What Changes to the RRO Cap Means for Albertans
In October of 2018, Burst Customers were sent a two–part article which outlined concerns about Regulated Rate Option (RRO) providers such as Direct Energy who were being subsidized despite having divorced itself from Canadian investment. In 2018 alone, RRO providers were subsidized for any electricity rate above 6.8 cents/kWh…
… to the tune of over $70M in carbon tax dollars. Over the life of the capping legislation, it was predicted that Alberta taxpayers would pay over $700M in subsidies to large energy providers – some of whom do not even have a corporate presence in Canada.
Cause for Applause
The RRO cap and subsidy program came on the heels of the Alberta government’s 2016 decision to transition from an energy-only market to a capacity market where electricity was concerned. The change carried with it the potential for steep increases and general market price volatility and in order to mitigate risk, the subsidy program was put in place.
To be clear, the NDP implemented a subsidy program which pulled tax income from every Alberta taxpayer and only subsidized RRO providers. This meant that margins were guaranteed for Regulated Rate providers who already made up 50%-80% of the market share while variable rate providers were made ineligible for the same.
July 2019 saw industry pressure soar in favour of cancelling the move to a capacity market. Industry leaders were heard, and the capacity market implementation was put to rest. What does this mean? It means an end to the subsidy program and artificial pricing!
Levelling the Playing Field
Abandonment of the RRO cap subsidy means that after fall 2019, Alberta’s tax money will no longer go to funding RRO providers of which the total cost to taxpayers was set to run in excess of $388M over the course of the program! This is a big win for Alberta taxpayers as well as independent energy retailers like Burst! While this change does not mean any forthcoming changes to Burst Energy’s pricing strategy, it does make us more competitive in the Alberta energy market. Burst Energy’s pricing structure will remain at a rate of wholesale price plus 1 cent/kWh.
Your Support Matters
We would like to extend a heartfelt thank you to each and every one of our clients and their families for giving independent utility providers like us the chance to show that we can offer great value without the contracts, additional fees and outsourcing of customer service outside of Canada so often seen in larger energy providers like Direct Energy. Alberta is on the precipice of more economic change, no doubt, and uncertainty is the theme of so much of our dialogue right now. We hope that you will continue to recommend Burst Energy to the people in your life who deserve to benefit from an independent Alberta-based approach to their utility needs. True consumer choice carries more weight without artificial pricing programs, and we will continue to demonstrate that you’ve made the right choice by choosing to partner with Burst Energy!
Your Burst Energy Partners