January 27, 2017

Local electricity rate increase

Residential customers can expect to see an increase of approximately $3.24 per month on their
electricity bill starting March 1, 2017 after City Council approved three readings to the Electric Utility
Bylaw last night.

1. Why is my electric bill going up?

The increase comes on the heels of the carbon tax and increased balancing pool costs downloaded by the Province of Alberta. The overall cost increase for a typical residential customer consists of the following:

• Delivery (wires): $0.19/month (includes provincial transmission costs & City distribution)
  This includes costs for using the provincial transmission system as well as charges for
  delivery and services such as building, operating, maintaining, upgrading and replacing
  power lines and facilities; 24 hour emergency response and repair; office operations;
  installing and reading electricity meters; providing consumption and tariff billing information to
  retailers.
• Balancing Pool: $2.70/month (due to Provincial increases)
  The Balancing Pool Allocation on your electricity bill is a charge or credit shared by all Alberta
  electricity consumers as a result of the forecasted surplus or shortfall of the Balancing
  Pool for the year.
  With the introduction of the carbon tax this year, there is less money in the pool, and this
  cost is being passed on to customers by the Province. This is the first time customers will
  see a charge instead of a credit.
• Local Access Fee: $0.35/month (City increase)
  The local access fee is a franchise charge set by The City of Red Deer to access municipal
  land to construct, operate and maintain distribution systems serving City residents. While this
  fee isn’t new, some retailers have started to list it on their bill as “Local Access Fee – Paid to
  the City of Red Deer”.

2. How much is my electric bill going up?

The average residential customer can expect to see an increase of approximately $3.24 per month
on their electricity bill. This includes the 3 per cent increase approved by City Council, which is
comprised of costs that include approximately 0.73 per cent rate increase for distribution and 0.78
per cent increase for consumption, which is determined by The City of Red Deer; as well as an
estimated 1.48 per cent increase for transmission, which is a cost that is set by the Province.

3. What is the Balancing Pool?

The Balancing Pool is an independent agency run by the Government of Alberta as a way to
manage Alberta’s competition in the electric industry. The Balancing Pool returns profits or losses to
consumers on their monthly electricity bills, which has historically resulted in a credit on customers’
bills.

With the introduction of the carbon tax this year, there is less money in the pool, and this cost is
being passed on to customers by the Province. This is the first time customers will see a charge
instead of a credit.

In 2016, the average residential customer’s electricity bill included a credit of approximately $1.95.
Starting March 1, 2017, the average residential customer will now see a charge of approximately 67
cents per month. The charge is based on power usage. This charge is reviewed and adjusted
annually.

More information about the Balancing Pool is available at http://www.balancingpool.ca 

4. Are the rate increases limited to Red Deer customers?

Customers in other municipalities are also seeing increases on their electricity bills as a result of the
carbon tax and increased Balancing Pool costs.

The City must budget for and collect Red Deer customers’ share of the costs of building and
maintaining the provincial transmission grid that delivers electricity to the city. Provincial
transmission costs are established by the Alberta Electric System Operator (AESO) and approved
by the Alberta Utilities Commission (AUC). The City has no jurisdiction over these costs but must
ensure payment to the AESO.

The portion of the bill which The City has control over (monthly distribution tariff charges), are
comparable with other municipalities such as Edmonton, Calgary, Lethbridge, Airdrie and Grand
Prairie.

5. Who can I contact for more information?

Customers with questions about the charges on their electricity bill can visit Understanding Your Electricity Bill and Meter or contact The City of Red Deer at 403-342-8274.

Please note, if you have questions regarding the gas portion of your utility bill, please contact your
retailer directly.

Additional information is also available at http://ucahelps.alberta.ca/.