Residential Energy Rates in Alberta: What to do? January 2022

By Cameron Mitchell

Solution 105 Consulting Ltd.

“HAPPY 2022”

2021 saw electricity rates soar to the highest levels since deregulation began in Alberta in 2001. 2022 is expected to be a bit softer, and yet rates are still expected to come in over 9 cents per kWh… super high. Thankfully, there are a few good retail offers are still available. Hopefully, everyone has changed from their floating electricity rates by now! December electricity rates came in at about 13 cents per kWh for the month. January and February forward rates suggest those months’ will be coming in at around 11 cents per kWh. As forward rates are looking expensive, we would highly recommend locking in a fixed electricity rate for your homes if you have not done so already… Enmax has a very good option.

Floating natural gas rates are expected to come in around $4.20/GJ for January and February. 2022 as a whole is expected to average around $3.50/GJ. Rates for calendar 2023 to 2027 are presently in the low $3/GJ range.

WE RECOMMEND:

Natural Gas Only:

• Floating rate:
  • Get onto Direct Energy REGULATED Services. DERS. This is the default, no retailer rate.
• Fixed rate:
  • Encor by EPCOR: $4.09/GJ on a five-year plan. Admin of $7.00 per month. Free termination.
  • EasyMax by Enmax: $4.09/GJ on a five-year plan. Admin of $7.10 per month. Free termination

Electricity Only:

• EasyMax by Enmax has a 6.89 cents/kWh option. Rates stable for 5 years. $7.10/month admin. Free termination. With current market conditions, this is a great option.

IN MY HOUSE

I was on the ATCO “Three for All” offer. This offer is ending and had me paying 3 cents per kWh for electricity and $3/GJ for gas. I was able to get a 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).

If I didn’t have this plan in place, 100% go with the five-year EasyMax by Enmax plan for electricity as soon as possible and likely float with Direct Energy REGULATED Services for gas starting January 2022.

NATURAL GAS

The residential retailer offers we have seen are now no better than $4.09/GJ. Short term pricing now sits in the $4.20/GJ range, with 2022 expected to land near $3.50/GJ, and longer-term pricing is very close to $3.10/GJ. So, for gas, we recommend going with Direct Energy REGULATED Services (DERS)… remember “Regulated Service”. If you are not 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 Direct Energy Regulated Services (“DERS”) default rate is $3.893/GJ. Approximately $0.11/GJ of this figure is to rebate for previous overcharges. February’s DERS rate is likely to land around $4.50/GJ. After February, gas rates are expected to soften a little – with March expected around $3.75/GJ. With that in mind, we would recommend floating with DERS – ideally starting March 2022 as February DERS rates might be high. Index offers from most retailers add around $0.30/GJ or more for fees to the floating rate. As DERS fees are closer to $0.08/GJ.

ELECTRICITY

As noted previously, I am on a fixed rate product. Since the forward market is suggesting rates that are higher than the current retail offers available, we would highly recommend moving to a fixed rate offer if you are not already there.

Forward pricing currently suggests index residential rates will come in around 11 cents per kWh for January and February. December averaged about 13 cents/kWh. At this point, the forward market rates suggest the 2022 calendar year could average around 9 cents per kWh.

If I were to pick an electricity only option today, the 6.89 cents per kWh five year term EasyMax by Enmax is the one I’d go with. It has a $7.10/month admin fee, and free termination.

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 no longer seeing better electricity pricing for commercial users compared to residential users, but we can still help get the lowest rates for your business. We are still seeing larger commercial gas rate options that are better than the residential and small business options noted above.