Making Sense of Energy

Residential Energy Rates in Alberta: What to do? September 2019 Edition

By Cameron Mitchell
Solution 105 Consulting Ltd.

“BACK TO SCHOOL”

Summer is winding down, and the kids are back to work! The summer break saw soft electricity and gas prices. Electricity prices came in around 5 cents per kWh in July and August. September and October are expected to be in the 6 cent per kWh range. For the remainder of 2019, index electricity rates are expected to come in around 6.5 cents per kWh. Gas continues to be cheap and is expected to come in around $1.50/GJ for the remainder of 2019. Also, with the carbon tax ending, your gas bills should see a drop of about $1.50/GJ starting in June. Nothing too exciting with respect to new retailers’ offers below.

WE RECOMMEND:

  • Gas Only: get onto Direct Energy REGULATED Services. DERS. This is the default, no retailer rate.
  • Electricity Only:
    • Here are the best fixed rate options:
      • ATCOenergy has a 5.99 cents/kWh option. Rates stable for 1 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 has a 5.89 cents/kWh option. Rates stable for 1 year. $7.10/month admin. Free termination.
      • Direct Energy has a “one month free electricity” promotion. Fixed rate of 6.59 cents per kWh, but August 2020 would be at 0 cents per kWh. Rates stable for 5 years. $12/month admin (ouch!! Could be a bit much for low use residents). Free termination.
      • Direct Energy also has a renewable electricity option. Fixed rate of 6.99 cents per kWh, which comes with a one-time furnace or AC maintenance and 7,200 kWh of RECs (Renewable Energy Certificates) per year. 3 year term. $12/month admin. Free termination.
    • Best floating rate option:
      • Best option is ENRG Power, as their floating rate is spot plus 0.22 cents/kWh. Monthly admin fee of $5.90/month.

AT MY HOUSE

I’m on the ATCO “Three for All” offer. This expired offer has me paying 3 cents per kWh for electricity and $3/GJ for gas from January 2019 until December 2021. 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, in year 1, 2 or 3).

NATURAL GAS

For gas, we are not seeing any exciting residential fixed rate offers. Most offers are higher than $3.00/GJ. Both short and 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 September, the DERS rate is just $1.166 /GJ. For October, we are expecting a DERS gas rate around $1.50/GJ. Looking at the longer view, we still recommend DERS. Index offers from most retailers add around $0.30/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 6 cents/kWh for September and October. July and August 2019 averaged about 5 cents/kWh.

If I were to pick an electricity only option today, there is nothing that really stands out between the five options listed at the top. If I were keen to have my furnace or AC looked at, I might go with Direct EnergyDirect Energy also has a renewable offer which isn’t too bad (though their admin fees are super high). ATCOenergy also has an ok offer.

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.

SOLAR SPOTLIGHT:

Just a reminder that the sun is not staying out as long, and there will come a time when residents with solar panels on their roofs should start to move away from a high export rate and towards a lower import rate as they begin to import more power than they export.

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.