Winter power bills do not spark joy, but questions about variable rates

Residents of St. Paul and the surrounding area are raising the alarm about the impact of high electricity prices on their families following a winter cold snap that saw both usage and prices increase.

Pamela Warner and her husband bought their first home together in June 2020. It’s the first winter they’ve had where they are paying for the utilities for a whole house as compared to an apartment.

“So some of it is definitely that we use more power, we’re paying for the full cost of laundry now. This is the first winter where we’ve both plugged in our vehicles because at the apartment we only had the one spot to plug in,” said Warner.

“What’s really shocking to me is the difference between what you use and what you pay,” said Warner, noting close to two thirds of her bill is “Distributor Charges” with no transparency on how they are calculated.

Warner and her husband get their electricity through Direct Energy, which is one of two regulated retailers serving the St. Paul area according to Utilities Consumer Advocate.

According to Stacey Schorr, who heads Government and Public Engagement Canada for Direct Energy, higher energy costs during the winter are a regular seasonal trend that happens every year.

“It’s expected that consumption increases in the winter, but particularly during a colder than normal period such as Albertans have experienced in the last few weeks,” said Schorr in an e-mailed response.

She said Direct Energy does try to prepare their customers for the winter increase by providing tips to reduce energy consumption and making a budget billing plan available so “potential increased cost during winter months could be distributed throughout the year.”

“We work closely with Alberta Works and refer them customers who may need support with their invoices. We also offer payment arrangements for qualifying customers,” said Schorr.

A bill insert which was included with Direct Energy’s December bills notes “Distributor charges can be up to 60 per cent of your total bill in the winter. These rates are calculated by the distributor and are the same regardless of the plan you are on or the retailer you are with.”

Distribution charges more variable than suggested

But a review of several months’ worth of electricity bills submitted by various people in St. Paul and the surrounding areas shows the distributor charges are not fixed from month to month. There are transmission charges, distribution charges, rate riders, and local access fees which all vary, and there is no explanation on the bills for how those charges are determined.

The electricity distributor for the St. Paul area is ATCO Electric. The company signed a 10 year agreement with the Town of St. Paul in 2013 which gives it a monopoly on the distribution and also allows the company to have utility infrastructure on municipal lands.

In exchange, the town gets a percentage of the billings, itemized on the bill as “Local Access Fee paid to St. Paul.”

According to Town of St. Paul CAO Kim Heyman, seven per cent of the distribution charges get paid to the Town of St. Paul. She said the money goes into general revenues and is used to fund things like fixing potholes and other infrastructure like the water and sewer lines, as well as other services provided by the Town.

“It gets well used, that’s for certain,” said Heyman.

“I should note as well, that seven per cent is the minimum set out in the Franchise Agreement. We can request a greater percentage but we never have,” she said. According to Heyman, the Town is entitled to request up to 20 per cent of the distribution charges for the municipal coffers.

The agreement with ATCO is due to be renewed in 2023.

A spokesperson for ATCO said being the distributor for the area means they own the high voltage power lines which transport the electricity from where it is produced to the transformer and then onto a customer’s home or business.

In an e-mail, the spokesperson said they can speak to the general difference in usage, but not the total impact that has on the bill because the financial impact is dependent on the retailer you purchase your electricity from.

“Generally, there are fluctuations with a customers’ energy usage during temperature changes. We have found the changes to be approximately 5 kWhs per one-degree Celsius change in weather,” said the ATCO spokesperson.

According to the company, there was an all-time record for electricity system demand on Feb. 9 as well as several unplanned power plant outages in February reducing the available supply.

The company noted they had submitted a request to the Alberta Utilities Commission in December to defer “compulsory distribution rate increases” in order to provide rate relief to customers during the COVID-19 pandemic.

A price schedule is published each year by ATCO, which gives some insight into how they are calculated.

According to that price schedule, the transmission charge is usage-based, while the distribution charge is a combination of a set daily rate and usage. Rate riders are “temporary credits or charges approved by the Alberta Utilities Commission to adjust for over or under collection of approved costs,” and are also calculated based on usage.

Both ATCO and Direct Energy have pages on their websites dedicated to reducing electricity consumption, but for consumers like Warner who already do everything listed it’s still frustrating.

“Even our three-year-old son knows to turn the lights off when we’re leaving a room. Unless we start living by candlelight, there’s not much more we can do to reduce our consumption,” said Warner.

One thing which is available through some providers which Warner thought might help, is a time of use service where electricity costs more during the peak hours and less during off-peak.

ATCO does have a price schedule for time of use residential service but it requires an advanced metering system to be installed in the home and is only available by request. Not all electricity retailers offer the service.

“It would be good though because then for things like laundry, you could flip loads before going to bed for the night and it would be a little bit inconvenient, but you’d also pay less for the electricity to do it. You’d get something for it,” said Warner. According to the ATCO website, in a typical home washing and drying clothes is the source of 24 per cent of the energy used.

“It is what it is. At the end of the day, you just roll over and take it because you don’t have a choice. You have to have electricity,” said Warner.

Residential solar panels more feasible than you think

But not everyone is rolling over.

After extensive research into the costs of electricity, his family’s consumption habits, and the rules and regulations surrounding power generation Nathan Taylor installed solar panels on his house five months ago.

“I was not going to put solar panels on my house only for the environmental costs, I wanted to prove that I could save money, or do it cheaper in the long run. Because that’s what myself and other consumers are going to make decisions on,” said Taylor.

He said reading the price schedule published by ATCO helped him to understand the cost of electricity from the grid better because he was able to calculate what his actual cost per kilowatt hour was instead of basing his calculations on the costs from the retailer.

“That understanding changed my thinking and changed the numbers to realize it is actually more feasible to do things like LED lighting and solar panels. If transmission and distribution charges were solely fixed, then there would be no reason to do it,” said Taylor.

He said because it’s winter right now, he estimates his solar panels are only producing about 10 per cent of his power each month.

“But as soon as we get to spring and summer and we have long summer days, I’m going to be massively overproducing electricity. You need to look at a solar system not on a month-to-month number, but on a year-long calculation,” said Taylor.

He said the system he installed is actually smaller than what he would have liked, but the way the regulations are written you can only produce as much power as you will use in a given year. That limit is frustrating, said Taylor, because what he’d really like is to get his electricity bill down to zero.

“I’m not looking to produce electricity like a factory or like a power plant where I’m making a profit on electricity, that’s not my goal. I would like to have provided enough solar energy to pay for the transmission and distribution and get a bill down to zero,” said Taylor.

In theory, Taylor said he could do that if his system included batteries and allowed him to store extra power from his solar panels so he didn’t have to pull from the main grid at night. But the cost of the batteries to store power in is prohibitive, so instead, he uses the grid as a battery and buys the power back when he needs it.

“When I produce power in the summertime and I put it into the grid, and then I pull it back later and draw it into my house to supply at night. But I have to pay those distribution charges because I’m using the power line,” said Taylor.

In addition to the capital cost of the batteries, which according to Taylor need to be replaced every 10 years, there’s also the issue of storage space – he just doesn’t have room for them.

“You have to calculate it as an opportunity cost. So I can look at how much power I produced from my solar panels this month and I never sold into the grid. All I can calculate then is, what would I have paid if I had bought electricity from the grid,” said Taylor. In February, he saved about a dollar a day.