By Cameron Mitchell
Solution 105 Consulting Ltd.
“HAPPY NEW YEAR”
Wishing everyone a happy and healthy 2025. As we start the new year, electricity customers that are less familiar with this newsletter may notice that the Regulated Rate Option (“RRO”) has changed to Rate of Last Resort (“RoLR”). This rate is likely one to avoid, as it is set at roughly 12 cents per kWh for the next 24 months. Meanwhile, floating December electricity commodity rates came in around 3 cents per kWh. January and February forward rates suggest those months will be coming in at around 6 cents per kWh. The calendar years of 2025 and 2026 are trading near 5.5 cents per kWh and 6.0 cents per kWh, respectively.
The spot market for natural gas averaged roughly $1.90/GJ for December. The forward market for natural gas has remained relatively steady compared to last month. Short term rates are trading under $2.50/GJ until winter of 2025. This being the case, we suggest moving to a floating rate if your current fixed rate is above $2.90/GJ. Forward market gas rates for January 2025 are trading near $2.20/GJ, 2025 around $2.20/GJ, and 2026 to 2028 are in the $3.00/GJ range.
WE RECOMMEND:
Natural Gas Only: Unless you have a longer-term fixed rate under $3.00/GJ, we recommend getting onto a floating rate.
- 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. This rate is very close to spot plus $0.117 per GJ. The monthly admin fee is about $10.65/month.
- Encor by EPCOR has a floating rate of spot plus $1/GJ. The monthly admin fee is about $8.20/month. $50 referral credit linked here.
Electricity Only: Unless you have a fixed rate contract below 7 cents per kWh, we recommend considering a short-term fixed rate option, or a floating rate:
- Best floating rate option: Encor by EPCOR has a floating rate of spot plus 1.00 cents/kWh. The monthly admin fee is about $8.20/month. $50 referral credit linked here.
AT MY HOUSE
I signed my electricity up with the fixed 6.69 cents per kWh winter offer from Empowering Communities Energy starting December 1, 2024. I am mainly concerned about the possibility of high winter rates, but I may move from this option to a floating option come March or April 2025. For now, though, this seems ok. That said, with December floating rates coming in at roughly 3 cents per kWh, I will continue to watch the electricity market and may look to make a move to a floating rate sooner than later.
For gas, I plan to continue floating with Direct Energy REGULATED Services. DERS.
If something better comes along in the future, these plans can be terminated at no cost.
NATURAL GAS
The retail offers we have seen are no better than $3.29/GJ. Short term forward market pricing is now below $2.50/GJ, with January 2024 expected to average around $2.20/GJ, and pricing below $3.00/GJ until winter 2025. So, for gas, we recommend a floating rate. In general, a good option is to go with Direct Energy REGULATED Services (DERS)… remember “Regulated Service”. If you are not with DERS 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 has an admin fee of about $10.65 per month and their floating rate includes a margin of roughly $0.117 per GJ. Still, this is better than most floating margins which average over $0.40 per GJ.
For January, the Direct Energy Regulated Services (“DERS”) rate is $1.986/GJ. Approximately $0.02/GJ of this figure is to rebate previous period overcharges. We expect February’s DERS rate will be approximately $2.30/GJ.
ELECTRICITY
As the forward market is suggesting electricity rates for January and February may be in the 6 cent per kWh range, we recommend people with fixed rates higher than 7 cents per kWh to make a move to a floating rate option. Be sure to check to see if there are any cancellation fees. The Encor by EPCOR floating plan is a good one. $50 referral credit linked here.
Forward pricing currently suggests index residential rates will come in around 6 cents per kWh in January and February. December averaged about 3 cents/kWh on the floating index. 2025 and 2026 are trading in the 5.5 cents per kWh and 6.0 cents per kWh range, respectively.
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, 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.