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at the website of the Bruderheim REA since March 27, 2002

Deregulation introduction
Propaganda
Analysis of the impact of deregulation
Increased complexity of power bills
Enron tested deregulation ploy in Alberta
 
Transmission lines will cost us
 
Utility industry is in shambles
 
12 years after deregulation in the UK
 

Figuring out the power bill and how much is left of the "Alberta Advantage"

Under the deregulation of the public utilities, imposed on us by Ralph Klein—asked for by no one but a handful of large producers of electrical power—not only did the price of electrical energy almost quadruple over night, from December 31, 2000 to January 1, 2001, but the complexity of the bills we receive increased enormously.

The information shown here relates to the format of the bills we used to receive.  The Alberta government attempted to simplify the power bills we used to receive — all along since the complaints began to pour in about all of the extra charges and the inaccuracies and the glaring errors on the bills that we did receive and that took literally years to get straightened out.

The bills, as you well know, did become simplified.  What we see on our power bills now is a relatively small amount for energy charges (not much bigger than it used to be before deregulation got rammed down our throats) plus a long list of extra charges, some new and innovative ones and some that were formerly included in the rates we used to pay per kWh.

The net result is that now we pay every month about what we used to pay every three months for our power bills.  In addition, the power bill is no longer comprehensible and auditable by normal mortals.  Going by the bills we receive, we have no idea, for example, when rate riders came into effect or ceased, because all rate riders are now lumped into a single figure.

Fewer people now complain about it all.  As usual, and as expected by the politicians who wish to substitute energy taxes for income taxes, most consumers became tired of it all, resigned themselves to energy costs that tripled over night from December 2000 to January 2001, and they quietly and peacefully pay their dues to the "Alberta Advantage" that no longer looks all that advantageous, especially not for people on low and fixed incomes for some of whom the choice is simple.  They either cut back on their eating habits or put warmer clothes on when they are at home.  They no longer can do what they could do both in comfort, eat and heat well.

We now peacefully pay our tithe and more to the deregulation ideology, after being legislated to death by exhaustion.  The reality is now that Albertans who sit right on top of massive energy sources pay by far the highest energy bills in all of Canada.  It really makes it hurt all the more like a knife being twisted in one's gut when politicians and leaders in the energy industry parrot one another and jubilate time and again that deregulation was a great success.

Hitler knew how to make things like that work, how to make the BIG LIE acceptable.  He simply said that if you wish to tell lies, so as to get them accepted as the truth, just tell very big ones, tell them as often as you can, and keep telling them.  That worked then, and, given that propaganda is no longer an art but a science, it works even better now.

At any rate, when we still thought that honesty and accuracy were all that mattered with our power bills, we were trying to come to terms with things so that at least there was a discernible audit trail on our bills.  That is what the following examples tried to address.

A simple bill

Billing Date: Mar-17-2006

EPCOR

Details on current usage - 1 month to Feb-23-2002

Last meter reading on Jan 27, 2002

43,002

Feb-25-2002 Current billed reading

43,922

kWh

Jan-27-2002 Previous billed reading

43,002

kWh

Energy used

920

kWh

EPC Energy charge

6.459

/kWh

*

$59.42

UNC Delivery charge

1.061

/kWh

*

$9.76

Service capacity is 7.5kVA

UNC Operating charge

$19.16

a month

*

$19.16

UNC Other Services

$6.18

a month

*

$6.18

REA Deposit Reserve Account

$2.08

a month

*

$2.08

UNC Load settlement charge

$0.39

a month

*

$0.39

EPC 2001 RRO Shortfall Charge

$23.96

a month**

*

$23.96

EPC Farm Retail Service Charge

$4.52

a month

*

$4.52

UNC Interim 2002 DT Rider

0.694

/kWh

*

$6.39

EPC S & D Access Service Charge

0.153

/kWh

*

$1.41

Federal GST

7%

of taxables

n/a

$9.33

Your Total Electricity Charges

$142.60

Amount to be withdrawn

$142.60

* GST applies

The following lines and all pink-coloured items should be but are not shown on the power bill.

EPC Deferred Energy charge

$7.00

/kWh

$0.00

Balance:

$729.36

Payment

$23.96

a month**

*

$23.96

Balance owing:

$705.40

** The rate is based on 31 months divided into the amount of money owed for power consumed during the year 2001 at a price of 18/kWh, for which we paid only 11/kWh.  Individual rates vary as much as the total amounts of power consumed by individual members vary. 
   What is fixed is the time interval during which the amount racked up during 2001 is being paid back.  It's best to have all finish paying at the same time, just before the next provincial elections come up, to make sure that people feel good about the "cost of power going down".

 

The example shown above is of a simple bill, the one for March 2002, but frequently, when rates change, the bill becomes quite a bit more complex.

The bill we received in February 2002 is such a complex bill.  It reflected the rate changes at the end of 2001.   See the explanations for the February 2002 bill.  We received seven such complex bills since January 2000, every time when there was a rate change.

The notes shown below are repeated in the explanations for the February bill, in addition to a few more notes, because there are a few more problems to figure out.

_________________________
Notes:

  1. In the history of the Bruderheim REA, the power- and power service providers were as follows:

  1. Farm Electric Services — a company that got set up and operated by Calgary Power, especially to look after the work that needed to be done for the Alberta REAs.  Calgary Power produced and distributed the power we consumed in the Bruderheim REA.

  2. TAU, or TransAlta Utilities; which Calgary Power became when it merged with other power companies.  Farm Electric Services came under the jurisdiction of TransAlta Utilities.  Farm Electric Services looked after the meter reading, the accounting and the billing for the members of the Bruderheim REA.

  3. UNC or UtiliCorp Networks Canada, a Canadian subsidiary of an American-owned power service company.  UNC distributes but does not produce the power consumed by members of the Bruderheim REA.

  4. Fortis Alberta, a Canadian company, ownership unknown.  Fortis Alberta distributes but does not produce the power consumed by members of the Bruderheim REA.

  5. EPC, EpCor or Edmonton Power Corporation is currently the producer of the power we consume in the Bruderheim REA.  EpCor does the billing for the power it sells to us and for the costs of the services provided by UNC.   EpCor also looks after contracting out the meter reading.

  6. Last, but not least, there's the Bruderheim REA, or Rural Electrification Association.  The REA owns some of the poles and wires required to get power to your farm.  The REA decides who does the work to maintain and repair its plant.

  1. Details on current usage - 1 month to Jan-23-2002 — Those details may be for a one-month or a three-months interval, depending on whether you elected to receive a power bill every month or every three months.

  2. The billing date may differ for different members.  It is the date on which the bill is due.  If you authorized automatic withdrawal from your bank account, the billing date is the the date on which the money owed will be transferred to EpCor.  Bills must be paid within one month from the billing date, or interest will be charged on the outstanding amount thereafter.

  3. The meter reading date is shown basically as three different dates that are given names at the whim of whoever is the current producer of the bills. 

    1. Last meter reading — is the date on which the meter was last read.  If you happen to catch the meter reader when he or she comes around, it may help to avoid confusion if you jot down on the calendar when that is and what the meter reading is.  It might come in handy when the next bill comes in the mail.
         The last-meter-reading date varies for different customers, as there is no possible way anyone can read all meters on a single day.
         The reading taken on the last-meter-reading date can show up under the heading "current billed reading."

    2. Current billed reading — is the date for which the meter reading (could be an actual reading but is more often estimated) on which the bill has been based. 
         The meter reading is seldom an actual reading.  It is most often calculated or estimated, based on the amount of time that has gone by since the last meter reading and on historical rates of consumption by your service.  Things may go your way, in that the estimate may be too low. 
         However, eventually when the meter is read again, things will catch up with you, and you'll have to pay a fairly and unexpectedly large amount for the last period in the interval between actual readings.  Sometimes that will work in your favour, too, when the amount you'll be charged for the last period in the interval between meter readings is unexpectedly low, because the estimates may have been too high and you overpaid for a few months.  In that case a credit is applied.
         In all of the years I checked my consumption against what I was billed for, nobody came out ahead in the long run.
         Meter-reading costs money.  EpCor hires a contractor to read the meters.   The contractor bids on the job according to how many meters must be read, how much driving must be done to read them, and how many times a year the meters must be read.

    1. Previous billed reading — is simply the date that was called "current billed reading" on the previous power bill.

  4. Energy used — That is the difference between the meter reading shown for the "previous billed reading" and that shown for the "current billed reading".

  5. kWh: kiloWatt-hour

  6. Energy charge: The price of the energy used:

        Number of kiloWatt/hours used times the rate per kWh.

  7. Delivery charge: The price for having the energy delivered:

        Number of kiloWatt/hours used times the delivery rate per kWh.

  8. Operating charge: The price of the overhead of running the power distribution business allocated to an individual member as per the rate that applies for the size of transformer he uses.   Different rates apply, according to the size of transformer installed on the transformer pole in your yard.  I'll have to look them up and will show them here in short order.

  9. Other Services — UNC charges that to each REA member.  It is for the costs of providing insurance, pole testing, brushing, ground testing, and PCB testing of transformers, over a five-year period. The billing collected for 'Other Services' is paid to the REA for their use in doing the actual 'Other Services' work, when required.

  10. REA Deposit Reserve Account: That is a sinking fund to which the members contribute, so that when times come when major repairs are needed for the plant and equipment we own can be paid for.  That is, for example, some of the poles and lines over which the power is being transmitted along the roads, and the lines connecting the transformers in the farm yards to the main lines on the road.  
       Pole testing and replacement have to be done every few years, and the costs of that can range from about $60,000 to $150,000 or more, depending on how many poles are not safe to climb anymore.

  11. Load settlement charge — The power bought in the "deregulated" and "competitive" market is sold at varying rates, depending on what price bids by the producers are accepted at any given time.  One the other hand, the power that is sold to us is paid for at different but fixed rates that should guarantee the providers and distributors a fair return. 
       That involves a reconciliation between the amount of power fed into the system and paid for by the distributors and the amount of power that the distributors carried to their customers.  One of the problems is that some customers pay according to peak consumption during peak hours of consumption.  Others, as most farmers do, pay at a fixed rate per kWh.  Then there are some, such as oil pumps, that don't even have any meters attached to their services to measure what they use.
       The consequence is that methods must be worked out by which the rates at which customers pay reflect accurately what is needed for the power that got bought at widely varying rates.  It's a very complicated process that needs to be worked out in detail now never required before.
       Before deregulation it was generally that the producer was also the retailer.   It was a cradle-to-grave process under common management, a process in which no great accuracy was required with respect to allocating purchasing and operating costs — and visa versa, income collected — to various portions of plant.  It all went into the same bank accounts anyway.  However, now it matters, every player want his share of the loot, and it matters that everybody involved gets his fair cut.
       The process of balancing production and price paid over time with income collected from specific geographic regions is called load settlement. 
       UNC charges every member $0.39/month to pay for the work that is required for that.
       It's only nickels and dimes, but collect enough of them, and before you know it, it all adds up to real money.

  12. 2001 RRO Shortfall Charge — This is the big one.  During 2001 we consumed power that had been contracted for at 18/kWh.  Naturally, deregulating a commodity that had never been deregulated (in a market in which there is essentially no competition), drove the price of power right through the ceiling.  Instead of receiving power at a more advantageous price to consumers, many consumers (e.g: factories and steel plants), had to introduce shift work, so as to be able to take advantage of lower prices during the off-hours of consumption.  Some of them closed shop or moved elsewhere.
       It was a tough choice to make for Ralph Klein, tell the truth and lose votes in the 2001 elections, or fudge the figures.  It was quite a gamble required in catering to the few big producers, but it paid off.  The voters, hooked on TV, peanuts, beer, and on the "Alberta Advantage," never caught on.
          The consumers lost out, but what is wrong with pulling the wool over their eyes?  It always worked before, didn't it?  Why shouldn't it have worked again?  And it did work only too well.  But that is quite all right, because Ralph Klein won the last provincial elections with an overwhelming margin.   That is good, isn't it?  Only, now we must pay!

    The subsidies came off December 31, 2001, and, to boot, we'll be paying for the next 30 months for a good portion of the price of power we consumed in 2001.  For an individual member, that's an amount about equal to the total cost of power consumed during the year 2000.  And that is in addition to higher prices of the costs of power and the services required to bring it to us.
       The subject is covered in greater depth on a different page, but here is just a bit of a summary of what the choices were, to explain why we got served the dish we are now having a tough time cramming down our throats.  However, whether we want it or not, down our throats it must go, all for "The Alberta Advantage."  What advantage?
       The following graph depicts the total shown on the power bill for a given member who uses power at the rate of 1000kWh/month, for a few selected months during the 2001-2005 interval.

Figure 1
truefudge.gif (6112 bytes)

For details of the changes caused by deregulation, refer to the "Analysis of the impact of deregulation".

  1. Farm Retail Service Charge — That is money charged by EpCor for the extra work they must do in issuing their bills to members of the REAs.  The charge includes also the cost of meter reading.  EpCor collects through their bills the moneys owed in connection with UNC's and the REAs' costs and pass the money collected on to those two parties involved in providing power to REA members.

  2. Interim 2002 DT Rider — An Amount granted by the Alberta Government to UNC, to enable UNC to recover the costs of power brought to you for which they had not been charging enough money.  According to UNC, there is:

  • First, a 1.004 cents per kWh charge to recover the deferral account for energy used in the year 2000, when TransAlta/UtiliCorp did not recover the cost of energy when we were still operating under a 'Regulated' system as regards to energy supply.
       This Rider is expected to be in place for two years, or however long it takes to recover the shortfall. Unlike EpCor's Rider, this Rider is based on consumption used now rather than consumption during the year 2001.

    My note:
    Of course the calculation should not be based on 2001 consumption figures, because it applies to the consumption figures using the lowered rates during the year 2000.
       However, it strikes me as being very odd that April 1, 2000, we had a reduction of 1.4 cents per kWh in the price of electrical energy, down from 5.59 cents per kWh to 4.19 cents per kWh, and that now UNC must recover most of the price decrease we received in 2000. 
       However, I know exactly how many kWh I used at the new and lower price in the year 2000 and will make sure that I pay not a cent more than what I should have to pay according to the explanation offered by UNC.
       The amount for me is 8,686kWh*1.004 cents.  That will work out to a total of $87.21 I have to pay back at the rate of 0.00384 cents per kWh used, starting with the February 2002 bill, counting from January 1, 2002.
       According to my average annual consumption of about 10,500kWh, I should be finished paying that within about 26 months.  We'll have to keep an eye on that.
       Of course, there may be more to this than meets the eye.  What puzzles me is why we have to stretch out paying back a debt of $87.21 over such a long interval.   Who dreams these things up?  What are they trying to achieve?  What is their objective?  Is it merely to nickel-and-dime us to death? —WHS

  • Second, there is a 0.31 cents per kWh credit for the Transmission System and this will be in place at least until this fall, at which time a new Regulatory decision may change this. The net result of the Rider, at present, is a 0.694 cents per kWh charge.
       This on top of the regular 1.06 cent per kWh charge for Transmission Access.
       The reason the Transmission portion of the Rider shows up as a UtiliCorp Rider is that we are required to collect/refund transmission costs as part of the Distribution Access charges.

  1. S & D Access Service Charge — An amount of money EpCor charges for feeding power into the network that winds up on your farm.   I don't know why they are getting that, but the government gave it to them anyway.   It appears that the higher return they receive for power they produce and sell is not enough.
       Look, there is a good reason why the farms in the Bruderheim REA didn't get power until 1950.  That is because it was not profitable for the power companies to bring it out to the farms.  It still isn't profitable enough to do it, if there's a lot of regulation.  Basically, given that there is only one company, EpCor, that is willing to provide power to us, the choice we've got is simple: live with what is being done to us, live without power, or move elsewhere.
       Nobody likes that, but that is free enterprise for you.  Deregulation did away with any company's obligation to provide power to us or to provide it at a rate that guarantees it a reasonable rate of return.  If you've got complaints about that, talk or write to your MLA (Ed Stelmach for the Bruderheim REA members), or vote for a party that will do better in looking after your interests and is not so very much in need of your money by any way in which it can get a hold of it.

  2. Deferred Energy charge — That is a debt of 7 cents that was being racked up during the interval from January 1, 2001 to December 2001 for every single kWh used.  It is the difference between the market price per kWh of 18 cents that the power providers should have charged us and the 11 cents per kWh that they were allowed to charge us when Ralph Klein put the price ceiling on the price of power.  The mounting total of that debt the rate at which it will be reduced, and the declining total of that debt are shown in the pink portion at the bottom of the sample bill.
       Don't look for that information on the bill you receive in the mail.   It's not on there.  I suppose that if it is hidden from us we'll not worry about it, as long as we keep paying our $25 a month for the next 30 month to pay back that debt.  We'll be finished paying it just in time for the next provincial elections.

  3. Federal GST — We all know what that is, so why mention it here?  The reason is that sometimes there are items on your bill for which no GST is being charged.  An example of that are the two subsidies you received during last year to compensate you with your tax money for the higher costs of the power that Ralph's Folly rammed down your throat, so you would not see by how much your power bill had increased. 
       The two subsidies were the non-residential "rebate" (3.6/kWh) and the residential "rebate" ($40/month).  Those two rebates are not being paid anymore.  They ended December 31, 2001.  In addition, you have now begun paying back the debt on the power racked up by you during 2001.  That's why your current bills are substantially higher than they were during last year – even though the power rates had already been higher.   The bills will stay that high until July 2004, when you'll be finished paying your debt.
       Then you can feel good that your power bill dropped by $25/month or so, which will most likely put you in the mood to vote for Ralph Klein again to make sure he can crank up the power costs and other forms of taxation by another notch.


Related article:

If you find the explanations offered on this page too difficult to understand, and I can't blame you at all if you do, you can always try the explanation offered by the Alberta Government: Understanding your power bill It is possible but not likely that there you'll find the answers you seek.

__________________
Posted 2002 03 25
Updates:
2002 03 26
2002 03 29 (to fix the width of the table containing the sample bill and to reflect that the explanations for the complex  bill were completed)
2002 04 04 (to add a reference to the explanation by the Alberta Government)
2005 05 07 (added an update on, and a review of, the quality of our power bills)