rates for Red Deer, Lethbridge, Cardston and Ponoka 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 the distribution charges graph (Figure 2), distribution costs have increased during the period of 2013 to 2021. In 2021, monthly distribution charges paid by the average small business customer with 3,000 kWh of consumption and 4 kW power demand ranged from $72.18 (in ENMAX’s service area) to $156.23 (in ATCO’s service area). Distribution charges constitute approximately 17% of a small business customer’s total bill (from AESO report)