Making Sense of Energy

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

Residential Energy Rates in Alberta: What to Do? 

November 2016 Edition

By Cam Mitchell
Solution 105 Consulting Ltd.

“Trick or Treat!

For electricity users, the energy markets have been very tasty over 2016.  The low rates are expected to continue for a while yet.  I’m not making any changes at my home, but 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. Looks like monthly admin fee has been increased from $6.10 to $6.50/month.
      • Next best is Brighter Futures Energy Inc. at spot plus 0.7 cents/kWh. Monthly admin fee of $6.50/month.
    • Don’t want the risk or fluctuations
      • Bow Valley Power has a 5.09 cents/kWh option. Rates stable to Dec. 2018.  $6.50/month admin.  Free termination.

NATURAL GAS

stove

For gas, we are still not seeing many decent residential offers.  Most offers are higher than $3.50/GJ, and the forward gas market is under $3.00/GJ for the balance of 2016 and into 2020.  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 November, the DERS rate is $3.303/GJ.  Note that this regulated rate is around $0.27/GJ higher than what DERS would normally request, because DERS collected a fair bit less than they spent in October.  This $0.27/GJ extra attempts to put things back in line.

We have seen index offers from many retailers, but most 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.  As we head into the winter months, and residential natural gas increases, the case to stay with DERS becomes even stronger.

ELECTRICITY

electric-poles-384623_640I 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.  I’m going to stick with Bow Valley Power for now.   Looking at the floating rates available, ENRG Power offers spot plus 0.55 cents/kWh.  Compared to my floating with Bow Valley at 0.8 cents, they are likely cheaper by $1/month.  However, I’m not sure the small hassle to change is worth it at this point – especially if I decide to flop back over to a fixed rate at some point.

If you still are looking for a fixed rate, Bow Valley Power has an offer at 5.09 cents/kWh.  That said, we think the floating rate is the way to go at this time.

November 2016 forward pricing suggests index residential rates will come in around 3.5 cents/kWh.  October 2016 averaged about 3.5 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.

COMMERCIAL USERS:

EdmontonAnd 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 give us a call and we can help.