Making Sense of Energy

Residential Energy Rates in Alberta: What to do? January Edition

By Cameron Mitchell

Solution 105 Consulting Ltd.

“HAPPY 2019!!”

December electricity spot prices settled near 5.3 cents per kWh. January and February are expected to be in the mid 5 cent per kWh range too. For 2019, index electricity rates are expected to come in around 6.0 cents per kWh. Gas remains relatively inexpensive, and is expected to come in under $2/GJ for 2019.

WE RECOMMEND:

  • Bundled Gas and Electricity: ATCOenergy has come out with a “Three for All” offer. The offer is for a three year fixed term, with a fixed gas rate of $3/GJ and a fixed electricity rate of $0.03 per kWh. Early termination penalties are $150 if you terminate in year 1, $100 if you terminate in year 2 and $50 if you terminate in year 3. $5.99/month per meter admin.
  • Gas onto Direct Energy REGULATED Services. DERS. This is the default, no retailer rate.
  • Electricity
    • Here are the best options
      • Direct Energy has a lucky penny promotion. Fixed rate of 6.19 cents per kWh, but January 2019 and June 2019 are just 1 cent per kWh. $12/month admin (ouch!! Could be a bit much for low use residents). Free termination. 
      • ATCOenergy has a 5.89 cents/kWh option. Rates stable for 3 years. $5.99/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.
      • EasyMax by ENMAX Energy has a 5.89 cents/kWh option. Rates stable for 1 year. $7.10/month admin. Free termination.   Electricity:
    • Best floating rate option:
      • Best option is ENRG Power, as their floating rate is spot plus 0.22 cents/kWh (this rate recently dropped from 0.55). Monthly admin fee of $5.90/month.

AT MY HOUSE

I’m sticking with the ATCO “Three for All” offer. Since I use about 9,000 kWh/yr, the 2.8 cent per kWh savings compared to other fixed rate offers, should lead to a savings of about $252 per year. On the gas side, I use about 100 GJ per year, and the fixed rate of $3/GJ is likely about $1.50/GJ more than I might have to pay if I stuck with DERS… but that only leads to an extra cost of $150 per year. So it would appear the Three for All offer would save me about $100 per year, and lock in my rates. If something way better were to come along, I could still terminate by paying $150/$100/$50 (depending when I terminate). I’d recommend this option to others too… But be sure to calculate your expected savings based on how much electricity and gas you use.  

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 $1.50/GJ for January and February. Longer term pricing is still below $2.00/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 January, the DERS rate is $1.515 /GJ. For February, we are expecting a DERS gas rate around $1.30/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 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 very close to the offers available – so the fixed offers are pretty good. 

Forward pricing currently suggests index residential rates will come in around 5.5 cents/kWh for January and February. December 2018 averaged 5.3 cents/kWh.

If I were to pick an electricity only option today, I’d likely move forward with the Direct Energy lucky penny promotion. However, because I’m looking at the ATCOenergy “Three for All” offer, I will not be going that way at this time. 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.