Making Sense of Energy

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

By Cameron Mitchell
Solution 105 Consulting Ltd.

“Fall is Gone!

Fall lasted all of one month.  Winter seems to have settled in just as the Halloween goblins tucked into bed.  The Alberta energy market continues to stay cool, but is expected to heat up a bit in January.  Not much movement on retail price options since last month, so I’m still sticking with floating rates at my home for now.  That said, some of the fixed electricity rates are looking more attractive as we get closer to January.

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 UTILITYnet at spot plus 0.60 cents/kWh. Monthly admin fee of $5.95/month.
    • Don’t want the risk or fluctuations, here are the best options:
      • Peace Power has a 1 year rate option at 4.95 cents per kWh. $5.75/month admin.  Free 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.
    • What about ATCOenergy? I hopped over there with my gas and electricity on Jan 1.  How is it going after ten 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.  [They’ve now changed this to $5/mth/meter].  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 breaking 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 their 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.  All the above being said, I might look to make a jump to a fixed rate on the electricity side in the New Year.  Stay tuned!

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 under $2.60/GJ for November and December.  Longer term pricing is well below $3.00/GJ into 2022.  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 November, the DERS rate is $1.825 /GJ.  For December, we are now expecting a DERS gas rate around $2.90/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:

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 floating option is ENRG Power.  They offer spot plus 0.55 cents/kWh.  If you still are looking for a fixed rate, Peace Power has a 1 year rate option at 4.95 cents per kWh and ATCOenergy is offering 5.39 cents/kWh.  As we get closer to January, the stability these fixed rate options provide start to look more attractive.

November and December 2017 forward pricing suggests index residential rates will come in around 3.5 cents/kWh for both months.  October 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 and we can help.