Powerless to alter rates
Alberta Energy Minister Ken Hughes’s announcement of changes to electricity purchasing rules, as if it were some kind of benefit to consumers, is simply another example of government saying one thing while doing something else.
Yes, it is entirely possible that extending the forward-buying rights of power utilities for four months, instead of the current six weeks, will result in some savings in the cost of power.
But those savings will be so small that very few of us will be able to see the change on our monthly bills. Far more likely, the savings will just disappear into the bottom line of the utilities.
More, if consumers could actually realize a drop in price, I doubt if a whole lot of us could find the appropriate numbers on their statements to prove how many pennies were saved over the period of a month.
The critics are right about Alberta’s foray into deregulation of electricity: the government just doesn’t get it.
Nobody should need an economics degree and maintain a constantly updated spreadsheet program to make the comparisons that will determine if they’re getting a fair deal in Alberta’s so-called free market in power. Buying power is not like going to the grocery store and comparing the cost per hundred grams of the various sizes of canned beans.
You can almost see Hughes throwing back his hands and rolling his eyes when he’s asked why so few Albertans lock their power rates into long-term contracts with suppliers. Why do the majority of Albertans — me included — opt instead for the floating rate?
The answer is simple. We don’t have any data presented in an understandable form that would show how locking in is a good idea for anyone other than the utility. The utilities simply won’t provide it. Stemming from that is the perfectly understandable response of widespread consumer distrust of the utilities.
In our household, we’ve tried the long-term fixed rate option and the floating rate option, with three different providers over the years. In our experience, there is no difference between them. The bills only go up over time.
No matter how diligent you are in unplugging things that are not used, if you switch to more efficient lighting and run around turning things off all day long, there is no noticeable savings in the monthly bill.
You may feel better about your carbon footprint for your effort, but there is no financial reward to a residential customer for conserving power.
Simply put, if everyone in Red Deer was as much of a cheapskate as me, the drop in demand would have absolutely no effect on the cost of supply. And even if it did, you would notice no more money in your pocket at the end of the month for your diligence.
The cost of the power is such a small portion of your monthly bill, you would need to severely crimp your lifestyle for conservation to have a noticeable effect.
Demand — therefore presumably (laughably?) price — is driven by industrial consumers, not by people in their homes who only use their clothes dryers in the middle of the night.
That’s how power deregulation in Alberta has evolved, and neither forward buying by utilities, nor university-level price comparisons of delivery options will save you the price of a cup of coffee per month.
When ranting about free markets and deregulation of power, one must also acknowledge that under Alberta’s system, the total cost is more honestly expressed. It’s more costly, but it is more honest.
In Saskatchewan, for instance, the whole system is owned by SaskPower. The province (that is, the taxpayers) own the generators, the power lines, the power meters and the whole billing system.
Customers there don’t fully know what portion of their bill is due to costs of production, infrastructure, delivery and administration. More than likely, parts of some of these costs are contained in the general tax system. Pension costs for retired SaskPower employees come to mind, as one small example.
Therefore, monthly bills will be lower — consumers are mostly likely paying for some of it elsewhere in the provincial budget.
But we pay through the tax system, too.
The investors in private power generators and the private builders of power lines get significant grants and tax support from taxpayers. That, plus a guaranteed minimum rate of return, with profits built into the power rates, access fees, admin fees and every other confusing thing you see on your bill.
Progressive Conservative ideology says that private industry is always better — at everything. The profit motive always makes products and services more efficient and cheaper for the consumer, than, say, the same services provided in Saskatchewan by the government.
You’ll just never see it on your power bill.
Ken Hughes should stop pretending otherwise — it’s embarrassing.
Greg Neiman is a retired Advocate editor. Follow his blog at readersadvocate.blogspot.ca or email email@example.com.