'Electricity prices aren't expected to move at all': Why Alberta's carbon tax won't hike your power bill

When Alberta's new carbon tax kicks in on Jan. 1, 2017, it will raise the price of gasoline for your car, diesel for your truck, propane for your barbecue and natural gas for your furnace.

But what impact will it have on your electricity bill?

Very little, according to University of Calgary economist Trevor Tombe.

"In short: electricity prices aren't expected to move at all on Jan. 1," he told CBC News.

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That's largely because the emissions of major power producers are already covered by Alberta's existing carbon pricing systemthatapplies only to large emitters.

These emitters will continue under the same system until the end of 2017, according to the Alberta government.

Why Alberta's carbon tax won't hike your power bill

7 years ago

Duration 0:45

What impact will Alberta's new carbon tax have on your electricity bill? Very little, according to those who follow the province's electricity market.

A new pricing system will be implemented in 2018 but, even then, Tombe said it's not clear if that will resultin increased electricity prices because of new, output-basedsubsidies for large emitters that will be introduced at the same time in order to help Alberta companies stay competitive.

"Carbon pricing will raises a firm's costs the output subsidy then lowers costs,"Tombesaid, noting the net effect can be zero, depending on the size of the subsidy.

In Alberta's complex electricity market, Tombe said prices will be determined by the marginal bidder in the power pool, which will be natural gas, not coal. And he said natural gas prices are not expected to rise under the new pricing system some may even fall since the output subsidies will be calibrated to offset the carbon-pricing effect on natural gas costs.

Enmax spokeswoman Doris Kaufmann Woodcock also said customers shouldn't expect their electricity bills to rise on Jan. 1.

"Carbon costs for electricity generation are applied to generators, not retailers," she said in an email.

"Due to Alberta's competitive market structure,generators will initially absorb the costs involved and eventually the wholesale electricity market will adjust for the overall increases."