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Residential Energy Rates in Alberta: What to do? July 2022

By Cameron Mitchell

Solution 105 Consulting Ltd.

“SCHOOL IS OUT”

Summer is officially in full swing. High spot and forward market rates have pushed many retailers to move their residential offers upwards AGAIN over the last few weeks. Even with those increases, the retail fixed offers available are better than floating. June electricity floating rates settled around 13.5 cents per kWh for the month. July and August forward rates suggest those months’ will be coming in at around 13 cents per kWh and 14 cents per kWh, respectively. Balance of 2022 is presently in the 13 cent per kWh range. 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 significantly lower this month – around $4.90/GJ and $4.50/GJ for July and August, respectively. Balance of calendar 2022 is trading around $5.00/GJ. This being the case, we recommend locking in a fixed rate for gas. Rates for calendar 2023 are trading around $4.50/GJ and 2024 to 2027 are in the $4.20/GJ range.

WE RECOMMEND:

Natural Gas Only: The best fixed rate option:

  • ATCO Energy has a $4.99 per GJ option on five-year plan. Admin of $6.99 per month. Free termination.

Electricity Only: The best fixed rate options:

  • Abode Power has a 7.91 cents per kWh option on 3-year plan. Deposit and Pre-Authorized Debit (PAD) required. Admin of $6.32 per month. Free termination.
  • ATCO Energy has an 8.49 cents per kWh option on five-year plan. Admin of $6.99 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). 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 the five-year ATCO Energy plan for electricity and gas as soon as possible. The three-year plan with Abode Power would also be an option (for electricity only). If rates drop or something better comes along in the future, the contracts can be terminated at no cost.

NATURAL GAS

Short term pricing sits in the $4.80/GJ range, with the remainder of 2022 expected to land near $5.00/GJ (with winter rates slightly higher). With that in mind, we recommend moving to a fixed rate. The ATCO Energy plan at $4.99/GJ is the best option we’ve found.

For July, the Direct Energy Regulated Services (“DERS”) default rate is $8.324/GJ. Approximately $1.15/GJ of this figure is to recoup from previous undercharges. July’s rate would have been a further $3.17/GJ higher, but there was a $5,520,000 carry forward balance to alleviate what would have been an even greater natural gas rate shock for Albertans. Depending on how much of a carry forward balance DERS plans to have, we expect August’s DERS rate is likely to land around $5.50/GJ. If DERS starts to pay it all down, then the rate will likely be upwards of $9/GJ.

ELECTRICITY

As the forward market is suggesting electricity rates will be 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 13 cents per kWh in July and 14 cents per kWh in August. June averaged about 13.5 cents/kWh. At this point, the forward market rates suggest the balance of the 2022 calendar year could average around 13 cents per kWh.

If I were to pick an electricity only option today, it would be a tough choice between the three-year plan with Abode Power at 7.91 cents per kWh or the five-year term with ATCO Energy at 8.49 cents per kWh. Abode Power will cost a bit less but requires a $100 or $200 deposit and payments through PAD. Each have 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.

COMMERCIAL USERS

And for those of you who are not residential users, and maybe a bit bigger, give us a call. We are now seeing better pricing for commercial users compared to residential users, and we can help get the lowest rates for your business.