Making Sense of Energy

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

By Cameron Mitchell
Solution 105 Consulting Ltd.

“HOT TIMES!”

July electricity spot prices settled near 7.3 cents per kWh. August is expected to be in the 9 cent per kWh range and the remainder of 2018 is around 7 cents per kWh. Time to move to a fixed rate for power! Not much change for gas – it remains cheap, at well under $2/GJ.

WE RECOMMEND:

  • Gas onto Direct Energy REGULATED Services. DERS. This is the default, no retailer rate.
  • Electricity:
    • Here are the best options:
      • ATCOenergy has a 5.89 cents/kWh option. Rates stable for 3 years. $5.00/month admin. Free termination.
      • Encor by EPCOR has a 5.89 cents/kWh option. Rates stable for 2 years. $7.00/month admin. Free termination.
      • Spot Power has a 5.79 cents/kWh option. Rates stable for 1 year. $5.90/month admin. Free termination.
      • EasyMax by ENMAX Energy has a 5.89 cents/kWh option. Rates stable for 1 year. $7.10/month admin. Free termination.
    • Best floating rate option:
      • Best option is ENRG Power, as their floating rate is spot plus 0.55 cents/kWh. Monthly admin fee of $5.90/month

AT MY HOUSE

I am not planning to move from my current plans at this time. I am sticking with my fixed 5.39 cents/kWh electricity rate with ATCOenergy. For gas, I’m with Direct Energy REGULATED Services. That is the best gas option both short and long term at present.

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 $1.40/GJ for August and September. Longer term pricing has moved upwards a bit, but is still below $2.00/GJ into 2022. 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 August, the DERS rate is $1.160 /GJ. For September, we are expecting a DERS gas rate around $1.60/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 9 cents/kWh for August and 7 cents/kWh for September. The remainder of 2018 is expected to average around 7 cents/kWh. July 2018 averaged about 7.3 cents/kWh.

If I were to pick an option today, I’d likely move forward with the three year ATCOenergy option – especially with September being free. However, this is only if I didn’t already have a better contract in place.

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.

Want to receive these updates via email? Subscribe to our mailing list!