Making Sense of Energy

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

By Cameron Mitchell
Solution 105 Consulting Ltd.

“Sunshine at last!”

It was a long cold winter, but May seems to have ushered in some warmer weather at last. April electricity spot pricing came in very soft, considering the generation fleet that was missing. Forward rates for May are in 4.0 cent per kWh range and around 6.0 cents per kWh for the remainder of 2018.

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.
  • 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 sticking with my fixed 5.39 cents/kWh electricity rate with ATCOenergy. I might be able to do a bit better in May and June by floating electricity, but likely not too much better. Plus, I’d likely jump back onto a higher fixed rate if I were to leave now. For gas, I’m with Direct Energy REGULATED Services. That is the best 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 $0.50/GJ for May and $1.15/GJ for June. Longer term pricing has moved upwards a bit, but is still 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 May, the DERS rate is $0.989 /GJ. For June, we are expecting a DERS gas rate around $1.20/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 4.0 cents/kWh for May and 4.3 cents/kWh for June. The rest of 2018 is expected to average around 6.0 cents/kWh. April 2018 averaged about 4.9 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 a floating rate with ENRG Power. At least for one month, then see how the forward market changes over the next 30 days.

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.