July 24, 2002 – The Day I Became a Consumer Advocate

David Gray

 

That day I was working for the Alberta Energy and Utilities Board (AEUB) and was not supposed to pick sides between customers and companies. In fact, it was my duty to be absolutely impartial between the two. But one meeting in the Mayerthorpe Legion Hall changed all that.

I had come to the AEUB in the spring of 1998 and had taken to the complicated process of deregulation in electricity. Applying my University of Calgary economics training as well as extensive training in conventional electric utilities, I was one of the analysts tasked with trying to turn deregulation into rate making.

In 2001 the Government of Alberta (GOA) was moving steadily towards market based pricing for electricity. To be honest, the GOA didn’t really have a clue as to how markets were going to set rates in the new market scheme. The policy was broad and vague and full of contentious issues and pitfalls. There were all sorts of unknown risks to the process and in the spring of 2002, most of those risks became reality for customers in the former TransAlta distribution service territory.

Through the end of the 90’s, Alberta’s economy had been growing while additions to the electricity generation fleet had been slowing. Through 1999 and 2000, emergency meetings were held in the Board’s offices to try and manage the risk of blackouts on the system. The critical problem was that all generation companies were waiting for the government’s policies to be finalized. They had been placed in a sort of limbo, where the “deregulated” price for power was really just a twist on the old regulated price and was not sufficient to justify new investment. That was about to change.

My job was to make the consumer groups and the utilities negotiate a rate setting strategy for the Regulated Rate Option, the price that most people (still) pay for power. I was successful in convincing customers to negotiate with EPCOR, the company providing power for the rural customers in the old TransAlta area. I remain sorry for that.

Because the negotiations between the customers and EPCOR went relatively smoothly, they had an agreement in place by the end of 2001 that called for EPCOR to buy contracts in the market for the supply of power to its customers. In contrast, negotiations between customers and ATCO did not reach a conclusion until well into 2002. When EPCOR went to market in early 2002 they were purchasing power at almost 15 cents per kilowatt hour because the market was still short on generation. Many of those contracts had multi-year terms meaning that the rate shock for customers was going to last a while. All through that spring, new plants were being announced by numerous generators that quickly brought the market prices back down, but it was too late for the EPCOR rural customers.

On top of seeing their rates skyrocket from 2 cents to 15 cents per kilowatt hour (capped by the GOA at 11 cents but with the difference deferred and ultimately paid by customers), EPCOR and Aquila, the distribution company, couldn’t get their billing systems to work and play together. The result was a disastrous hodgepodge of inexplicable and obscene bills being delivered to their customers.

MLA George VanderBurg organized a meeting in the Mayerthorpe Legion Hall, including EPCOR and Aquila representatives as well as staff from the department of Energy. I was asked to attend on behalf of the AEUB and report back.

I grew up on the farm and on the drive from Edmonton to Mayerthorpe I could see first hand the effects of the drought that was gripping that region of Alberta. Crops were way behind schedule. The grass and trees along the highway were brown and parched.

When I arrived at the meeting, the Legion was packed with over 500 people. To a man and woman they were angry and confused with electricity bills that had gone from $200/month to $1,200/month in many cases. They did not listen patiently. The RCMP showed up and decided to stay, just in case.

EPCOR and Aquila representatives mostly repeated the mantra that this was GOA policy. The general message was that if your bill has only gone up five times or less, it’s probably right. To give credit, they did bring along many staff to sort through billing issues customer by customer; but the result was only to confirm the obvious, customer bills were painfully high.

As I write this today, I have to wonder if my guilt at having been part of the process that led to those rates played a part in the strong resolve that I took back from that meeting that something needed to be done to better protect consumers. It certainly had me reevaluate some of the neo-classical cow patties that still pervade the electricity sector. Regardless, I still remember the day of the follow up meeting with my superiors as the day my heart left that job and went searching for something more noble.

Over the course of the next two years I worked on a number of cases for electricity and natural gas deregulation. Much greater caution was exercised by the Board in ensuring that rate shocks like that would not occur again. The market had also corrected substantially downward to the extent that one of the new generators went bankrupt.

But when the opportunity arose for me to join the Office of the Utilities Consumer Advocate, I jumped at it. Hell, I pushed, cajoled, begged and pleaded to get the job. Because those people in Mayerthorpe needed better protection and deserved better policy.

They still do.

That’s why I am as passionate today as I was that day about defending the interests of my customers.

Dave

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