By Cameron Mitchell
Solution 105 Consulting Ltd.
“HAPPY 2024”
Offers from energy retailers are relatively unchanged this month… New Year’s hang-over? We expect rates to start tumbling as the year progresses. December spot electricity rates came in around 6 cents per kWh!! That is worth celebrating as this is the lowest monthly spot electricity rate seen since December 2020. Low demand due to warm weather coupled with very few supply outages helped keep December’s electricity spot rates low. That said, January and February forward rates suggest those months will be coming in at around 15 cents per kWh and 13 cents per kWh, respectively. EPCOR’s RRO for January totals 19.551 cents per kWh.
The forward market for natural gas has dropped a little compared to last month. Short-term rates are now trading near $2.50/GJ. This being the case, we suggest moving to a floating rate if your current fixed rate is above $3.30/GJ. Forward market gas rates for all of calendar 2024 are trading near $2.30/GJ, 2025 is trading around $3.10/GJ, and 2026 to 2028 are in the $3.50/GJ range.
One great feature of these fixed-rate residential options is that they can be terminated at no cost if a better offer comes along.
WE RECOMMEND:
Natural Gas Only:
- Unless you have a fixed rate under $3.30/GJ, we recommend getting onto 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.
Electricity Only: The best-fixed rate options:
- Empowering Communities Energy has a 10.75 cents per kWh option on a three-year plan. Admin of $6.60 per month. Free termination. Deposit and PAD (Pre-Authorized Debit) are required.
- Sponsor Energy has a 9.99 cents per kWh on a 5-year plan. Deposit and PAD are required. Admin of $16.69 per month is very high, however. Free termination.
Encor by EPCOR has a 12.19 cents per kWh option on a five-year plan. Admin of $7.00 per month. Free termination. They also have a $50 bill credit referral program right now if you follow this link here.
AT MY HOUSE
On March 1st, 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 DERS floating rate for gas and the Empowering Communities Energy three-year plan for electricity as soon as possible. If rates drop or 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 $3.43/GJ. Short-term forward market pricing is now around $2.50/GJ, with 2024 expected to average around $2.30/GJ and pricing below $3.50/GJ until winter 2025. 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.
DERS recently moved their admin rate up to about $10.17 per month. And their floating rate now includes a margin of roughly 12.2 cents per GJ. Still, this is better than most floating margins, which average over $0.40 per GJ.
For January, the Direct Energy Regulated Services (“DERS”) rate is $2.173/GJ. Approximately $0.03/GJ of this figure is to rebate previous period overcharges. We expect February’s DERS rate will be approximately $2.50/GJ.
ELECTRICITY
As the forward market is suggesting electricity rates will be much higher than the current fixed-rate 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 15 cents per kWh in January and around 13 cents per kWh in February. 2024 is trading at roughly 9.5 cents per kWh. December averaged about 6 cents/kWh on the floating index.
If I were to pick an electricity-only option today, I’d go with the three-year term with Empowering Communities Energy at 10.75 cents per kWh.
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.