How retail rates are set

Rates charged by utility retailers include the commodity rates and administration charges on your bill. Albertans have the choice to receive service from a regulated retailer, where retail rates are approved by the AUC, or sign a contract with a competitive retailer, agreeing to unregulated retail rates.

• Administration charges recover the costs incurred by the retailer to operate a call centre and provide customer service, manage the billing information provided to the retailer by the distribution company and issue bills to customers based on that information. Retailers apply to the AUC for approval of administration charges, also known as non-energy rates.

• Commodity rates are the charges for the actual electricity or natural gas used in the billing period.

Electricity commodity rates

Regulated electricity retailers apply to the AUC periodically for approval of energy price-setting plans. These plans set out how the retailer will procure energy from the wholesale market and combine energy costs with risk compensation, profit margin and other costs into the monthly electricity rate billed to customers on the regulated rate option (RRO). Every month regulated retailers file an application with the AUC for approval of the monthly electricity rate which needs to be in compliance with the approved energy price-setting plan.

Competitive retailers also purchase energy from the market for customers, but the energy rate offered is not determined through an AUC review.

Natural gas commodity rates

Regulated gas retailers purchase natural gas from the wholesale market for their customers. The monthly gas prices are regulated by the AUC​, and reflect market conditions.

Regulated gas retailers establish their monthly cost of gas rate by forecasting both the consumption for the upcoming month and the market price using monthly and daily indices. During the course of the month, commodity costs may vary from the forecast due to changes in expected weather and/or market prices. The cost of gas is reconciled between what customers are charged for the cost of gas and the actual market costs. Any surpluses or deficits are placed in an account, this amount is included when determining the cost of gas for the next month.

The AUC has established a framework for regulated retailers to file monthly gas rates, based solely on market factors, with the small rate of return.

Competitive retailers also purchase natural gas from the market for their customers but the natural gas rate offered is not determined through an AUC review.