By: Nick Clark
Background: The Regulated Rate Option (RRO) was intended as a retail price offered by regulated utilities as the supplier of last resort. If customers could not obtain a competitive energy contract, they could always count on the government to look after them and never be without electricity or natural gas. Half of the province has moved off of the RRO and over to competitive contracts, under the concept of “Customer Choice” and in search of innovative products and services offered by competitive providers.
Recent Article: Gary Holden, former CEO of ENMAX recently offered an insightful perspective on Alberta’s energy market. ‘The idea of collecting taxes and redistributing them to renewable energy is obsolete. The idea of a regulated rate option (RRO) interfering with choice and confusing the concept of energy retail will mean Alberta will not be able to keep pace with the efficiency gained in truly liberated markets. True market models don’t need carbon taxes.’
Today: the political wind in Alberta is based on subsidies being spent on non-renewable energy political agenda objectives, and funded out of the Carbon Tax. At the same time, the government is attempting to use its influence to undermined and destroy the competitive market.
The Source of the Problem: The government increased the carbon tax levy and some coal generators cancelled their power purchase agreements (PPAs). They lost the legal argument over the generators right to cancel the agreements and it cost tax payers $1.3 Billion. They knew full well, when coal plants closed, prior to new replacement generation being brought online, the wholesale market would become volatile and the cost of energy would increase. This month, the prices being paid to generators are more than five times higher than the average price paid to generators in 2016. This will dramatically hurt all commercial and industrial consumers.
Calculating the Subsidy: If the real price of the RRO was 8.25 cents/kWh in any particular month, the government is paying the big utilities the differential between 8.25 cents/kWh and 6.8 cents/kWh. For smaller regulated rate providers, the government is giving them an extra 10% to make sure the regulated market provider’s margins are never impacted by the turmoil and volatility in the market that the government themselves caused.
Debunk the Myth: The government caused the volatility in the market by manipulating the generation supply side of the equation and then used the Carbon Tax money to hide the inevitable increase in the cost of energy. This wasn’t what the Carbon Tax was intended for. If the Carbon Tax dollars were being used to de-carbonize the environment, then many would agree that this would be a wise use of our tax dollars. Protecting the profit margins of the larger utilities is not what the tax was ever intended to be used for.
One of the NDP Beliefs: The NDP have always believed that big government can offer a better solution then encouraging competitive retailing in the province. Over the last couple of years, they have systematically attempted to marginalize competition in the marketplace. First, they outlawed sales people, making it illegal to go door to door. Secondly, they used tax dollars in a direct mail advertisement to our customer’s home promoting the benefits of the government’s own RRO retail program. They have tilted the playing field away from competitive market participants towards subsidized regulated rate providers such as ENMAX, EPCOR and Direct Energy.
Tilt: Tilting the competitive playing field is not what governments should be doing. Investor confidence in the province suffers when the government becomes manipulative for altruistic goals. To add insult to injury – some of the same regulated utilities who are receiving the Carbon Tax subsidy exported jobs out of the province to help cut costs and further increase margins. Why would a government turn a blind eye to outsourcing and then use Carbon Tax dollars to subsidize their profit margins? How backwards is this?
Time for a Change: All Energy Marketers within UTILITYnet’s Network in Alberta are offering lower prices than the RRO to consumers. So why is the government ignoring this reality and subsidizing the regulated utilities to try to help them compete in the market? If a regulated retailer cannot compete with the private sector without being subsidized, they should get out of the market.
It was estimated by EDC Associates that if the government would simply encourage consumers to sign up with competitive retailer’s tax payers would save half a billion dollars instead of subsidizing the regulated utilities. Why didn’t they do this? Was the RRO subsidy program more about buying votes?
If it has a white stripe down its back, if it looks like a skunk and it smells like a skunk, regardless of how you dress it up or try to mask the smell, it is still a skunk. And this policy stinks.
Limited Time Offer: For the first 1,000 residential customers who are on the government’s RRO (currently capped at a rate of 6.8 cents which is subsidized by the Carbon Tax), if you want to save some money, we will retail electricity to you for 5.89 cents per kWh – guaranteed for 3 years. No signup fee – No exit fee. Just a lower price, guaranteed until September 2022. All you have to do is present us a copy of your current utility bill from ENMAX, EPCOR or Direct Energy and sign up for our subsidy free RRO Alternative Rate.
Disclosure Statement: The offer to sell electricity below the RRO is not a government rebate program. Spot Power is not receiving any subsidies from the Carbon Tax. The 5.89 cents/kWh price is guaranteed until September 2022, and the contract can be cancelled at anytime with 10 days notice without penalty and no cancellation fees. This is a limited time offer open until May 31, 2019 and to the first 1,000 residential customers who switch off of the Government Regulated Rate Option.
Recent Article: Gary Holden, former CEO of ENMAX recently offered an insightful perspective on Alberta’s energy market. ‘The idea of collecting taxes and redistributing them to renewable energy is obsolete. The idea of a regulated rate option (RRO) interfering with choice and confusing the concept of energy retail will mean Alberta will not be able to keep pace with the efficiency gained in truly liberated markets. True market models don’t need carbon taxes.’
Today: the political wind in Alberta is based on subsidies being spent on non-renewable energy political agenda objectives, and funded out of the Carbon Tax. At the same time, the government is attempting to use its influence to undermined and destroy the competitive market.
- The NDP passed Bill 16 “An Act to Cap Regulated Electricity Rates” in an attempt to mask the true cost of energy from consumers by subsidizing regulated rate utilities.
- Hundreds of millions of dollars are needlessly being spent out of the Carbon Tax fund to financially support the profit margins of regulated rate providers (gifted to firms such as ENMAX, EPCOR, Direct Energy, and others).
- Deceitfully, the cap was marketed by the government as a cap on the cost of electricity – but this is not true. What the government called a cap of 6.8 cents per kWh is a subsidy paid out of the Carbon Tax fund and paid only to regulated rate providers to protect their margins when selling electricity at 6.8 cents in competition with other retailers. This is just masking the problem that the government created in the first place.
The Source of the Problem: The government increased the carbon tax levy and some coal generators cancelled their power purchase agreements (PPAs). They lost the legal argument over the generators right to cancel the agreements and it cost tax payers $1.3 Billion. They knew full well, when coal plants closed, prior to new replacement generation being brought online, the wholesale market would become volatile and the cost of energy would increase. This month, the prices being paid to generators are more than five times higher than the average price paid to generators in 2016. This will dramatically hurt all commercial and industrial consumers.
Calculating the Subsidy: If the real price of the RRO was 8.25 cents/kWh in any particular month, the government is paying the big utilities the differential between 8.25 cents/kWh and 6.8 cents/kWh. For smaller regulated rate providers, the government is giving them an extra 10% to make sure the regulated market provider’s margins are never impacted by the turmoil and volatility in the market that the government themselves caused.
Debunk the Myth: The government caused the volatility in the market by manipulating the generation supply side of the equation and then used the Carbon Tax money to hide the inevitable increase in the cost of energy. This wasn’t what the Carbon Tax was intended for. If the Carbon Tax dollars were being used to de-carbonize the environment, then many would agree that this would be a wise use of our tax dollars. Protecting the profit margins of the larger utilities is not what the tax was ever intended to be used for.
One of the NDP Beliefs: The NDP have always believed that big government can offer a better solution then encouraging competitive retailing in the province. Over the last couple of years, they have systematically attempted to marginalize competition in the marketplace. First, they outlawed sales people, making it illegal to go door to door. Secondly, they used tax dollars in a direct mail advertisement to our customer’s home promoting the benefits of the government’s own RRO retail program. They have tilted the playing field away from competitive market participants towards subsidized regulated rate providers such as ENMAX, EPCOR and Direct Energy.
Tilt: Tilting the competitive playing field is not what governments should be doing. Investor confidence in the province suffers when the government becomes manipulative for altruistic goals. To add insult to injury – some of the same regulated utilities who are receiving the Carbon Tax subsidy exported jobs out of the province to help cut costs and further increase margins. Why would a government turn a blind eye to outsourcing and then use Carbon Tax dollars to subsidize their profit margins? How backwards is this?
Time for a Change: All Energy Marketers within UTILITYnet’s Network in Alberta are offering lower prices than the RRO to consumers. So why is the government ignoring this reality and subsidizing the regulated utilities to try to help them compete in the market? If a regulated retailer cannot compete with the private sector without being subsidized, they should get out of the market.
It was estimated by EDC Associates that if the government would simply encourage consumers to sign up with competitive retailer’s tax payers would save half a billion dollars instead of subsidizing the regulated utilities. Why didn’t they do this? Was the RRO subsidy program more about buying votes?
If it has a white stripe down its back, if it looks like a skunk and it smells like a skunk, regardless of how you dress it up or try to mask the smell, it is still a skunk. And this policy stinks.
Limited Time Offer: For the first 1,000 residential customers who are on the government’s RRO (currently capped at a rate of 6.8 cents which is subsidized by the Carbon Tax), if you want to save some money, we will retail electricity to you for 5.89 cents per kWh – guaranteed for 3 years. No signup fee – No exit fee. Just a lower price, guaranteed until September 2022. All you have to do is present us a copy of your current utility bill from ENMAX, EPCOR or Direct Energy and sign up for our subsidy free RRO Alternative Rate.
Disclosure Statement: The offer to sell electricity below the RRO is not a government rebate program. Spot Power is not receiving any subsidies from the Carbon Tax. The 5.89 cents/kWh price is guaranteed until September 2022, and the contract can be cancelled at anytime with 10 days notice without penalty and no cancellation fees. This is a limited time offer open until May 31, 2019 and to the first 1,000 residential customers who switch off of the Government Regulated Rate Option.