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The energy charge on your bill is determined by the wholesale market
The energy charge on your bill is determined by the open and competitive wholesale energy-only electricity market.
The energy charge, or commodity charge, on is determined through the Energy Trading System where participants enter energy supply offers and prices are market set based on the demand. A utility retailer purchases energy from the wholesale market and then sells the energy to its customers. The charge on your utility bill is based on your consumption for the billing period, which is calculated on a per kilowatt-hour (kWh) basis for electricity and on a per gigajoule (GJ) basis for natural gas. This charge does not include any costs or services required to deliver the energy to your home or business.
In Alberta, investor-owned companies invest in, build and operate power plants using wind, solar, coal, natural gas, hydro and other methods to generate electricity. The investors decide what type of generation to build, where and when to build electricity generation. The AUC does not make the decision on the financial viability of power plants but must test whether the location meets the public interest. These companies offer the electricity to the wholesale market. The price of electricity is influenced by market conditions.
Likewise, natural gas producers are investor-owned businesses that extract and prepare the product for use, also selling the commodity to the wholesale market.
Generally, the supply of the commodity available in relation to the demand for the commodity determines the market price. By using market forces, Albertans can expect to receive energy charges at the best available prices.
More information about the electricity market in Alberta is available on the Alberta Electric System Operator’s website.
More information about the natural gas market in Alberta is available on the Government of Alberta’s website.