By Cameron Mitchell
Solution 105 Consulting Ltd.
So far, so good in 2023. With Alberta experiencing a fairly warm January, spot electricity and gas rates have come tumbling downwards. For electricity, there was plenty of room to come down – as the recent high spot rates were record-breaking by a good margin. That said, electricity prices are still quite expensive. January spot rates came in around 13 cents per kWh… a far cry from December’s 32 cents per kWh but still quite high. February and March forward rates suggest those months’ will be coming in at around 16 cents per kWh and 14 cents per kWh, respectively. We highly recommend locking in a fixed electricity rate for your homes if you have not done so already – even though retailers have recently moved their rates higher.
The forward market for natural gas is trading down significantly compared to last month – and the next few months are looking much less costly now, at around $3/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 2023 are trading around $3.00/GJ, and 2024 to 2027 are in the $3.70/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.
The best-fixed rate options:
- EasyMax by Enmax has a $5.99 per GJ option on a five-year plan. Admin of $8.68 per month. Free termination
- ATCO Energy has a $5.99 per GJ option on a five-year plan. Admin of $8.99 per month. Free termination.
Electricity Only: The best-fixed rate option:
- Foothills Energy Co-op has a 10.35 cents per kWh option on a three-year plan. Admin of $5.71 per month. Free termination. Deposit required.
- ATCO Energy has a 10.99 cents per kWh option on a five-year plan. Admin of $8.99 per month. Free termination.
- Encor by EPCOR has a 11.29 cents per kWh option on a five-year plan. Admin of $7 per month. Free termination.
AT MY HOUSE
I am currently 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). I am 100% not going to touch electricity, but I am considering switching my natural gas to DERS. I’ll hold off for one more month to see how things look.
If I didn’t have this plan in place, I would go with DERS floating rate for gas starting in February 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, the contracts can be terminated at no cost.
Short-term spot pricing sits in the $3/GJ range. With that in mind, we recommend moving to a floating rate. The EasyMax by Enmax plan at $5.99/GJ is the best fixed-rate option we’ve found.
For February, the Direct Energy Regulated Services (“DERS”) default rate is $3.715/GJ. Approximately $0.39/GJ of this figure is to rebate from previous overcharges. We expect March will be approximately $3/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 16 cents per kWh in February and 14 cents per kWh in March. January averaged about 13 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 10.35 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.