By Cameron Mitchell
Solution 105 Consulting Ltd.
Lockdowns, shutdowns, mandates, cold weather, and something called omicron… coupled with the last week of cold weather, could be giving you the blues. On top of that, we had a January floating electricity rate that soared above 9 cents per kWh! At least we can be thankful retailers have decent fixed rates to jump onto.
February and March forward rates suggest those months’ will be coming in at around 10 cents per kWh and 8.5 cents per kWh respectively. Balance of year is presently in the 9 cent per kWh range. 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 took a jump too. Floating rates are expected to come in around $4.80/GJ for February and March. Balance of year popped up to the $4.35/GJ range. This being the case, locking in a fixed rate for gas might be the way to go, at least for a while. Rates for calendar 2023 to 2027 are still in the low $3/GJ range.
Natural Gas Only:
- Fixed rate:
- EasyMax by Enmax: $4.09/GJ on a five-year plan. Admin of $7.10 per month. Free termination.
- Floating rate:
- Direct Energy REGULATED Services. DERS. This is the default, no retailer rate.
- EasyMax by Enmax has a 7.49 cents/kWh option. Rates stable for 5 years. $7.10/month admin. Free termination. With current market conditions, this is a great option.
AT MY HOUSE
I signed up a few months back on 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, I would 100% go with the five-year EasyMax by Enmax plan for electricity as soon as possible and likely jump over to EasyMax by Enmax for gas too, on a fixed rate of $4.09/GJ. If rates drop or something better comes along in the future, the contracts can be terminated at no cost.
The residential retailer offers we have seen are no better than $4.09/GJ. Short term pricing sits in the $4.35 to 4.80/GJ range, with 2022 expected to land near $4.50/GJ. That being the case, don’t be scared to move to the fixed rate! The EasyMax by Enmax plan at $4.09/GJ is the cheapest.
Rates in 2023 and beyond look to be much softer than $4.09/GJ, so the swap may not last too long, but likely long enough to make it worthwhile.
For February, the Direct Energy Regulated Services (“DERS”) default rate is $4.842/GJ. Approximately $0.36/GJ of this figure is to recoup from previous undercharges. March’s DERS rate is likely to land around $4.80/GJ also.
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 10 cents per kWh for February and 8.5 cents per kWh for March. January averaged about 10 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 five-year term with EasyMax by Enmax is the obvious choice – even though they recently bumped it to 7.49 cents per kWh. 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.
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.