Making Sense of Energy

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

By Cameron Mitchell
Solution 105 Consulting Ltd.

“Happy New Year!

Lots of movement in the electricity world, as a couple of coal plants were recently shut down and 2018 carbon pricing is now impacting other coal generating units.  This has led to an uptick in spot market electricity rates, which are now in the 3.6 cent per kWh range.  And forward rates are around 5.8 cents per kWh for the remainder of 2018.  With that in mind, we are recommending a more conservative approach moving forward.  The fixed electricity rates available look attractive.

WE RECOMMEND:

  • ATCOenergy is now offering a $150 WestJet Gift Card when signing up both gas and electricity on a three or five year term. We would recommend their three year fixed electricity rate of 5.89 cents/kWh and the floating gas rate of index plus $0.89/GJ.  $5.00/month admin.  Free termination.

NEXT BEST OPTIONS:

  • 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.
    • Don’t want the risk or fluctuations, here are the best fixed rate options:
      • Ambit Energy Canada has a 1 year rate option at 5.30 cents per kWh. $5.00/month admin.  $75 termination.
      • ATCOenergy has a 5.39 cents/kWh option. Rates stable for 1 year.  $5.00/month admin.  Free termination.
      • Encor by EPCOR has a 5.49 cents/kWh option. Rates stable for 2 years.  $7.00/month admin.  Free termination.
      • Just Energy has spot plus 1.00 cents/kWh, but with a 5.99 cents per kWh cap. Price cap is for a 2 year term.  Termination fee of $100 if cancelled within first year.
    • A few good floating rates options:
      • ENRG Power has spot plus 0.55 cents/kWh. Monthly admin fee of $5.90/month.
      • UTILITYnet has spot plus 0.60 cents/kWh. Monthly admin fee of $5.75/month.
      • ATCOenergy has spot plus 1.00 cents/kWh. But just $5.00/month admin.

AT MY HOUSE

I am currently with ATCOenergy for both electricity and gas – and I’m enjoying their free energy offer for January and February.  Note that this option might just be the best for these two months only – not long term.  I wonder if I can get a WestJet gift card come March?

NATURAL GAS:

For gas, we are not seeing any exciting residential fixed rate offers.  Most offers are higher than $3.50/GJ.  The shorter term forward market is around $2.00/GJ for January and $2.15/GJ for February.  Longer term pricing is 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 January, the DERS rate is $1.911 /GJ.  For February, we are expecting a DERS gas rate around $2.30/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 above, I will be looking to swap over to 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 similar to the offers available – so the fixed offers are pretty decent.

January and February forward pricing suggests index residential rates will come in around 4.5 cents/kWh.  2018 as a whole, is expected to average around 5.8 cents/kWh.  December 2017 averaged about 3 cents/kWh.

ATCOenergy is a good option due to the $150 WestJet promo – we would recommend floating the gas (at index plus $0.89/GJ) and fixing the electricity (at 5.39 cents/kWh for 1 year).  Ambit Energy Canada has a 1 year rate option at 5.30 cents/kWh, but there is an early termination fee of $75.  For longer term stability, Encor by EPCOR has a 5.49 cents/kWh 2 year plan, which is also pretty reasonable.

Another hybrid option is Just Energy who have a spot plus 1.00 cents/kWh floating rate, but with a 5.99 cents per kWh cap.  (Price cap is for a 2 year term.  Termination fee of $100 if cancelled within first year).

If you are still keen to float, generally speaking, the best option is ENRG Power.  They offer spot plus 0.55 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.

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.