The price per kilowatt hour (kWh) in Alberta depends on a variety of factors, including the location, the type of type of supply, and amount of electricity consumed by the customer. In this guide we break down the charges that make up the price of a kilowatt hour of electricity in Alberta.
Electricity Cost Breakdown
The price of electricity can be broken down into two main components: the cost of the electricity supply, and the cost of supplying it. Your electricity supply charges are based on how much electricity you have used in a month, whereas your delivery charges include both fixed and variable costs that are intended to cover the costs of building, operating, and maintaining the infrastructure that brings electricity into your home. The charges that make up the cost of a kWh of electricity in Alberta include:
- Electricity supply charge
- Transmission tariff
- Distribution tariff
- Local access fee
- Rate riders
- Administration fee
Average Breakdown of the Cost of a Kilowatt Hour in Alberta
Given the size and relatively small population of the province, the costs of electricity transportation and distribution vary widely throughout the province. Urban consumers therefore tend to pay less per kilowatt hour than rural customers. Residential and small business customers that consume less than 250 000 kWh per year are eligible for the Regulated Rate Option, which is approved by the Alberta Utilities Commission (AUC). They are also able to choose a competitive energy retailer for their electricity supply if they wish. Distribution and transmission rates are regulated by the AUC.
Source: Alberta MSA
Using 2013 figures, the average annual electricity bill in Alberta was about $1476. Divided by annual consumption per household (7200 kWh) this makes an average of 20.5 ¢/kWh, when taking into account the costs of electricity supply, transmission, distribution, riders, etc.
Did you know? The average Alberta residence consumes approximately 600-700 kWh electricity per month, or about 7200 kWh per year
Comparison of Annual Electricity Costs for a Typical RRO Residential Consumer, 2013
Source: Alberta MSA
How do electricity prices in Alberta compare with other provinces?
Click on the cities below to compare monthly electricity bills
Source: Manitoba Hydro, 2014
According to the Independent Power Producers Society Association of Alberta (IPPSA), electricity prices in Alberta are roughly the same as the national average. The cost of electricity varies widely in Canada depending on the provincial energy mix. Provinces that rely primarily on hydropower, such as BC, Manitoba, and Quebec, enjoy much cheaper electricity prices as most of the costs of investment have been already paid off.
How have electricity prices in Alberta evolved over time?
Electricity prices in Alberta have been influenced by market prices since 2001, and have fluctuated with the changes in market conditions. On average, however, prices have been increasing. As electricity prices are determined by demand and supply, this trend can partly be explained by the growing demand for electricity in Alberta. Both the population and economy of Alberta have grown significantly during the past few decades. In the past 20 years, the population of Alberta increased by 43%, and demand for power rose by 84%. Over the next 20 years the Alberta Electric System Operator (AESO) expects demand for power to double. This increased demand for electricity exerts strong upward pressures on prices, particularly given the time it takes to construct new generating capacity.
Other factors also play a role in rising electricity prices. Weather also puts upward (though usually temporary) pressure on electricity prices, with extreme heat or cold creating a spike in demand and sometimes limiting supply (during a storm, for example). As most of Alberta's electricity generation is coal- or gas-fired, the cost of these fuels also directly affect the cost of electricity.
Electricity prices in 2014 were generally lower than those of 2013, though the IPPSA expects prices to increase over the next four years due to the need for investments in transmission and distribution. The wholesale electricity price itself may in fact decrease, with greater generation capacity and linkages with other electricity-generating areas, but the required investments are expected to offset this.