Why do transmission and distribution fees make up most of my energy bill? Why do I pay huge delivery charges even when I live in an energy-efficient home or own a solar PV system? What do transmission and distribution fees pay for?
Well, let's think of it this way: When you order an item online and need it delivered to your home, you pay shipping fees. So, in this case, to have your electricity and gas delivered right to your "doorstep" and stay connected to the grid, you need to pay the delivery charges.
Transmission and distribution fees pay for the cost of installing, operating, and maintaining Alberta's grid infrastructure that's needed to deliver energy to your home. For electricity, this infrastructure includes poles, wires and transformers, and for natural gas, infrastructure includes pipes and compressor stations.
You are paying for the maintenance and development of our grid to ensure it is working for you and every Albertan 24 hours a day and keeping the lights on throughout our province. Did you know that Alberta has more than 26,000 km of electricity transmission lines and 12,000 km of natural gas pipelines bringing power to over four million people? With that much power demand, we need to ensure our grid is reliable and resilient.
Delivery company rates are charged by distribution companies and regulated by the Alberta Utilities Commission (AUC), an independent agency associated with Alberta Energy. The AUC holds rate hearings to ensure you receive safe and reliable services at a reasonable cost. However, rural electrification associations (REAs), municipally owned utilities and natural gas co-ops are not regulated by the AUC.
Regardless of which energy provider you're with, your distribution company and the delivery portion of your electricity bill or natural gas bill will stay the same from one retailer to another.
Transmission charges in Alberta have doubled over the last 10 years due to the expansion of grid infrastructure and large transmission projects. As a result, transmission charges now make up approximately 17% of your total electricity bill.
Distribution charges vary according to location and are higher for customers in rural Alberta than for those in urban areas because of the low population density and longer distances between customer sites. This is why a customer in ENMAX’s service area pays less than a customer in ATCO’s service area. On average, distribution charges make up approximately 33% of a customer’s total electricity bill.
You may have noticed a “Rate Rider” credit or charge on your bill. These rate riders approved by the Alberta Utilities Commission (AUC) enable distribution companies to recover operational costs that are not included in their monthly approved rates. These are some examples:
ATCO Gas’ delivery charge is made up of fixed and variable portions. The fixed delivery charge covers the cost of building, operating and maintaining their distribution system. The variable charge also covers the cost of maintaining the system but is calculated based on the amount of natural gas you consume.
From 2013 – 2022, ATCO Gas North’s delivery service rates increased by 90% and ATCO Gas South’s delivery service rates increased by 85% for residential customers.
Canada and over 120 other countries have committed to net zero emissions by 2050.
Canada’s commitment to net zero will increase electricity demand (e.g., EV adoption) and require more grid infrastructure. As we continue to decarbonize and build more solar and wind farms, more high-voltage transmission lines and better connections will need to be built throughout our communities.
Since Direct Energy is the only major retailer that isn’t a distributor and does not have control over the transmission and distribution fees being charged to our customers, we are constantly advocating on our customers' behalf to ensure those fees are priced fairly.
If you would like to voice your opinion about these delivery charges, we recommend reaching out to the Utilities Consumer Advocate (UCA) with your questions or concerns:
Phone: 310-4822 (In Alberta)
Phone: 780-644-5130 (Outside Alberta)
Hours of operation: Monday-Friday 8:15am - 4:30pm