By Cameron Mitchell
Solution 105 Consulting Ltd.
“Things starting to warm up!”
Lots of heat in the electricity market, as a couple of coal plants were recently shut down and 2018 carbon pricing is now impacting generating units. This has led to an uptick in spot market electricity rates, which are now in the 3.6 cent per kWh range. As a couple more coal units are coming offline effective April 1, forward rates are around 6.5 cents per kWh for the remainder of 2018. With that in mind, we are strongly recommending fixed electricity rates.
WE RECOMMEND:
- Gas onto Direct Energy REGULATED Services. This is the default, no retailer rate.
- Electricity: We think it is time to make a change towards a fixed rate product. Here are the options we like best:
- Encor by EPCOR has a 5.49 cents/kWh option. Rates stable for 2 years. $7.00/month admin. Free termination. They currently have a promotion that will waive admin fee for first 6 months.
- Just Energy has spot plus 1.00 cents/kWh, but with a 5.99 cents per kWh cap. Price cap is for a 2 year term. Termination fee of $100 if cancelled within first year.
- Alberta Cooperative Energy (ACE) has a 1 year rate option at 5.55 cents per kWh. $6.50/month admin. Free termination.
- ATCOenergy has a 5.89 cents/kWh option. Rates stable for 3 years. $5.00/month admin. Free termination. They currently have a $100 grocery gift card promotion when signing up gas and electricity.
AT MY HOUSE:
As April electricity rates are expected to be in the 8 cent per kWh range, I am sticking with my fixed 5.39 cent/kWh electricity rate with ATCOenergy. I’m a bit tempted to try out the offer from Just Energy, but I’m ok with my current fixed rate offer. For gas, I’ve moved onto Direct Energy REGULATED Services.
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 around $1.60/GJ for March and $1.30/GJ for April. Longer term pricing is well below $2.00/GJ into 2020. 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 March, the DERS rate is $1.733 /GJ. For April, we are expecting a DERS gas rate around $1.40/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 will definitely be on a fixed rate product before April 1. 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 substantially higher than the offers available – so the fixed offers are pretty good.
Forward pricing suggests index residential rates will come in around 4.5 cents/kWh for March and 8.3 cents/kWh for April! The rest of 2018 is expected to average around 6.5 cents/kWh. February 2018 averaged about 4 cents/kWh.
If I were to pick an option today, I would go with either Encor by EPCOR (who have a 5.49 cents/kWh 2 year plan) or Just Energy (who have a spot plus 1.00 cents/kWh floating rate, but with a 5.99 cents per kWh cap. Price cap is for a 2 year term. Termination fee of $100 if cancelled within first year).
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.