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Understanding Alberta’s Rate of Last Resort (RoLR): Your guide to the 2025 electricity changes

16 December 2024

Alberta’s electricity market stands at a pivotal turning point. On January 1, 2025, the province introduced the Rate of Last Resort (RoLR), replacing the long-standing Regulated Rate Option (RRO).

This transformation represents more than just a change in terminology—it’s a fundamental shift in how businesses access and pay for their electricity. While the RoLR is marketed as a stable alternative, it introduces new uncertainties that could lead to higher costs and less flexibility for consumers.

Understanding these changes is essential for business owners and energy managers to make informed decisions about their organization’s energy future. Let’s explore what the RoLR means for your business and how you can navigate this transition to ensure the most cost-effective energy strategy.

Your new energy landscape

The Rate of Last Resort (RoLR) may seem like a fallback option in Alberta’s evolving energy market, but it comes with significant limitations. Unlike the Regulated Rate Option (RRO), which adjusts monthly based on market conditions, the RoLR is a fixed rate set for two-year periods—offering minimal flexibility and responsiveness to market changes for those that are concerned about prices going down and a relatively high price with a short term for most businesses that are concerned about prices going up.

At the end of each term, RoLR rates can increase by up to 10%, creating the risk of steadily rising costs over time.

Understanding your new energy landscape

An additional feature, not widely discussed, compounds this issue: the rate can be reopened and adjusted before the two-year term is complete. This means that even the “fixed rate” structure isn’t guaranteed if the regulator deems adjustments necessary. And let’s be honest—such changes are far more likely to result in increases rather than decreases, further exposing consumers to rising costs.

Additionally, the Utilities Consumer Advocate (UCA) will provide a “free” 90-day checkup to remind you of your rate options and encourage you to explore competitive alternatives. There’s no penalty for leaving the RoLR at any time, making it clear that you’re encouraged to consider better options outside of this default rate.

 

Consider these factors:

  • Locked rates with limited flexibility
  • Potential for rate adjustments, even mid-term, through a rate reopening mechanism
  • Rates could potentially increase by up to 10% every two years.
  • Less competitive pricing compared to market alternatives

Who’s making this journey?

You’re not alone in this transition. The change affects:

Your fellow business owners (29% of commercial customers)

Local farmers (40% of farm customers)

Residential neighbors (26% of households)

If these groups remain on the RoLR, each faces unique risks, including higher-than-expected costs or lost opportunities for better rates in the competitive market. Understanding these changes is important for making informed decisions.

Your path forward

As a business owner or manager navigating Alberta’s evolving electricity landscape, your journey toward optimal energy management begins with thoroughly evaluating your current position, including a detailed analysis of existing energy costs, consumption patterns, and future growth projections.

By carefully examining the RoLR rates alongside competitive market offerings, you can develop a comprehensive long-term energy strategy that considers your bottom line and risk tolerance while ensuring price stability for your operations.

The transition doesn’t have to be overwhelming – our energy management expertise at DNE allows us to provide personalized guidance through this change, offering in-depth analysis of your specific business impacts, detailed energy usage assessment, and tailored solutions that align perfectly with your organizational objectives.

We’ll work alongside you to ensure a smooth transition that maximizes your energy efficiency while minimizing costs in this new regulatory environment.

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review your current plan with DNE

Time-sensitive considerations

Now is the ideal time to start planning your energy strategy. Whether you’re currently on the default rate or considering your options, taking action now can help you secure the most advantageous position for your business. Don’t leave your organization exposed to unexpected rate increases or missed opportunities in the competitive market.

Don’t let these changes catch you unprepared. Our energy experts at DNE are here to help you understand these changes and find the best path forward for your business. Contact us for a no-obligation consultation to:

  • Review your current energy situation
  • Understand how the RoLR will affect your business
  • Explore alternative options that might better suit your needs
  • Develop a strategic energy plan for 2025 and beyond

 

The shift to the Rate of Last Resort represents more than just a change in pricing structure—it’s an opportunity to reassess and optimize your energy strategy. Let us help you turn this transition into an advantage for your business.

Reach out to our team today to start your journey toward energy certainty. Together, we can ensure your business is well-positioned for the upcoming changes while maintaining focus on what matters most: your business’s success.

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