REGULATED RATE OPTION AMENDMENT REGULATION
For information only: Made by the Minister of Affordability and Utilities (M.O.
114/2024) on September 25, 2024 pursuant to sections 108(b), 108(f), 108(i) and
115(h) of the Electric Utilities Act.
1 The Regulated Rate Option Regulation (AR 262/2005) is
amended by this Regulation.
2 The title of the Regulation is repealed and the following
is substituted:
RATE OF LAST RESORT REGULATION
3 Section 1 is amended
(a) by adding the following after clause (c.1):
(c.2) "consumer awareness surcharge" means a surcharge
imposed under section 11.1 for the purpose of funding
UCA initiatives to educate regulated rate customers
about electricity service options;
(b) by adding the following after clause (d):
(d.1) "energy price setting plan" means a Rate of Last Resort
energy price setting plan established under section 5.1
that includes the owner's proposed risk margin and
outlines the methodology for setting regulated rates for
regulated rate customers to ensure rates are just,
reasonable and reflective of market conditions;
(d.2) "financial performance report" means a report prepared
by the MSA under section 11.2 to evaluate the financial
performance of an owner under a regulated rate tariff;
(c) by adding the following after clause (e):
(e.1) "MSA" means the Market Surveillance Administrator
continued by section 32 of the Alberta Utilities
Commission Act;
(e.2) "MSA determination report" means a report prepared by
the MSA under section 5.2 to confirm compliance of an
energy price setting plan with the requirements of a fair,
efficient and openly competitive electricity market;
(d) by repealing clause (f);
(e) by adding the following after clause (h):
(h.1) "Rate of Last Resort" means the charge determined
in accordance with sections 10 and 11 for the supply
of electric energy to regulated rate customers;
(h.2) "rate reopener proceeding" means a proceeding
initiated by a regulatory authority under section 11.3
to review and determine whether an owner's
regulated rate should be adjusted to ensure
compliance with the MSA's parameters on what
constitutes acceptable financial performance;
(f) by repealing clause (i) and substituting the
following:
(i) "regulated rate" means a Rate of Last Resort;
(g) by adding the following after clause (m):
(m.1) "UCA" means the Office of the Utilities Consumer
Advocate established under section 2 of Schedule 13.1
to the Government Organization Act;
4 Sections 3 and 4 are repealed and the following is
substituted:
Regulated rate tariff application requirements
3(1) An owner must apply to its regulatory authority for the
approval of a regulated rate tariff under section 103 of the Act in
accordance with this section.
(2) An application under subsection (1) must include
(a) an energy price setting plan,
(b) an MSA determination report prepared in accordance with
section 5.2,
(c) the terms and conditions under which the owner supplies
electricity services to regulated rate customers, including
those set out in subsection (3),
(d) the billing information requirements set out in subsection (4),
and
(e) any other terms or conditions the owner considers
appropriate.
(3) The terms and conditions that must accompany an application
include
(a) a statement that the regulated rate customer's full name,
phone number, email address and mailing address will be
shared with the UCA for the purpose of enabling the UCA's
customer awareness initiatives, and
(b) the following statement:
The Rate of Last Resort is a 2-year fixed, stable default
rate with a 10% rate adjustment cap for any subsequent
2-year fixed rate. The Rate of Last Resort includes
energy related charges (including, but not limited to,
energy rates, risk margin and trading charges) and a
consumer awareness surcharge of 0.1 cents/kWh to
support initiatives by the Utilities Consumer Advocate
to inform regulated rate customers about their
electricity service options.
Regulated rate customers are free to purchase
electricity services from a retailer of their choice. For a
list of retailers, visit ucahelps.alberta.ca or call
310-4822 (toll free in Alberta).
(4) The application must itemize the following information and
specify how each item will be displayed separately on the bill of a
regulated rate customer:
(a) the electric energy charge, shown under the heading "Rate of
Last Resort";
(b) the administrative charge, which may include a billing
charge, as a dollar amount, for each period specified in the
regulated rate tariff;
(c) the delivery charge for distribution access service and system
access service, shown separately as either
(i) a distribution charge and transmission charge, or
(ii) a fixed delivery charge and variable delivery charge;
(d) if applicable, any amount levied under section 45 of the
Municipal Government Act, under Schedule 1, section 21 of
the Metis Settlements Act or by bylaw under the Indian Act
(Canada), shown under the heading "local access fee".
(5) The application must not include, propose or consider any
deferral accounts, true-ups, rate riders or similar mechanisms for
energy related costs.
(6) The application must specify the period during which the owner
intends the regulated rate tariff to be in effect.
(7) Before applying for approval of a regulated rate tariff, an owner
must submit its energy price setting plan to the MSA for review in
accordance with section 5.2.
5 Section 5 is amended
(a) by repealing subsections (2) and (3);
(b) in subsection (4) by striking out "other";
(c) by repealing subsections (5) and (6) and
substituting the following:
(6) The risk margin must be set for a period of 2 years.
6 The following is added after section 5:
Energy price setting plan
5.1(1) An owner must develop a Rate of Last Resort energy price
setting plan that
(a) uses a fair, efficient and openly competitive process, and
(b) provides a reasonable degree of transparency to ensure that
the resulting prices for the supply of electric energy are just,
reasonable and based on market conditions.
(2) The MSA may
(a) provide advice, give guidance or make recommendations to
the owner during the development of the energy price setting
plan, and
(b) participate in the negotiation process for the energy price
setting plan.
(3) The energy price setting plan must set the regulated rate for a
period of 2 years, subject to any adjustments to the regulated rate in
accordance with section 11.3.
MSA determination report
5.2 The MSA must
(a) review an energy price setting plan to determine whether it
complies with the requirements for a fair, efficient and
openly competitive electricity market, and
(b) prepare a determination report on the energy price setting
plan and indicate whether it complies with the requirements
under clause (a).
7 Section 6 is amended
(a) in subsection (1)
(i) in clause (d.1) by striking out "Regulated Rate
Option Stability Act" and substituting "Rate of Last
Resort Stability Act";
(ii) by repealing clause (f) and substituting the
following:
(f) approve an energy price setting plan referred to in
section 3(2)(a) in a manner that ensures the owner
cannot recover any additional costs through the
electric energy charge from a regulated rate
customer once a Rate of Last Resort rate is
finalized.
(b) by adding the following after subsection (1):
(1.1) A regulatory authority must consider only those
applications for a regulated rate tariff that include an MSA
determination report.
(1.2) Notwithstanding subsection (1.1), a regulatory authority is
not obligated to follow any results or recommendations made by
an MSA determination report.
(c) in subsection (3) by striking out "Regulated Rate
Option Stability Act" and substituting "Rate of Last
Resort Stability Act".
8 The following is added after section 6:
One-time cost recovery
6.1(1) An owner is entitled to receive a one-time recovery of
implementation costs, including costs related to billing, system
updates and other non-energy charges associated with the transition
from a monthly regulated rate setting plan to a 2-year fixed regulated
rate setting plan.
(2) In order to receive a recovery of costs under subsection (1), an
owner must apply to its regulatory authority
(a) in a form and manner acceptable to the regulatory authority,
and
(b) within 6 months of the first 2-year term referred to in section
10(1)(a).
9 Section 7 is amended
(a) by repealing subsection (1);
(b) in subsection (2) by striking out "under subsection (1)
only if the new RRO rate" and substituting "only if the
Rate of Last Resort";
(c) by repealing subsections (3) and (4).
10 Sections 10 to 12 are repealed and the following is
substituted:
Duty to set Rate of Last Resort
10(1) An owner must set each Rate of Last Resort for a term of 2
years
(a) for the first 2-year term, beginning on January 1, 2025 and
ending on December 31, 2026, and
(b) for each subsequent 2-year term, beginning on January 1 of
the year following the end of the previous term.
(2) Each Rate of Last Resort must be set in accordance with the
energy price setting plan referred to in section 3(2)(a) and the
calculation referred to in section 11.
Calculation of Rate of Last Resort
11(1) A Rate of Last Resort must be calculated based on
(a) regulated rate customer load forecasts made during the
relevant price-setting period described in subsection (3),
(b) electricity market prices prevailing during the relevant
price-setting period, and
(c) the consumer awareness surcharge collected under section
11.1.
(2) The Rate of Last Resort must not be based on market prices
prevailing before or after a relevant price-setting period.
(3) The price-setting period for a 2-year term begins on a date set by
the owner and approved by its regulatory authority, and ends at least
30 days before the next Rate of Last Resort term takes effect.
(4) Subject to section 11.3(8), the Rate of Last Resort may only be
adjusted by a maximum of 10% after the end of each 2-year term.
(5) The adjustment to a Rate of Last Resort under subsection (4)
must be calculated based on the Rate of Last Resort in effect at the
end of the preceding 2-year term.
Consumer awareness surcharge
11.1(1) Beginning on January 1, 2025, each owner shall collect a
consumer awareness surcharge of 0.1 cents per kilowatt hour during
each 2-year term.
(2) The purpose of the consumer awareness surcharge is to support
initiatives led by the UCA to inform regulated rate customers about
their electricity service options.
(3) Each owner shall, on a monthly basis, remit the total consumer
awareness surcharge collected for the preceding month directly to
the Minister.
Financial performance report
11.2(1) Beginning on January 1, 2025, the MSA shall
(a) assess the financial performance of each owner under the
regulated rate tariff, and
(b) prepare a financial performance report every 6 months, with
the first report to be completed by July 1, 2025.
(2) The financial performance report must include
(a) a detailed evaluation of the owner's financial performance
over the preceding 6-month period,
(b) an assessment of whether the owner's financial performance
falls within acceptable parameters, as set by the MSA under
subsection (3),
(c) a recommendation on whether a rate reopener proceeding
should be initiated under section 11.3, and
(d) any additional observations or recommendations the MSA
considers relevant to maintaining the integrity of the
regulated rate tariff.
(3) The MSA shall establish parameters for what constitutes an
owner's acceptable financial performance in accordance with
subsection (4).
(4) Before establishing the parameters under subsection (3), the
MSA must consult with persons the MSA considers likely to be
directly affected by the parameters.
(5) Each owner must submit any information requested by the MSA
at least one month before the preparation of the financial
performance report.
(6) If the financial performance report shows that the owner's
financial performance falls outside the parameters set by the MSA,
the MSA must notify the regulatory authority.
Rate reopener proceeding
11.3(1) On receiving notification from the MSA under section
11.2(6), the regulatory authority shall, within 30 days,
(a) initiate a rate reopener proceeding, and
(b) provide notice of the proceeding to any interested parties.
(2) Within 30 days of the initiation of the rate reopener proceeding,
the owner must submit to the regulatory authority
(a) any MSA determination reports,
(b) any financial performance reports, and
(c) any other information the owner considers relevant.
(3) In the submission under subsection (2), the owner must either
(a) justify the current regulated rate, or
(b) propose a new regulated rate.
(4) Interested parties notified under subsection (1)(b) have 30 days
from the date of the owner's submission under subsection (2) to
provide comments on the submission.
(5) For the purposes of this section, "interested parties" may include
the UCA, consumer groups or any other persons that the regulatory
authority considers directly affected by a regulated rate adjustment
resulting from the rate reopener proceeding.
(6) The regulatory authority must conclude the rate reopener
proceeding and decide whether the regulated rate requires
adjustment no later than 90 days after the submission of the
information under subsection (2).
(7) If the regulatory authority determines that a regulated rate
adjustment is necessary, the owner must, within 30 days of the
decision, submit
(a) a new energy price setting plan in accordance with section
5.1, or
(b) a regulated rate adjustment directly to the regulatory
authority for approval.
(8) An owner's regulated rate adjustment resulting from a rate
reopener proceeding is not limited by the 10% rate adjustment cap
described in section 11(4).
Duty to provide regulated rates to regulatory authority
12 An owner must submit a regulated rate and its calculations to
the regulatory authority at least 30 days before the start of each
2-year term.
11 Section 14(3) is amended
(a) by repealing clause (b) and substituting the
following:
(b) the regulated rate will be available by the first day of the
calendar month in which the rate is to have effect,
(b) in clause (c) by striking out "at least once in a calendar
month".
12 Section 15 is repealed and the following is substituted:
Billing information
15(1) Every month, an owner shall issue a bill to each of its
regulated rate customers for the use of electricity services.
(2) A bill under subsection (1) must separately include
(a) the charges set out in section 3(4),
(b) the consumption of electric energy for which the charges
under clause (a) are based,
(c) the following statement:
Regulated rate customers are free to purchase
electricity services from a retailer of their choice. For a
list of retailers, visit ucahelps.alberta.ca or call
310-4822 (toll free in Alberta).
(d) any information that is required to be included under the
Utility Commodity Rebate Regulation (AR 158/2022).
(3) The statement under subsection (2)(c) must be
(a) on the main page of the owner's website,
(b) on the first page of the regulated rate customer's bill,
(c) in at least 12-point bold type, and
(d) in a colour that contrasts with the background.
13 The following is added after section 18:
Records and MSA Mandate
Retaining records
18.1 An owner must retain all records pertaining to any action
taken by them under this Regulation for a period of at least 2 years
from the date the record was created.
Submitting records to the MSA
18.2 An owner must prepare and submit any records that the MSA
considers necessary to perform its duties under this Regulation, in a
form and manner and within a period specified by the MSA.
Carrying out MSA mandate
18.3(1) The performance of any duty or the exercise of any
discretion, power or authority by the MSA under this Regulation
does not prevent the MSA from carrying out
(a) any aspect of its mandate under section 39 of the Alberta
Utilities Commission Act, or
(b) any powers, duties or responsibilities established by any
additional mandate provisions that may be established under
regulations made under section 59(1)(a) of that Act.
(2) For greater certainty, the duties and responsibilities assigned to
the MSA under this Regulation fall within the scope of the MSA's
existing mandate under section 39 of the Alberta Utilities
Commission Act.
14 The following is added after section 22:
Information sharing with the UCA
22.1(1) Each owner shall send the contact information of all current
regulated rate customers to the UCA on the first day after every 2
months following the implementation of each 2-year Rate of Last
Resort term, for the purposes under subsection (3).
(2) The contact information under subsection (1) includes the
regulated rate customers' full names, phone numbers, email
addresses and mailing addresses.
(3) The UCA will contact each regulated rate customer in
accordance with the Utilities Consumer Advocate Regulation
(AR 183/2018) for the purposes of
(a) inquiring whether the regulated rate customer is aware that
their electricity services are being provided by a rate of last
resort provider, and
(b) educating the regulated rate customer of the option to receive
electricity services from a retailer of the regulated rate
customer's choice.
15 The following is added after section 23:
Transitional
23.1(1) In this section,
(a) "former regulation" means this Regulation as it read
immediately before the coming into force of this section;
(b) "regulated rate", notwithstanding section 1(i), means a new
RRO rate as defined in the former regulation.
(2) Where an application for a regulated rate tariff under the former
regulation was made before the coming into force of this section but
had not been decided by that time, the application must be
considered and decided as if the former regulation were still in force.
(3) Where an application for a regulated rate tariff is made for a
regulated rate that is to take effect before January 1, 2025, the
application must be considered and decided as if the former
regulation were still in force.
(4) For greater certainty, any regulated rate tariff approved for a
regulated rate that is to take effect before January 1, 2025 continues
to be subject to the terms and conditions approved by the regulatory
authority under the former regulation until December 31, 2024.
(5) Notwithstanding sections 5.1 and 5.2 of this Regulation, any
energy price setting plan developed for a regulated rate that is to take
effect before January 1, 2025 must be developed in accordance with
section 4 of the former regulation.
(6) For greater certainty, section 5.2 of this Regulation does not
apply to an energy price setting plan developed for a regulated rate
that is to take effect before January 1, 2025.
(7) Where a regulatory authority is considering an application to
which subsection (2) or (3) applies, the regulatory authority shall
(a) consider the application in accordance with the criteria set
out in section 6 of the former regulation, and
(b) approve the method to determine regulated rates in
accordance with section 7 of the former regulation.
(8) For any regulated rate that is to take effect before January 1,
2025, the owner must
(a) set the rate in accordance with sections 10, 11 and 12 of the
former regulation,
(b) publish the rate in accordance with section 14 of the former
regulation, and
(c) include on every bill sent to a regulated rate customer the
information set out in section 15 of the former regulation.
(9) All regulated rate tariffs for regulated rates that take effect
before January 1, 2025 shall cease on December 31, 2024.
Expiry
23.2 For the purpose of ensuring that this Regulation is reviewed
for ongoing relevancy and necessity, with the option that it may be
repassed in its present or an amended form following a review, this
Regulation expires on December 31, 2028.
16 This Regulation comes into force on the coming into
force of section 2(6) of the Utilities Affordability Statutes
Amendment Act, 2024.