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Power Rate Hike Pushes Orders for Contracts

  • It took the highest power rates in a decade to get some customers off the couch, with thousands swamping utility retailers with calls and orders for contracts or new floating plans.The regulated rate option for Epcor Utilities customers who do not have a contract passed the 15centsperkilowatt-hour mark Jan. 1, a price higher than retail contracts and much more than floating plans, which dipped to the five-cent range Tuesday."There has been a spike in sales over the past week and we have seen an increase in customers looking at their options this fall," Direct Energy spokeswoman Lisa Frizzell said.At Enmax, Doris Kaufman said December has seen the highest number of contract sales in years.

  • "I think people are getting the message," she said, but added that because of monthly fluctuations in price, "electricity is difficult for people to wrap their heads around it. It is frustrating for consumers."Her advice is to think about the price of bananas at the supermarket."At the store, prices can change from one visit to the next for a variety of reasons, such as season."Electricity works in much the same fashion."With 312,967 residential customers, Epcor reports slightly less than 20 per cent are on contracts offered by third-party retailers. Epcor does not sell contracts, unlike Calgary's Enmax.Across Alberta, the average is 29 per cent. There was little movement to sign contracts in the past year because prices under the regulated rate option remained relatively low.

  • Even so, Nick Clark of Utility Net-work and Partners Inc. in Calgary said the option's default price is an expensive route for most consumers."I think complacency and lack of awareness among the public is the reason for most people not signing up."We are adding people every day with no cost to sign up or leave, and very few people ever leave. In 2011 we were selling (one-and two-year) plans for 6.5 to 6.8 cents, and we sold out," he said. Clark's firm offers services to major industrial users as well as many small retailers and co-ops. It also has its own retail arm, Spot Power.Utilities, such as Epcor and En-max, "go every month to the same wholesalers and generators, and buy power for the next month. But if you are always going to the farm gate with your hat in your hand, you are going to pay a premium," he said.

  • "We buy off the power pool at the actual price."For example, on Tuesday generators were getting $25 per megawatt hour, or 2.5 cents per kWh. Under a floating contract, the consumer would be paying between four and five cents per kWh. Over the past 30 days, the average price paid to generators has been $50.36 per MWh."That's not bad. The generators are selling into the market at a reason-able price. The problem is the RRO (regulated rate option), which we should get rid of for most people."

  • Not so fast, Epcor spokesman Tim LeRiche said."The average RRO during the past three years has been about eight cents per kWh. The RRO may seem high today, but it could be substantially lower in a few months," he said."Epcor believes there is a need in Alberta for an RRO, which protects consumers from wide, hourly fluctuations in the market."He said most of Epcor's profit from selling regulated rate option power is based on consumption - how many kilowatt hours people consume - and not the price of the power. A higher RRO does not mean Epcor is making more money.The typical homeowner uses 600 kWh a month, and the actual price of electricity makes up less than half the final bill.

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