Energy delivery charges on your utility bill consist of two main components: transmission and distribution charges. Let’s look at them in further detail.
Transmission Charges
These fees are associated with the cost of transporting electric energy from generating facilities to distribution utility substations. This process involves high-voltage transmission lines that carry electricity over long distances.
Transmission rates in Alberta for electricity are set and regulated by the Alberta Utilities Commission. The transmission charge on your electricity bill depends on your electricity usage.
Over the years, particularly since 2004, Alberta has experienced a rise in transmission charges. This increase is largely due to the expansion of the electricity transmission infrastructure.
Several large transmission projects have been undertaken, which has led to higher costs. These costs are then passed on to consumers.
In 2023, for instance, the average monthly transmission charge for a residential customer using 600 kWh of electricity varied across different service areas. It ranged from $26.18 in FORTIS’ service area to $33.01 in ATCO’s service area. On average, transmission charges make up about 15% of a customer’s total electricity bill.
This variation in charges reflects the ongoing investment in and expansion of the electricity transmission network in Alberta, necessary to meet the growing demand and maintain a reliable power supply across the province.
Understanding these charges can help you better comprehend the components of your electricity bill and the reasons behind the changes in rates over time.
Distribution Charges
After electricity reaches the substations, distribution charges come into play. These cover the cost of moving electric energy through local, lower-voltage lines that deliver electricity directly to customers’ meters.
In Alberta, the distribution rates for electricity vary depending on your location and provider. Here’s a breakdown of how these rates are regulated:
- Major Cities – In Calgary and Edmonton, the Alberta Utilities Commission regulates the distribution rates. ENMAX covers Calgary, while EPCOR is responsible for Edmonton. The Commission also regulates Fortis Alberta and Atco Electric.
- Some Municipalities – In towns like Cardston, Ponoka, Red Deer, and Lethbridge, the local municipal governments and town councils approve the distribution rates.
- Rural Areas – For Rural Electrification Associations, their boards of directors set the distribution rates on behalf of their members.
The cost of distribution varies based on location and how much electricity you use. Generally, customers in rural Alberta face higher distribution charges than those in urban areas. This is due to the lower population density and the greater distances electricity must travel to reach customers in rural regions.
For example, in 2023, the average monthly distribution charge for a residential customer using 600 kWh ranged from $27.47 in ENMAX’s service area to $91.70 in ATCO’s service area.
On average, distribution charges make up about 24% of a customer’s total electricity bill. This variance highlights the impact of location and infrastructure on the cost of delivering electricity to different areas.
In addition to these charges, your bill may also include rate riders on both transmission and distribution charges. Rate riders can cause variations in your average monthly charges from year to year.
They are essentially adjustments used to balance out the expected operational costs with the actual costs incurred by the utility company. This ensures that the company recovers the correct amount for the energy delivery services they provide.
By understanding these components, you can easily comprehend the details of your energy bill.