Making Sense of Energy

Residential Energy Rates in Alberta: What to Do? June 2017 Edition

By Cam Mitchell
Solution 105 Consulting Ltd.

“Time to crown a champ!

Yes, the Stanley Cup is about to be awarded… a sure sign that June is here!!  No exciting changes for the short-term view on power.  Unless you think a 6.8 cent per kWh cap on commodity is exciting – or even a change considering that electricity commodity rates are idling around 2 to 3 cents.  (If only the government could shield us against the rise of delivery charges!!).  Getting back on topic, I’m sticking with floating rates at my home.

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
      • Brighter Futures Energy Inc. has a 4.99 cents/kWh option (4.85 cents/kWh for seniors). Rates stable to Dec. 2018.  $6.50/month admin.  Free termination.
    • What about ATCOenergy? I hopped over there with my gas and electricity for Jan 1.  How is it going after five months?

AT MY HOUSE – no change for now:

If you were one of those individuals who follow this update closely, you will note that I made the jump to ATCOenergy starting January 1.  I went there on the promise of free electricity and natural gas in January.  Their floating admin rates are a bit higher (at plus 1.0 cents/kWh and plus $0.89/GJ), but one thing they have going for them is a monthly admin fee of just $3.50/mth/utility when you sign up for both gas and electricity.  [But $7/mth if you just sign one utility up].  So there is a potential monthly admin savings to be had compared to DERS admin of around $7.50/mth and ENRG Power admin of $6.50/mth.  They also have a $50 anniversary credit, if you stay with them for 12 months straight.

Doing the math, my annual costs with ATCOenergy will come in very close to costs with the recommended option of DERS and ENRG Power below.  The math really depends on how much energy you use.  I am very close to break even, and I average about 9,000 kWh and 100 GJ over a year.  If you use less than this, then ATCOenergy will be more attractive (since there lower monthly admin fees and anniversary credit will outweigh the cost of the extra 0.45 cent/kWh and $0.83/GJ fees).  If you use more than me, you may want to go with the recommended options below.

So, after all of that, I’m going to stick with ATCOenergy until something better comes along.  They are no better for me than the other option, but no worse either.

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 $2.65/GJ for June and July.  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 June, the DERS rate is $1.235/GJ.  This super low rate is partially because DERS is giving about $20,000,000 back to its customers from March to June (due to an AUC decision dated Feb 9).  For June, the refund works out to about $0.53/GJ.  On top of this, DERS over-collected about $3,000,000 from customers in May, and so have a balance they are trying to return to customers.  That cuts out a further $1.04/GJ.  Together, those certainly takes a bite out of the $1.01/GJ carbon tax.  For July, we are now expecting a DERS gas rate around $2.70/GJ.

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.  The AUC decision adds a further reason to stay with DERS.

ELECTRICITY:

I am still very 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 the rest of this year, and then around 5 cents/kWh for 2018-2020.

As mentioned above, I have swapped over to ATCOenergy, 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 (4.85 for seniors).  That said, we think the floating rate is the way to go at this time.

June and July 2017 forward pricing suggests index residential rates will come in around 3.0 cents/kWh and 3.5 cents/kWh respectively.  May 2017 averaged about 2.8 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