The Regulated Rate Option, sometimes called the “RRO” or “default option” is a holdover from the process of deregulation. Before deregulation (ca. 1995), one company would own the generating plant (that made the power) and the wires between the generating plant and your house, and would also send you the bill, i.e. they were your “retailer”.
Deregulation aimed to introduce competition into both the generating and retailing sides. However, they weren’t sure how fast competition would evolve on the retailing side, and so they created a government sanctioned price that the old company was required as a “backup” rate consumers could use.
Since then, competition has developed on the retailing side (such as yours truly), but the legislation requiring it has never been revoked, and so it remains.
In terms of the actual mechanics of the rate, it is set monthly, as a month-ahead hedge, with a pre-determined profit included, and approved by the provincial government.
In practice, it mostly anticipates the movement of the floating electricity price, but is faster to jump and much slower to come back down.
My personal option is that you’re better to do with our floating rate, as over the longer term it continues to be cheaper than the Regulated Rate Option.