How to calculate your electricity costs for your business

As your energy partner, we know that understanding electricity costs helps you make better business decisions. Accurately calculating the cost of electricity allows you to manage expenses, plan your budget, and identify ways to optimize energy use.

In Alberta, the electricity market has undergone major changes with the introduction of the Rate of Last Resort (RoLR) in January 2025, replacing the Regulated Rate Option (RRO). These changes affect how businesses pay for electricity, making it essential to understand your billing components and rate options.

This guide will break down how to calculate your electricity costs, explain Alberta’s current market structure, and provide strategies to help you optimize your energy spending.

Understanding Alberta’s electricity market

The new Rate of Last Resort (RoLR) system includes:

• Fixed rates for two-year terms
• Current RoLR rate: 12¢/kWh
• Price adjustments every two years with a 10% cap on increases
• Over 50 energy providers offering competitive alternatives

Understanding your rate options

You now have three main choices for electricity pricing:

• Rate of Last Resort (RoLR): 12 ¢/kWh
• Fixed-rate contracts: Under 12 ¢/kWh
• Variable-rate contracts: Market-based fluctuating rates

A step-by-step guide to calculating your electricity bill

Here’s how to calculate the cost of electricity for your business:

1. Track your consumption

• Check your latest bill to see how much energy you used during the billing period. You can compare this with previous bills to track changes in your usage.

2. Calculate your energy charge

• Energy Charge = Your Consumption (kWh) × Your Chosen Rate
• Example: If your business consumes 10,000 kWh per month under the (RoLR) rate:
• 10,000 kWh × $0.12 = $1,200

3. Include additional charges

• Delivery charges (transmission and distribution costs)
• Administration fees (fixed costs for account management)
• Local access fees (municipal charges)
• Taxes and regulatory charges

4. Calculate your total cost

Here’s a real-world example of a business using 12,000 kWh per month under the current (RoLR) rate:

Optimizing your energy costs

To reduce your electricity expenses, consider:

1. Reviewing available rate options

• Compare RoLR rates with competitive fixed-rate contracts
• Fixed-rate plans can offer stability and savings
• Assess your business’s risk tolerance and budget needs

2. Managing energy use efficiently

• Track peak usage times and reduce unnecessary consumption
• Identify areas where you can cut back on energy waste
• Upgrade to energy-efficient equipment for long-term savings

How DNE can help

At DNE, we specialize in helping businesses manage and reduce electricity costs. Our services include:

• Comprehensive rate analysis to find the best pricing for your business
• Market monitoring to identify savings opportunities
• Contract negotiation with energy providers for better rates
• Ongoing support to improve energy efficiency
• Regular market updates so you’re always informed

Stay ahead of electricity market changes

With the Alberta electricity market evolving, having a strong energy strategy is important. We help businesses navigate these changes, optimize costs, and secure the best energy solutions. Contact us today to learn more!