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Home » Residential Energy Rates in Alberta: What to do? August 2024

Residential Energy Rates in Alberta: What to do? August 2024

By Cameron Mitchell

Solution 105 Consulting Ltd.

“WARM SUMMER NIGHTS”

Hot July weather pushed electricity commodity rates higher than they have been in the past few months – but still just halfway to the heights seen last summer. July’s floating index rate came in at around 9 cents per kWh. Because floating spot rates are expected to beat the current fixed rate offers, our recommendation remains to float rather than fix. So, unless you have a great fixed rate (i.e. below 7 cents per kWh) already locked in at your home, our advice would be to move to a floating rate.

August and September forward rates suggest those months will be coming in at around 8 cents per kWh and 6.5 cents per kWh, respectively. The balance of 2024 is trading around 7 cents per kWh, and each calendar year up to 2027, is trading near 6 cents per kWh.  EPCOR’s RRO for August totals 13.6 cents per kWh.

The spot market for natural gas averaged roughly $1/GJ for July. The forward market for natural gas has dropped slightly compared to last month. Short term rates are trading under $3.00/GJ until winter of 2025. This being the case, we suggest moving to a floating rate if your current fixed rate is above $3.00/GJ. Forward market gas rates for the remainder of calendar 2024 are trading near $2.00/GJ, 2025 and 2026 are trading around $3.00/GJ, and 2027 to 2028 are in the $3.50/GJ range.

WE RECOMMEND:

Natural Gas Only: Unless you have a longer-term fixed rate under $3.00/GJ, we recommend getting onto a floating rate.

  • Direct Energy REGULATED Services. DERS. This is the default, no retailer rate. It is a floating rate. Check with your current provider to ensure there are no cancellation fees, etc. This rate is very close to spot plus $0.122 per GJ. The monthly admin fee is about $10.17/month.
  • Encor by EPCOR has a floating rate of spot plus $1/GJ. The monthly admin fee is about $8.20/month.

Electricity Only: Unless you have a fixed rate contract below 7.0 cents per kWh, it is recommended to consider a floating rate:

Best floating rate option:

  • Encor by EPCOR has a floating rate of spot plus 1.00 cents/kWh. The monthly admin fee is about $8.20/month.

The best fixed rate option:

ACE (Alberta Co-operative Energy) has a 7.69 cents per kWh option on a one-year plan. Admin of $7.99 per month. Free termination. Deposit, $25 refundable membership, and PAD (Pre-Authorized Debit) required.

AT MY HOUSE

On March 1, 2023, I moved my gas supply off the three-year renewal offer from ATCO for 5.99 cents per kWh and $3.99/GJ (and an admin fee of $6.99 per meter per month). I was told that moving my gas would not impact my fixed electricity rate or come with any gas cancellation fees, but I have heard stories from others who did not get the same feedback – so, best to double check and get something in writing.

I am now floating on DERS for gas and still with ATCO at 5.99 cents per kWh for electricity (until November 30, 2024). If I didn’t have this plan in place, I would go with a DERS or Encor by EPCOR floating rate for gas and the Encor by EPCOR floating plan for electricity as soon as possible. If something better comes along in the future, these plans can be terminated at no cost.

NATURAL GAS

The retailer offers we have seen are no better than $3.33/GJ. Short term forward market pricing is now below $2.00/GJ, with the remainder of 2024 expected to average around $2.00/GJ, and pricing below $3.00/GJ until winter 2025. So, for gas, we recommend a floating rate. In general, a good option is to go with Direct Energy REGULATED Services (DERS)… remember “Regulated Service.” If you are not with DERS 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.

DERS has an admin fee of about $10.17 per month and their floating rate includes a margin of roughly $0.122 per GJ. Still, this is better than most floating margins which average over $0.40 per GJ.

For August, the Direct Energy Regulated Services (“DERS”) rate is $0.936/GJ. Approximately $0.04/GJ of this figure is to refund previous period overcharges. We expect September’s DERS rate will be approximately $1.00/GJ.

ELECTRICITY

As the forward market is suggesting electricity rates will be lower than the current fixed rate retail offers available, we would recommend moving to a floating rate offer – unless you have a fixed rate contract below 7.0 cents per kWh.

Forward pricing currently suggests index residential rates will come in around 8 cents per kWh in August and 6.5 cents per kWh in September. The remainder of 2024 is trading at roughly 7 cents per kWh. July averaged about 9 cents/kWh on the floating index. 2025 to 2027 look like they will be coming in around 6 cents per kWh.

As the forward market is suggesting rates below 7 cents per kWh going forward, we will continue to watch the market to see if a fixed option might become more appropriate. Summer often can experience tightening the supply/demand balance, but so far it is looking like lower rates may prevail.

If I were to pick an electricity only option today, I’d go with the Encor by EPCOR floating plan.

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, give us a call. We are now seeing much better pricing for commercial users compared to residential users, and we can help get the lowest rates for your business.