You are already familiar with the "simple" version of your power bill.
Isn't deregulation exciting? But wait until you've got this one figured out.
When we had simple bills, we also had low costs of power. It wasn't really that
great a concern for anyone to "waste" time on knowing the power bill inside and
out. For a few cents either way on a bill involving the grand total of about $60 -
$70, who would be crazy enough to break his head over something that's not that important.
There's a problem with that. A few cents here and there, multiplied by hundreds of
thousands of customers...before you know it we are talking real money, large sums of it!
However, whereas as individuals we had a choice to become involved two years ago, now it's
become a necessity that we do, a matter of survival. With the power bill being in
the range of $150/month, who can neglect to learn what the money is being spent on?
And who knows. They may charge us next for the air we breathe and for
the water we drink. After all, they are taxing us already for the labour we do and
the food we eat. Moreover, we just recently had to go through the effort of
registering our water sources and water requirements.
First comes registration, then regulation and taxation, and, if we wait long
enough, there'll be rationing and perhaps even confiscation. Can't easily confiscate
anything unless it's registered, right?
It's a new and novel way to tax the living daylights out of us, because a good portion of
all of the money we pay goes back to the government — twice, once for the higher
royalties and taxes paid in the production of electrical energy that is made from natural
resources that we all own. The second time is when the producers charge us for the
power we consume, with the governments taking their slice there as well, not the least of
which is that every time the price of power goes up, we have to pay more on GST, so that
Jean Chretien can keep on breaking the election promise he had made many years ago:
"We'll kill the GST."
That is a little bit like having us grow potatoes in our very own backyard
and then having the government take for nothing a good portion of them after we dug them
out — justifying all of that by simply stating that the world price of potatoes has
gone up.
Unlike the price of electrical power that went up by a factor of 3.74, in the space of a
single night between New Years' Eve and New Year 2001, the price or cost of natural
resources used to produce the power we consume didn't increase at all. It stayed the
same. It's the power producer's net profits that increased by factors many times
that. All of that of course means a windfall for the provincial government:
royalties and producer taxes. The government just gave back a fraction of that to
the people that foot the bills, the taxpayers
It used to be that the Public Utilities Board lived up to its mandate to ensure that we,
the people, didn't get ripped off. Now things are different. We are now being
charged for electrical energy at whatever price the producers manage to get set up.
Deregulation has given us a powerful monopoly that is largely out from under the control
of the government. And we foot the bills.
Well, let's find out how much of the money we pay goes to which party.
** 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 that is shown above is of the February bill.
It reflects the rate changes at the end of 2001. Seven times since January
1, 2000, we received a complex bill like that.
See also the explanations for the more simple March 2002 bill.
That more simple version applies whenever there are no rate changes, or if no new
types of cost charges are made, or if the distribution of the ownership of the power
system doesn't change, or if there are no government subsidies to be received that we pay
to ourselves from our tax money, etc..
Most of the notes shown below are repeated from the explanations for the simple version of
the power bills, but there are additional notes, because there are few more aspects to
figure out.
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.
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.
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.
EPC, EpCor or Edmonton Power Corporation is
currently the producer/seller 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.
Last, but not least, there's also 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.
The REA does have operating costs. There is
a secretary, meeting and travel allowances for the directors, etc.. The operating costs
are itemized on the annual balance sheet.
Details on current usage - 1 month to Jan-23-2002
— Those details may be for a one-month or a three-month interval, depending on
whether you elected to receive a power bill every month or every three months.
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.
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.
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."
Actual meter reading — is the reading that was
reported by the meter reader for the date he came to your yard to read the meter.
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. On a more complex bill such as this one, when rates change,
there are two calculated meter reading intervals and consumption periods. The overall
billing interval runs from the 24th of the previous month to the 23rd of the following
month.
If any rates change, then charges for two different periods in that interval
must be calculated for the two different rates that apply. The first interval runs
from the 24th of the previous month to the end of that month. That could be for 5,
6, 7 or 8 days. The second interval for which the new rate applies is always 23
days.
Based on that, two allocation factors are calculated. One for the first
period of the billing interval and one for the second. Depending on the length of
the first of the two periods in the billing interval, the factors represent the following
ratios:
Length of
1st period
Ratios
5 Days
1/28*5
:
1/28*23
6 Days
1/29*6
:
1/29*23
7 Days
1/30*7
:
1/30*23
8 Days
1/31*8
:
1/31*23
That is all very confusing, and it is confusing even to the people that
happen to produce the bills at any given time, because they apply varying methods for
figuring it all out. You'll find discrepancies between what you think should be on a
bill for a given month and what actually is on it.
There is a discrepancy even on the actual February bill. It appears
that although the billing period should be 31 days, as both December and January have 31
days, the bill was calculated for a 30-day interval. Moreover, if you wanted to make
sure that that you have a common base for comparison, you would have to be right there
when the meter is being read. Unfortunately, you may not be home or don't notice
when the meter reader comes around.
It may happen that the actual meter reading is said to have been taken but
wasn't. What that will cause then is that the subsequent estimates of your
consumption and what you'll be billed for are possibly quite wide off the mark. That
will fall into place again when the next actual meter reading is truly made and accounted
for.
If it's any consolation, it all comes out correctly in the long run.
The only time you really have to worry is when you either commence or terminate a
service. Then it is important that you be there when the meter reading is
determined.
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 estimates may have been too low.
However, 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.
Previous billed reading — is simply the date that
was called "current billed reading" on the previous power bill.
Number of kiloWatt-hours used times the rate per kWh.
Delivery charge: The price for having the energy
delivered:
Number of kiloWatt-hours used times the delivery rate per kWh.
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.
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.
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.
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.
Alberta Government residential rebate — that is
a monthly 'rebate' given to home owners out of the tax money that they paid, to hide the
increase in the cost of power that happened after deregulation. The rebate was in
effect from January 1, 2001 to December 31, 2001.
Alberta Government non-residential rebate —
that is a rebate provided out of our tax money that was given to us for each kWh consumed,
to hide the increase in the cost of power that happened after deregulation. The
rebate was in effect from January 1, 2001 to December 31, 2001.
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 the
"Alberta Advantage," TV, peanuts, beer, 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.
1999 - 2001 Adjustment Rider — I don't
exactly know what this is for. If I was told, I forgot, but what it means is that
UNC were not happy with the rate of return they had on the cost of bringing power to us,
demonstrated to the government that they deserved to be able to recover a little bit to
make up for the shortfall, and were granted permission to apply a small additional charge
to give them what they felt they deserved. It doesn't involve a very large amount of
money for individual members, but if you multiply the amount by the total number of kWh
they deliver to all of their customers in Alberta, it soon adds up to a big sum of money.
That particular rate rider was in effect from Jul-01-2001 to Dec31-2001.
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.
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.
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.
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.
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 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 23
Updates:
2002 03 25 (to correct format and some of the wording)
2002 03 30 (to provide an example of a complex bill and
the associated explanations)
2002 04 04 (to add a reference to the explanation by the
Alberta Government)
