Regulated Rates (RRO) vs. Competitive Rates: Which is better?

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What is RRO - Understanding the EnergyTariffs Available in the Market.

The RRO (Regulated Rates Option) is the default rate for customers who do not sign a contract with any competitive energy provider in Alberta, and it is set by the Alberta Utility Commission (AUC), an independent body responsible for ensuring that RRO customers are reasonably charged for their energy and that energy suppliers are also fairly compensated. About 31% of energy customers in the province are currently on this rate.

The AUC reviews and adjusts the RRO rates on a monthly basis, which means that RRO customers may experience fluctuations in their rates from month to month. The RRO is only available to small businesses and residential customers who consume less than 250,000 kWh of energy or 2,500 GJ of natural gas per year. Some RRO customers may not be aware that they are on this tariff.

On the other hand, Competitive Energy Rates are options available to energy customers in Alberta who choose to receive their energy supply from private, government-approved energy retailers rather than the default Regulated Rate Option (RRO). These retailers offer various tariffs, including Fixed and Variable Rates, which allow customers to choose the rate that best meets their needs.

When customers choose fixed rates, they are guaranteed the same energy rate for the duration of their contracts. It is important to note that these rates only apply to energy usage and do not include other fees or charges. Customers who choose a competitive energy rates have the opportunity to shop around and compare different tariffs and rates to find the best deal.

Regulated or Competitive Rates, which is better?

The answer is simple, it all depends on the prevailing market condition and as with every commodity, it’s all a matter of demand and supply. The Regulated Rates (RRO) are cheaper when supply is abundant and more expensive when supply is limited. Therefore, those on regulated rates tend to benefit when energy is cheap but pay more when it’s scarce.

On the other hand, customers who choose competitive retail rates, such as a fixed rates, pay the same rate for the duration of their contract, regardless of changes in the market. While this can provide stability and predictability in energy costs, it also means that customers who fixed their rates during a high-price period may continue to pay the same rate even if energy prices subsequently fall. This is one of the key arguments against choosing a fixed rate, as it means that customers may not always be paying the lowest available rates for their energy.

The charts below show the historical comparison between the regulated and average competitive rates for Electricity and Natural Gas in Alberta.