What is a Rate Rider?

Hilary

By Hilary

Updated on
min reading

A rate rider is a temporary credit or charge that is added to your monthly bill on behalf of the electricity or gas distributor. A rate rider collects or refunds the difference between actual and estimated costs for delivering energy, and is approved by the Alberta Utilities Commission (AUC).

Summary:

What is a Rate Rider?

Electricity and gas distribution companies use rate riders to adjust any differences between the actual cost and the approved rate for providing service. As electricity and gas distribution and transmission are regulated, utility companies must apply to the AUC to approve their rates. However, these rates are often based on anticipated costs, and sometimes the actual cost of providing service may be higher or lower than what was anticipated. As electricity and gas distribution and transmission companies are required to charge rates based on a "cost of service" approach, rate riders are a means of ensuring that utility costs are accurate.

Who Charges Rate Riders?

Rate riders can be charged by electricity distribution and transmission companies, such as ATCO Electric, ENMAX Power Corp, EPCOR Distribution & Transmission, and FortisAlberta. Natural gas distribution and transportation companies (AltaGas Utilities, ATCO Gas) are also allowed to use rate riders. Regulated rate providers of electricity are not allowed to charge rate riders, as the risk of a difference between actual and estimated costs is already factored into the rate. As natural gas regulated rates are supposed to pass on the cost of gas to the consumer without a markup, regulated rate providers are allowed to use rate riders.

Different Types of Rate Riders

ATCO Electric Rate Riders

Rider A: (Municipal Assessment Rider) This rate rider applies to customers in municipalities where the local authority charges a property tax. It consists of a tax component and a franchise fee component. It is calculated with the following formula:

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Rider B: (Balancing Pool Adjustment) This is a refund from the Alberta Electric Systems Operator (AESO). As of January 2015 it was approved at 0.5642 ¢/kWh

Rider G: (Temporary Adjustment) This rate rider takes into account any difference between real and estimated costs that are not already covered by other rate riders

Rider J: (Interim Adjustment) This rider applies to all electric service throughout the territory served by the Company when a charge or refund is approved by the AUC.

Rider S: (SAS Deferral) This is a variable (¢/kWh) rate rider that allows for adjustments in the price for electricity transmission (specifically concerning AESO-related transmission access charges). This is the same type of rate rider as FortisAlberta's QTAR, EPCOR's Rider K, ATCO Electric's Rider S, and ENMAX's Quarterly AESO DTS Deferral Account Rider

ENMAX Rate Riders

Balancing Pool Rider: this is a refund rider to flow through an amount that was transferred to the AESO from the Balancing Pool. It is a variable (per kWh) rider.

Quarterly AESO DTS Deferral Account Rider: this is the same as FortisAlberta's QTAR, EPCOR's Rider K, and ATCO Electric's Rider S. It is a rider that allows for adjustments in AESO-related transmission access costs, and is adjusted four times a year.

EPCOR Rate Riders

Rider K: (Transmission Deferral Rider) the same as FortisAlberta's QTAR and ATCO Electric's Rider S, this rate rider adjusts the price of electricity transmission regarding transmission access charges and related services provided by the AESO).

Rider LAF: (Local Access Fees) this refers to the local access fee that is charged by the City of Edmonton. It is not regulated by the Alberta Utilities Commission. Find out more about local access fees in Alberta.

FortisAlberta Rate Riders

Quarterly Transmission Adjustment Rider (QTAR): this rate rider adjusts the current costs of transmission and estimates costs over the next quarter. It is calculated as a variable rate ($/kWh) based on the transmission component of the Total Distribution Tariff, and is adjusted four times a year (January 1, April 1, July 1, and October 1).

Base Transmission Adjustment Rider: this is a credit for 2015 that is related to FortisAlberta-AESO charges from 2013.

Distribution Adjustment Rider (DAR): this rate rider recovers all distribution-related costs approved by the AUC and is allocated to all FortisAlberta customers

A-1 Municipal Assessment Rider: this rider takes into account property taxes charged by local municipalities to FortisAlberta.

ATCO Gas Distribution & Transmission Rate Riders

Rider L: (Load Balancing Deferral Account Rider): this rider recovers differences between actual and estimated costs of distributing natural gas

Rider T: (Transmission Service Charge): this rider takes into account any differences between predicted and real costs of transporting natural gas from production sites to ATCO Gas's distribution systems

Rider W: (Weather Deferral Account Rider) this rate rider accounts for the effects of temperature fluctuations on billing to customers. Temperature affects demand for natural gas, which in turn affects ATCO Gas revenues. ATCO Gas North customers currently receive a $0.138/GJ credit thanks to Rider W.

AltaGas

Rate Rider D: (Gas Cost Recovery Rate) this rate rider takes into account the difference between estimated and actual costs of purchasing gas. As of February 2015 it was approved as $2.757/GJ

Rate Rider G: (Third Party Transportation Cost) this rider recovers the difference between actual and estimated costs of natural gas transmission by a third party. As of February 2015 it was set at $0.205/GJ