Alberta’s electricity market is different from most of Canada. Prices are not set by a regulator for retail customers. Instead, the underlying price of electricity is formed in a competitive wholesale market that changes hour by hour. That design can be efficient over time, but it also produces volatility — which is why the “variable vs fixed” decision keeps coming back.
This article explains what’s driving the current trend, what has actually changed since the worst price spikes, and how to choose a plan based on risk tolerance rather than guesswork.
How Alberta prices electricity
In Alberta, wholesale electricity prices are set in real time based on supply and demand. The system must balance generation and consumption at every moment. When supply is tight, prices can rise quickly. When supply is abundant, prices can fall.
The wholesale market is operated by the Alberta Electric System Operator (AESO), with regulatory oversight from the Alberta Utilities Commission (AUC). Retail plans (variable and fixed) are built on top of this wholesale reality.
- Variable plans tend to track market conditions (plus retailer costs and fees).
- Fixed plans smooth volatility by locking a rate, usually including a risk premium.
What drove recent price spikes
The sharp bill increases many Albertans experienced in recent years were not caused by one single factor. They were the result of multiple pressures occurring at the same time.
- Higher and more volatile natural gas prices
- Reduced dispatchable baseload supply during the coal phase-out period
- Load growth (population growth and electrification)
- Tight system margins during peak demand events
When these conditions overlap, the market becomes sensitive. Even a short period of stress can drive very high prices for a small number of hours — and variable-rate customers feel that immediately.
What has changed — and what hasn’t
Markets adapt. New supply gets built, forecasting improves, and operations evolve. That matters, because the question today is not “can prices ever spike again?” (they can) but “are we still in the same high-stress regime?”
What has changed
- More renewable generation capacity is now online (wind and solar)
- Fuel markets are generally calmer than the peak-spike period
- Balancing, forecasting, and operational tools have improved
- Extreme scarcity events have been less frequent than during the most volatile months
What has not changed
- Alberta remains a market where prices move with weather, demand, and system conditions
- Peak demand periods still occur
- Transmission constraints can still concentrate risk in specific moments
- Volatility is a feature of the market design, not a temporary glitch
Is variable the right choice right now?
The most honest answer is: it depends on your tolerance for variability, not on your ability to predict the next price spike.
A variable plan is not a promise that prices will stay low. It is a choice to accept short-term swings in exchange for avoiding the “insurance premium” that tends to be built into fixed rates.
Variable tends to make sense if:
- You can absorb month-to-month bill variability without stress
- You prefer transparency over predictability
- You have a longer time horizon and can ride out a bad month
- You are not switching plans in reaction to fear
Fixed tends to make sense if:
- Budget certainty matters more than average price
- A sudden spike would create financial pressure
- You want simplicity and stability, even at a modest premium
- You value insulation from the market’s short-term swings
The part most discussions miss
Fixed rates do not “beat” the market. They manage it.
When a retailer offers a fixed price, they are taking on volatility risk. That risk is usually hedged and priced. In plain terms: fixed rates often include a buffer that protects the retailer (and indirectly protects you) from sudden spikes.
This is why fixed rates tend to climb during high-fear periods. People are not just buying a number — they are buying protection.
What to watch in the trend
If you want a useful way to think about where Alberta rates are heading, focus less on tomorrow’s price and more on the structural drivers that shape the next few years:
- Whether firm (dispatchable) supply keeps pace with demand growth
- How quickly storage and grid flexibility expand
- Natural gas market stability
- Policy stability that supports timely investment
These factors suggest Alberta is unlikely to return to “ultra-cheap and stable” electricity. But they also do not imply permanent crisis pricing. What’s more realistic is a market that settles into a new normal: generally competitive, occasionally sharp.
A quiet conclusion
Variable pricing in Alberta can be a reasonable choice again — not because prices will never spike, but because volatility is now a known feature rather than a surprise.
Variable rewards patience and financial resilience. Fixed rewards predictability and peace of mind. Neither choice is “right” in the abstract. The right choice is the one that matches your household’s tolerance for uncertainty.
Practical takeaway: Don’t choose based on a prediction. Choose based on what happens to your household if you get one very expensive month.
Note: This article is general information only and not financial or legal advice. Plan details vary by provider.