Making Sense of Energy

Residential Energy Rates in Alberta: What to Do? April 2018 Edition

By Cameron Mitchell
Solution 105 Consulting Ltd.

“Things starting to warm up??

Not too sure when the warm weather will hit Alberta, but the cool weather might be helping out in the electricity market.  April electricity spot pricing has been relatively soft, considering the generation fleet is now missing a couple more coal plants and (currently) a large gas plant.  Forward rates for April are in 5.9 cent per kWh range and around 6.5 cents per kWh for the remainder of 2018.  With that in mind, we are recommending fixed electricity rates.

WE RECOMMEND:

  • Gas onto Direct Energy REGULATED Services.   This is the default, no retailer rate.
  • Electricity: We think it is time to make a change towards a fixed rate product.  Here are the options we like best:
    • ATCOenergy has a 5.89 cents/kWh option. Rates stable for 3 years.  $5.00/month admin.  Free termination.  They currently have a $100 grocery gift card promotion when signing up gas and electricity.
    • Encor by EPCOR has a 5.79 cents/kWh option. Rates stable for 2 years.  $7.00/month admin.  Free termination.  They currently have a promotion that will waive admin fee for first 6 months.
    • Alberta Cooperative Energy (ACE) has a 1 year rate option at 5.55 cents per kWh. $6.50/month admin.  Free termination.

AT MY HOUSE:

As April electricity rates are now expected to be in the 6 cent per kWh range, I am sticking with my fixed 5.39 cents/kWh electricity rate with ATCOenergy.  For gas, I’m with Direct Energy REGULATED Services.

NATURAL GAS:

For gas, we are not seeing any exciting residential fixed rate offers.  Most offers are higher than $3.00/GJ.  The shorter term forward market is around $1.60/GJ for April and $1.00/GJ for May.  Longer term pricing is well below $2.00/GJ into 2020.  So for gas, we recommend going with Direct Energy REGULATED Services (DERS)… remember “Regulated Service”.  If you aren’t with these guys now, you will automatically go there if you terminate your current gas contract.  Make sure there are no termination fees!  There may also be a small enrollment fee to get on with DERS.

For April, the DERS rate is $1.967 /GJ.  For May, we are expecting a DERS gas rate around $1.00/GJ.  Looking at the longer view, we still recommend DERS.  Index offers from most retailers add around $0.70/GJ or more for fees to the floating rate.  As DERS fees are closer to $0.06/GJ, we recommend residents stay on the default gas rate.

ELECTRICITY:

As noted previously, I am on a fixed rate product.  I am a bit risk averse, and don’t really want big swings on my bills if I can avoid it.  Plus, the forward market is suggesting rates that are slightly higher than the offers available – so the fixed offers are pretty good.

Forward pricing currently suggests index residential rates will come in around 5.9 cents/kWh for April and 4.7 cents/kWh for May.  The rest of 2018 is expected to average around 6.5 cents/kWh.  March 2018 averaged about 4 cents/kWh.

If I were to pick an option today, any of the above noted three options are pretty comparable.  I would probably go with ATCOenergy to take advantage of their $100 gift card offer (when gas is signed up too).  If that is not an option though, I think Encor by EPCOR would be my choice.  I like that they are offering no admin fees ($7 off per month) for the first 6 months.

Just to help put things into perspective, all that we are talking about here is the commodity rates and costs, not the delivery and other regulated charges.  An average house might use around 9,000 kWh and 100 GJ over a year.

COMMERCIAL USERS:

And for those of you who are not residential users, and maybe a bit bigger, give us a call.  We are seeing even better pricing for commercial users so get in touch and we can help.