Making Sense of Energy

Residential Energy Rates in Alberta: What to Do? December 2016 Edition

Residential Energy Rates in Alberta: What to Do? 

December 2016 Edition

By Cam Mitchell
Solution 105 Consulting Ltd.

“Winter is here!

Seems like it’s time to cozy up by the fireplace.  Man, it’s cold.  Thankfully for energy users, the energy markets continue to be pretty soft.  The low rates are expected to continue for a while yet.  Below I’ve tried to highlight the best residential options available.

WE RECOMMEND

  • Gas onto Direct Energy REGULATED Services.   This is the default, no retailer rate.
  • Electricity:
    • Floating rates are too good to pass up
      • Best option is ENRG Power, as their floating rate is spot plus 0.55 cents/kWh. Monthly admin fee of $6.50/month.
      • Next best is Brighter Futures Energy Inc. at spot plus 0.60 cents/kWh. Monthly admin fee of $6.50/month.
    • Don’t want the risk or fluctuations
    • What about ATCOenergy free energy in January? It’s an option for those who don’t mind hopping around.  Not the best long-term option though.

NATURAL GAS:

natural-gas-september_thumb_thumb_thumbFor gas, we are still not seeing many decent residential offers.  Most offers are higher than $3.50/GJ.  The shorter term forward market has jumped a bit, and is around $3.25/GJ for December and January.  However, longer term pricing is below $3.00/GJ into 2022.  So for gas, we recommend staying on the 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 December, the DERS rate is $2.579/GJ.  As December spot rates to date have moved upwards significantly, we expect the January DERS rate to jump significantly.  We think we might see a short term bump to around $4/GJ for January and maybe even February, before coming back to $3/GJ range.

For someone who doesn’t mind the hassle of jumping from one retailer to another – it may make sense to move temporarily to ATCOenergy.  They are offering free electricity and natural gas in January.  Their floating rates are plus 1.0 cents per kWh and plus $0.89/GJ.  So longer term, these rates are not as good, but there will be savings to be had in January.

If you are like me, you might use around 20 GJ and 900 kWh in January.  Assuming a DERS rate of around $4/GJ and an index rate of 3 cents per kWh, the savings would be $60 for gas and $27 for power.  This is similar to earlier ATCOenergy introductory offers that saw payments to users of up to $100.  Again, for those who don’t mind spending a bit of extra time, this offer has legs – especially on the gas side.

Just because I watch the market so closely, and I think it will be a good experience for me to see how ATCOenergy bills, I will be making the switch on January 1.  This may only be a one or two month experiment for me, and we will see if it ends up being worth the hassle.

Looking at the longer view, we still recommend DERS.  Index offers from most retailers add around $0.75/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:

outdoor-lightsI am still keen to continue the floating market ride at this point.   Alberta’s spot market rates have averaged below 3 cents/kWh over the last 12 months and the forward market is suggesting rates under 4 cents/kWh for some time yet.

As mentioned above, I will look to swap to ATCOenergy for a month or two, but generally speaking, the best longer-term option is ENRG Power.  They offer spot plus 0.55 cents/kWh.

If you still are looking for a fixed rate, Brighter Futures Energy Inc. has an offer at 4.99 cents/kWh.  That said, we think the floating rate is the way to go at this time.

December 2016 forward pricing suggests index residential rates will come in around 3.9 cents/kWh.  November 2016 averaged about 2.5 cents/kWh.

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.

FOR COMMERCIAL USERS:

legislative-groundsFor 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.