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 reconcile expected costs with actual costs of operation.
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. In 2020, monthly transmission charges paid by the average residential customer with 600 kWh of consumption ranged from $20.88 (in EPCOR’s service area) to $28.19 (in ATCO’s service area). Transmission charges constitute approximately 17% of a customer’s total bill, on average.
Figure 1. Average monthly transmission charges for residential RRO customers, by service area, 2004 to 2020
The Alberta Utilities Commission regulates distribution rates for Calgary (Enmax) and Edmonton (EPCOR) and for Fortis Alberta and Atco Electric. Distribution rates for Cardston, Ponoka, Red Deer and Lethbridge 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 2020, monthly distribution charges paid by the average residential customer with 600 kWh of consumption ranged from $22.55 (in ENMAX’s service area) to $81.11 (in ATCO’s service area). Distribution charges constitute approximately 33% of a customer’s total bill, on average.
Figure 2. Average monthly distribution charges for residential RRO customers, by service area, 2004 to 2020