Want to learn more about the Regulated Rate Option? We've put together these helpful FAQs to better explain regulated electricity rates.

Why does the market price for electricity fluctuate?

Like a lot of things, electricity prices are influenced by supply and demand. Here's an example of how this works: Recently, Alberta has seen an increase in population. With this population increase, there has been an increase in electricity demand. But if demand for power increases, and there are no new power plants built, electricity prices will increase simply because the demand is higher while supply remains the same.

Another example: In Alberta, natural gas-fired generators are often used. Since power prices are also determined by the cost of raw materials used to create electricity, higher natural gas prices may result in higher electricity prices.

What is the Regulated Rate Option for Electricity?

The Regulated Rate Option (RRO) is a regulated electricity rate available to all eligible customers. The Alberta Utilities Commission (AUC) approves the rate calculation. If you have not chosen a competitive electricity retailer – and are eligible – then you're automatically an RRO customer. The RRO rate changes every month.

Who is eligible for the Regulated Rate Option?

Anyone who consumes less than 250,000 kWh per year is eligible. The average household uses approximately 7,600 kWh per year.

How is the Regulated Rate Option determined?

The Regulated Rate Option (RRO), is decided under a predetermined price-setting plan that was approved by the Alberta Energy and Utilities Board (EUB) which is now called the Alberta Utilities Commission (AUC). In 2006, the RRO changed to include an annual increase in the portion of electricity that reflects current monthly market-based prices. Today, 40% of the rate reflects monthly market-based prices. This percentage will increase every year until 2010, when 100% of the rate will be calculated using monthly market-based prices. Meaning, you will likely see an increase in rate volatility every year, due to factors such as weather, the economy, supply and demand and fuel costs.

Were consumers represented in determining the Energy Price Setting Plan?

Yes. Direct Energy Regulated Services negotiated with consumer group representatives to arrive at the energy price setting plan. The negotiations were conducted under the EUB's Negotiated Settlement Guidelines, and an EUB observer attended all meetings.

How will the RRO change over the next 3 years?

Over the next 3 years, the RRO will include an increasingly larger portion of monthly market-based pricing. This rate will be calculated as follows:

July 1, 2007 – 60% long-term / 40% monthly market-based pricing
July 1, 2008 – 40% long-term / 60% monthly market-based pricing
July 1, 2009 – 20% long-term / 80% monthly market-based pricing
July 1, 2010 – 100% monthly market-based pricing

What choices do you have?

You have a choice when it comes to your energy supplier. You can choose to remain on the RRO, or you can select an energy retailer. There are a number of energy retailers in Alberta offering a variety of pricing plans. A list of energy retailers can be found at www.ucahelps.gov.ab.ca or by calling 310-4-UCA.