By Cameron Mitchell
Solution 105 Consulting Ltd.
Hoping everyone had a terrific Christmas break. As we ring in the new year, electricity prices are still in high gear. December electricity floating rates settled around 32 cents per kWh… a new record for Alberta. January and February forward rates suggest those months’ will be coming in at around 25 cents per kWh and 30 cents per kWh, respectively. We highly recommend locking in a fixed electricity rate for your homes if you have not done so already.
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 $4/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 $3.50/GJ, and 2024 to 2027 are in the $4.20/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: The best-fixed rate options:
- EasyMax by Enmax has a $5.79 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:
- Abode Power has an 8.99 cents per kWh option on three-year plan. Admin of $6.43 per month. Free termination. Deposit required.
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). As there are no better options available at this time, I will stay with ATCO at my house.
If I didn’t have this plan in place, I would go with DERS floating rate for gas starting in February and the Abode Power 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 $4/GJ range. With that in mind, we recommend moving to a floating rate, unless your current fixed rate is below $4/GJ.
For January, the Direct Energy Regulated Services (“DERS”) default rate is $6.446/GJ. Approximately $0.28/GJ of this figure is to recoup from previous undercharges. We expect February’s DERS rate will be approximately $4.15/GJ.
As the forward market is suggesting electricity rates will be much higher than the current fixed-rate retail offers available, we 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 25 cents per kWh in January and 30 cents per kWh in February. December averaged about 32 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 Abode Power at 8.99 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 who are not residential users, and maybe a bit bigger, give us a call. We are seeing better pricing for commercial users than residential users, and we can help you get the lowest rates for your business.