Alberta Electricity Rates Forecast 2024: Why Are The Costs Rising?

Over the past years, Alberta has experienced a high increase in the average monthly electricity cost. 

This trend reflects a marked escalation in electricity rates, which now stand considerably higher than in 2017 when the price was approximately 2.88 cents per kilowatt-hour (kWh). 

Currently, electricity is priced 11 to 13 times higher than natural gas within the province, impacting consumers, particularly those on floating-rate plans who consume large amounts of electricity. 

Now, this raises important questions:

  1. Why is the electricity bill in the province escalating?
  2. What is the good news for Albertans?

This Alberta electricity rates forecast 2024 will help you know the answers and plan your future expenses.

Why Are The Electricity Rates In Alberta Rising?

Looking back, Alberta enjoyed North America’s lowest electricity rates, with the Regulated Rate Option (RRO) priced between 2 and 5 cents per kWh. 

By 2023, rates had surged to 29-33 cents per kWh, spotlighting the drastic shift in the province’s electricity pricing. 

Key factors that affected Alberta’s electricity rates include:

  • Delays in New Power Plants: Slow progress in adding new power generation facilities affects the availability of standby generation, crucial for meeting demand during peak periods.
  • Natural Gas Price Surge: Geopolitical events, notably the Russian invasion of Ukraine, significantly increased natural gas prices, affecting Alberta’s primary electricity generation source.
  • Increased Air Conditioning Use: Rising temperatures have led to more residents installing air conditioners, especially after 2021 when temperatures approached 40°C.
  • Carbon Tax Impact: The carbon tax has a minor effect on electricity prices, adding approximately 0.3 cents per kWh.
  • Electricity Price Cap: Under the Affordability Action Plan, electricity prices were capped at 13.5 cents per kWh in early 2023 despite market rates approaching 33 cents.
  • $200 Million Loan to Utilities: To support the price cap, the government provided a $200 million loan to utility companies, an expense covered in consumer bills.
  • Alberta’s Higher Inflation: According to data, Alberta’s electricity prices surged by 119.9% from January 2023 to January 2024, 11.1% above the national average, with Edmonton hitting 3% higher.

Impact On Consumers

High electricity costs significantly strain consumers, particularly Alberta’s low- and fixed-income households. 

These households might have to borrow money or seek external assistance to afford their basic needs. 

For businesses, higher electricity bills mean higher operational costs, which could mean higher prices for goods and services or fewer of them. 

The higher energy costs affect not only the direct costs of utilities for households but also the costs of goods and services, which means that consumers have less money to spend. 

Vulnerable populations face the risk of energy poverty by taking drastic measures to cut energy usage, compromising their comfort and safety.

3 Effective Solutions To Mitigate High Energy Prices

While electricity prices reach record levels in 2023, Alberta’s electricity rates are forecast to stay low throughout 2024. 

Still, given past unpredictability, such as during the pandemic, Albertans can take three proactive steps to manage their electricity costs effectively:

1. Adopt Solar Energy

Embracing renewable energy, particularly solar power, offers a practical solution to counter rising electricity costs driven by gas price increases. 

The province aims for a 30% renewable energy contribution to its power generation by 2030 and plans to phase out coal-fired electricity by mid-2024. 

Homeowners installing solar PV systems can reduce their electricity bills and earn money by selling surplus energy back to the grid. 

Despite certain fixed charges, the reduced kilowatt-per-hour costs and increased energy independence from solar adoption can lead to more predictable and manageable monthly expenses.

2. Choose A Fixed Electricity Rate

Alberta residents can select their power provider and decide between fixed or variable-rate plans. 

Recently, those on variable rates have faced steep increases in their utility bills. Fixed-rate contracts offer a shield against such fluctuations, providing cost stability. 

Market analysts suggest that a significant decrease in energy prices might not be visible shortly, making fixed contracts a prudent choice for budget stability.

3. Utilize Alberta’s Electricity Rebates And Incentives

Leverage government-supported programs to reduce energy costs, including the C$500 rebate for immediate relief on bills. 

Canada’s 2023 Federal Budget fosters renewable energy investments, enhancing wind and solar power. 

Benefit from a 30% refundable tax credit on solar investments and the net metering program, which supports solar adoption in Edmonton and Northern Alberta.

The Good News

Amid the uncertainties, Alberta electricity rates forecast 2024 shows a promising year for consumers.

Knowing that things can easily change, taking advantage of government-supported programs, adopting solar energy, and choosing a fixed rate can help manage your expenses.

For a smooth transition, Gridworks Energy is here to help those seeking to mitigate the impact of fluctuating Alberta electricity rates. We specialize in solar PV system installations in Edmonton and the neighboring areas.  

Work with us to find the best way to a more sustainable future.

FAQs

What is the future of electricity rates in Alberta?

The future of Alberta’s electricity rates hinges on evolving energy practices. With coal being phased out and natural gas, wind, and solar taking the lead, the province is shifting towards a sustainable, free, net-zero electricity system by 2035.

What is the average monthly electricity consumption in Alberta?

In Alberta, energy demands vary across residential and commercial sectors. For instance, the typical household in Edmonton consumes between 600 and 1200 kWh of monthly energy, while the average small business has a higher usage of around 3,000 kWh.

How do I lower my electricity bills using solar panels?

Since solar panels generate electricity from sunlight, you’ll rely less on expensive grid power, resulting in lower electric bills. With grid-tied systems, you also get savings from tax credits and incentives, making your investment even more beneficial.

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