The real cost of Alberta’s Rate of Last Resort

When Alberta transitioned from the Regulated Rate Option (RRO) to the Rate of Last Resort (ROLR) in 2025, the message to consumers was clear: the default rate is a temporary safety net, not a long-term solution.

Now, with the release of the Market Surveillance Administrator’s (MSA) Rate of Last Resort Report: 2025, we have the data to see exactly how this market shift is playing out. Our team has reviewed the latest findings, and the consensus is undeniable: Albertans are leaving the default rate in record numbers, persistent savings exist for those who switch, and those who stay are facing projected rate hikes.

Here is a breakdown of the report’s most critical findings, backed by the MSA’s latest data, and what they mean for your electricity bill.

1. 406K Sites Remain on the RoLR

The transition to the RoLR has successfully nudged consumers to explore the competitive market. Regulated site counts fell more than twice as fast in 2025 as they did in 2024, dropping by 79,700 sites in a single year.

However, there is still work to be done. By the end of 2025, there were still 406,200 sites remaining on the RoLR. While the majority are residential, a massive number of businesses and agricultural operations are still exposed to default rates, including 37,000 commercial and industrial sites and 21,000 farm sites.

To see just how dramatic this shift has been, we can look at the decline in Commission-regulated provider sites across all customer categories over the last three years:

2. Rates Increasing to ~13 ¢/kWh in 2027

If you are waiting on the RoLR hoping for prices to drop, the MSA’s forecasts offer a stark warning. Current and forecasted RoLR energy charges are generally not expected to fall below competitive retail electricity prices.

Because RoLR providers must purchase forward contracts to secure electricity for their customers, the forward market is already indicating that the cost of serving RoLR load in 2027 and 2028 will be higher. The MSA anticipates that RoLR charges will increase from 12.06 ¢/kWh to 12.82 ¢/kWh on January 1, 2027, with rates climbing even higher in the periods after that.

While the MSA’s most recent forecasts indicate the regulatory 10% adjustment collar is not currently expected to bind in the next term, the volatility of historical forecasts suggests that changing market conditions could trigger rate reopener proceedings in future terms.

The MSA forecasts steady increases over the next several terms:

• 2025–2026 Term: 12.06 ¢/kWh (Current)
• 2027–2028 Term: 12.82 ¢/kWh (Projected)
• 2029–2030 Term: 13.64 ¢/kWh (Projected)
• 2031–2032 Term: 13.94 ¢/kWh (Projected)

(Note: While current rates are locked in by two-year RoLR term limits, see Table 13 in the MSA report for a full list of current 2026 provider rates, which range from 9.975 ¢/kWh to 14.025 ¢/kWh).

3. Persistent and Significant Savings for Customers That Switch

The MSA actively tracks the financial benefit of leaving the RoLR, known as the “switching incentive.” The data demonstrates persistent and significant savings for customers who switch off the RoLR to a competitive fixed-rate contract.

On January 1, 2025, an average residential customer could expect to save between $16 and $20 per month by switching. By March 2026, that general savings range had increased to between $20 and $28 per month.

However, the report highlights a significant divide based on the type of home you live in:

While apartment dwellers have a slightly lower financial incentive to switch due to lower overall energy consumption, non-apartment customers are leaving hundreds of dollars on the table every year they remain on the default rate.