By Cameron Mitchell
Solution 105 Consulting Ltd.
Back to School!
The Alberta energy markets have not seen much change in the last little while – unlike the kids now going into their next grade. Over the summer there were some fixed rate increases seen, as forward pricing for 2018 has jumped a bit on news of coal plant retirements and conversions, news of potential Balancing Pool PPA terminations and also due to increases to the carbon tax rate starting 2018. Even with all that being the case, I’m still sticking with floating rates at my home for now.
- Gas onto Direct Energy REGULATED Services. DERS. This is the default, no retailer rate.
- Don’t want the risk or fluctuations, these rates have jumped up a bit:
- ATCOenergy has a 5.39 cents/kWh option. Rates stable for 1 year. $7.00/month admin. Free termination.
- Enmax has as EasyMax 5.59 cents/kWh option. Rates stable for 1 year. $7.10/month admin. Free termination.
- Brighter Futures Energy Inc.has a 5.85 cents/kWh option (5.75 cents/kWh for seniors). Rates stable to Dec. 2020. $6.50/month admin. Free termination.
- What about ATCOenergy? I hopped over there with my gas and electricity for January 1st. How is it going after eight months?
AT MY HOUSE – no change for now:
If you were one of those individuals who follow this update closely, you will note that I made the jump to ATCOenergy starting January 1. I went there on the promise of free electricity and natural gas in January. Their floating admin rates are a bit higher (at plus 1.0 cents/kWh and plus $0.89/GJ), but one thing they have going for them is a monthly admin fee of just $3.50/mth/utility when you sign up for both gas and electricity. [They’ve now changed this to $5/mth/meter]. So there is a potential monthly admin savings to be had compared to DERS admin of around $7.50/mth and ENRG Power admin of $6.50/mth. They also have a $50 anniversary credit, if you stay with them for 12 months straight
Doing the math, my annual costs with ATCOenergy will come in very close to costs with the recommended option of DERS and ENRG Power below. The math really depends on how much energy you use. I am very close to breaking even, and I average about 9,000 kWh and 100 GJ over a year. If you use less than this, then ATCOenergy will be more attractive (since their lower monthly admin fees and anniversary credit will outweigh the cost of the extra 0.45 cent/kWh and $0.83/GJ fees). If you use more than me, you may want to go with the recommended options below.
So, after all of that, I’m going to stick with ATCOenergy until something better comes along. They are no better for me than the other option, but no worse either.
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 $2.00/GJ for September and October. Longer term pricing is well below $3.00/GJ into 2022. So for gas, we recommend staying on the 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 $1.434/GJ. For October, we are now expecting a DERS gas rate around $2.20/GJ. Looking at the longer view, we still recommend DERS. Index offers from most retailers add around $0.75/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.
I am still very keen to continue the floating market ride at this point. Alberta’s spot market rates have averaged below 3 cents/kWh over the last 12 months and the forward market is suggesting rates under 4 cents/kWh for the rest of this year, and then around 5 cents/kWh for 2018-2020.
As mentioned above, I have swapped over to ATCOenergy, but generally speaking, the best longer-term option is ENRG Power. They offer spot plus 0.55 cents/kWh. If you still are looking for a fixed rate, ATCOenergy is offering 5.39 cents/kWh and Enmax is offering 5.59 cents/kWh. That said, we think the floating rate is the way to go at this time.
September and October 2017 forward pricing suggests index residential rates will come in around 3.5 cents/kWh for both months. August 2017 averaged about 3.3 cents/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.
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.