Newsflash: Deregulation does nothing except help the energy suppliers.  Consumers are generally out of luck and almost always get the short end of the stick.

energyderegulationThe Conservatives in Alberta have deregulated the power distribution system.  Has the market pushed down prices? NO.  Alberta energy prices are some of the highest in the country.  I am not sure how many times this has been said, then patently ignored by the alberta tories.   Deregulation hurts consumers.

The Edmonton Journal occasionally squeaks its disapprobation at the most ludicrous government policy.  For once they got it right…read the whole article below the fold.  I’d link the article itself, but the Journal insists on some digital PDF nonsense.

Former chief consumer advocate
speaks out

Energy contracts shopped doorto-door in Alberta are a “ripoff” because consumers are being charged too much for electricity and natural gas, and have to spend hundreds of dollars to get out of them, a former official with the Utilities Consumer Advocate says.

David Gray, who last month stepped down from his post as the agency’s executive director, said Monday only 30 per cent of the province’s one million retail electricity consumers have switched to contracts.

“The biggest number of complaints we had at the Utilities Consumer Advocate were from people pressured into a contract at their door … and realizing after they got their bill what happened to them. Instead of saving money, their bills went up considerably, and if they wanted to cancel their contracts, they faced enormous penalties.”

It is like opting for a stable, fiveyear fixed mortgage over a six-month or one-year variable rate, he said.

Liberal MLA Hugh MacDonald said all Alberta consumers are paying too much for electricity and natural gas.

He said with natural gas prices below $4 a gigajoule and much of Alberta’s electricity market hinging on natural gas pricing, people should be getting bargain prices.

There’s no reason for the regulated rate or contract prices to be eight to 12 cents when the spot price for electricity Monday was under three cents a kilowatt hour, he said.

“The market that the government designed for electricity doesn’t work. It may work for marketers and generators, but it doesn’t work for consumers. It’s a completely flawed system.”

MacDonald said the government promised that deregulation would bring lower prices and more competition, but after nearly a decade, consumers have yet to see a break in prices.

“They should phone Ed Stelmach and ask him why deregulation is not serving the interests of consumers.”

The government’s appointed agency watchdog says it isn’t concerned about the wide variation in price between the wholesale price and the regulated rate option.

Martin Merritt, who heads the office of Alberta’s Market Surveillance Administrator, said the regulated rate is set by utilities using a formula that has been agreed to by various parties, including the Utilities Consumer Advocate, and approved by the Alberta Utilities Commission.

“It’s really not the Market Surveillance Administrator’s job to get involved in the middle of agreements between consenting adults.”

But energy economist Andre Plourde said there are a lot of reasons for the difference in spot price and regulated rate, but “how big these differences should be is another question.”

Alberta Energy officials said the ministry is reviewing deregulation, but there’s a logical reason why the wholesale price is so much lower than the price consumers pay.

Spokesman Bob McManus said the wholesale price represents the price of electricity 24 hours a day, seven days a week, so it includes times when usage is low — which is the majority of the time — and times when there is peak demand and prices are highest — and that’s when consumers are using electricity the most. Enmax spokeswoman Doris Kaufmann said the regulated rate has not yet caught up to the economic situation, and it is likely to go down in the future.

Epcor’s Mike McBeath said the regulated rate is made up of 20 per cent of the purchases made six months previously and 80 per cent of the purchases made 45 days prior to the start of the month. The rate also includes an administrative fee for the utility.

“We have a formula that’s approved by the Alberta Utilities Commission and we follow it and we don’t have any discretion on that,” he said.