By Cameron Mitchell
Solution 105 Consulting Ltd.
“FIX ELECTRICITY, FLOAT GAS”
If you haven’t heard our commentary over the last few months, we are strongly recommending residential users to get into a fixed rate contract for electricity but float natural gas. This is because the fixed electricity retail options are pretty good, but the fixed natural gas options are not. March spot electricity rates came in around 18 cents per kWh. April and May forward rates suggest those months’ will be coming in at around 12 cents per kWh. If you need another reason to fix a rate, starting April 1, RRO customers won’t be protected by a rate cap, and they’ll start repaying deferred amounts.
The forward market for natural gas has dropped in the near term, but risen slightly in the longer term compared to last month. The balance of 2023 is expected to come in around $2.75/GJ. This being the case, we suggest moving to a floating rate if your current fixed rate is above $4/GJ. Forward market gas rates for calendar 2024 to 2027 are in the $4.15/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.
Natural Gas Only:
- Unless you have a fixed rate under $4/GJ, we recommend to get 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:
- Foothills Energy Co-op has a 12.00 cents per kWh option on three-year plan. Admin of $5.71 per month. Free termination. Deposit and PAD (Pre-Authorized Debit) required.
- ATCO Energy has a 12.69 cents per kWh option on five-year plan. Admin of $8.99 per month. Free termination.
Many different Utilitynet providers have 30.00 cent per kWh rates available. If your home is exporting more electricity than it is using, you could swap to this rate. Acorn Energy is one of many options.
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. If I didn’t have this plan in place, I would go with DERS floating rate for gas and the Foothills Energy Co-op 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.
The retailer offers we have seen are no better than $4.99/GJ (from ATCO Energy). Short term pricing is now around $2.75/GJ, and longer-term pricing is below $4.00/GJ for 2024 and below $5.00/GJ to 2027. 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 April, the Direct Energy Regulated Services (“DERS”) default rate is $3.381/GJ. Approximately $0.62/GJ of this figure is to recover previous undercharges. We expect May’s DERS rate will be approximately $2.40/GJ.
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 12 cents per kWh in April and May. The balance of 2023 is trading at roughly 15 cents per kWh. March averaged about 18 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 Foothills Energy Co-op at 12.00 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.
And for those of you who are not residential users, and may be a bit bigger, give us a call. We are seeing better pricing for commercial users compared to residential users, and we can help get the lowest rates for your business.