Alberta consumer power rates to be capped for four years

Alberta's NDP government plans to cap consumer power rates at a maximum of 6.8 cents per kilowatt hour for four years, starting June 1, 2017.

"Alberta's energy-only electricity market is broken," Premier Rachel Notley said at a news conference in Edmonton on Tuesday. "It will not bring in the kind of investment that will be needed to power Alberta's future."

The moveis the government's first step in moving Alberta away from the deregulated power market that was implemented in the 1990s. More announcements are expected this week.

Currently, consumers who are not on contracts pay a fluctuating rate based on market prices.

The government decided on the rate based on the number forecastby private operators five years from now.

The current average electricity price is 3.8 cents per kilowatt hour.

The price ceiling will apply to people with a regulated rate option. If the RRO is below 6.8 cents, they will still pay the lower rate.

Energy Minister Marg McCuaig-Boyd will lead a consultation with consumers and power companies starting in December on ways to reach that cap.

Don MacIntrye, the Wildrose critic for electricity and renewables, said the government is laying out a larger strategy piece by piece as part of an underlying agenda.

"As I back up and take a look at the puzzle pieces that are on table, things that we do know now, it is very clear to me that they are going to completely eliminate the deregulated system we currently have," he said.

MacIntyresaid under a deregulated system, power companies fund the construction of infrastructure through the rates they charge from consumers. If the system is regulated, the government takes on the costs of construction, which ultimately costs the taxpayer, he argued.

Progressive Conservative energy critic Rick Fraser said the price cap shows the government isn't confident the province will have enough electricity when it shuts down coal-fired power plants and tries to replace them with natural gas and renewable energy sources.

Like MacIntyre, Fraser said people will end up paying more through their taxes.

"Ratepayers are also taxpayers," he said. "This only amounts to the government putting money into one pocket and taking it out of the other."

Fraser said the deregulated system gave Albertans reliable power at an affordable price.