By Cameron Mitchell
Solution 105 Consulting Ltd.
“VOLATILITY STARTING TO SUBSIDE”
Not only do we expect to see greater stability in our daily lives, with the return to school for kids, but the electricity market too is expected to ease in the coming months. With that being the case, we are expecting retailers’ fixed rate options to start moving downwards. Though retailers have not yet moved their fixed electricity rates downward substantially, the fixed rates they are offering are still better than floating on the open market. August spot electricity rates came in around 19 cents per kWh. September and October forward rates suggest those months will be coming in at around 14 cents per kWh. If you need another reason to fix a rate, starting April 1, RRO customers are no longer protected by a rate cap, and they are repaying deferred RRO amounts. For example, EPCOR’s RRO for September totals 27.759 cents per kWh.
The forward market for natural gas has increased slightly compared to last month. The balance of 2023 is expected to average roughly $2.90/GJ. This being the case, we suggest moving to a floating rate if your current fixed rate is above $3.70/GJ. Forward market gas rates for calendar 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 $3.70/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:
- Empowering Communities Energy has a 11.97 cents per kWh option on three-year plan. Admin of $6.61 per month. Free termination. Deposit and PAD (Pre-Authorized Debit) required. This retailer recently changed its name from Emco Energy.
- ATCO Energy has a 12.39 cents per kWh option on three-year plan. Admin of $8.99 per month. Free termination.
Many different UtilityNet providers have fixed 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 Empowering Communities Energy 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 $4.89/GJ. Short term forward market pricing is now around $2.60/GJ, with 2024 expected to average just over $3/GJ, and pricing below $4.00/GJ until 2026. 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 September, the Direct Energy Regulated Services (“DERS”) rate is $2.724/GJ. Approximately $0.02/GJ of this figure is to recoup previous undercharges. We expect October’s DERS rate will be approximately $2.60/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 15 cents per kWh in September and October. The balance of 2023 is trading at roughly 15 cents per kWh. August averaged about 19 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 Empowering Communities Energy at 11.97 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, give us a call. We are now seeing much better pricing for commercial users compared to residential users, and we can help get the lowest rates for your business.