By Cameron Mitchell
Solution 105 Consulting Ltd.
Electricity retailers are in a giving mood, as many have dropped their residential offers this month. We expect this trend to continue into the new year as forward market rates are still pretty high now but should be substantially lower in spring 2024. We have seen residential offers come in as low as $0.1075/kWh – so for those with higher fixed rates, it would be a good time to switch. That said, we expect retailers’ offers will continue to tumble in the months ahead. November spot electricity rates came in around 10 cents per kWh. December and January forward rates suggest those months will be coming in at around 13 cents per kWh and 14 cents per kWh, respectively. EPCOR’s RRO for December totals 20.863 cents per kWh.
The forward market for natural gas has dropped a fair bit compared to last month. Winter rates are now trading below $2.50/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 are trading near $2.50/GJ and 2025 to 2027 are in the $3.60/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 10.75 cents per kWh option on three-year plan. Admin of $6.60 per month. Free termination. Deposit and PAD (Pre-Authorized Debit) required.
- Encor by EPCOR has a 12.19 cents per kWh option on five-year plan. Admin of $7.00 per month. Free termination. They also have a $50 bill credit referral program right now if you follow this link here.
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 $2.50/GJ, with 2024 expected to average around $2.50/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.
DERS recently moved their admin rate up to about $10.17 per month. And their floating rate now includes a margin of roughly 12.2 cents per GJ. Still, this is better than most floating margins which average over $0.40 per GJ.
For December, the Direct Energy Regulated Services (“DERS”) rate is $2.902/GJ. Approximately $0.03/GJ of this figure is to recoup previous period undercharges. We expect January’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 13 cents per kWh in December and around 14 cents per kWh in January. 2024 is trading at roughly 10 cents per kWh. November averaged about 10 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 10.75 cents per kWh.
Just to help put things into perspective, we are talking about 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 than residential users, and we can help get the lowest rates for your business.