By Cameron Mitchell
Solution 105 Consulting Ltd.
Turbulence in the electricity index market is continuing as we head towards sunnier days. March electricity rates settled at about 7 cents per kWh for the month. April and May forward rates suggest those months’ will be coming in at around 9 cents per kWh and 7 cents per kWh respectively. The remaining calendar 2021 is expected to come in around the 7 cents per kWh range. As forward rates are looking high, we would recommend locking in a fixed electricity rate for your homes.
Floating natural gas rates have softened since February and are expected to come in around $2.45/GJ for April and May.
- Gas Only: get onto Direct Energy REGULATED Services. DERS. This is the default, no retailer rate.
- Electricity Only: Here are the best fixed rate options:
- Best floating rate option:
- Best option is ENRG Power, as their floating rate is spot plus 0.22 cents/kWh. Monthly admin fee of $5.90/month.
AT MY HOUSE
I’m on the ATCO “Three for All” offer. This expired offer has me paying 3 cents per kWh for electricity and $3/GJ for gas from January 2019 until December 2021. Since I use about 9,000 kWh/yr, the 3.3 cent per kWh savings compared to other fixed rate offers, should lead to a savings of about $297 per year. On the gas side, I use about 100 GJ per year, and the fixed rate of $3/GJ is likely about $1.00/GJ more than I might have to pay if I stuck with DERS… but that only leads to an extra cost of $100 per year. So it would appear the Three for All offer would save me about $200 per year, and lock in my rates. If something way better were to come along, I could still terminate by paying $50.
For gas, we are not seeing any super exciting residential fixed rate offers. Most offers are higher than $3.40/GJ. Short-term pricing is now around $2.50/GJ, and longer-term pricing is still below $3.00/GJ into 2026. So for gas, we recommend going with Direct Energy REGULATED Services (DERS)… remember “Regulated Service”. If you aren’t 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 April, the DERS rate is $2.603 /GJ. Looking at the longer view, we still recommend DERS. Index offers from most retailers add around $0.30/GJ or more for fees to the floating rate. As DERS fees are closer to $0.07/GJ, we recommend residents stay on the default gas rate.
As noted previously, I am on a fixed rate product. I am a bit risk averse, and don’t really want big swings on my bills if I can avoid it. Since the forward market is suggesting rates that are a bit higher than the current retail offers available, we would recommend moving to a fixed rate offer if you are not already there.
Forward pricing currently suggests index residential rates will come in around 9 cents per kWh and 7 cents per kWh in April and May respectively. March 2021 averaged about 7 cents/kWh. At this point, 2021 forward market rates suggest the remainder of the year could average around 7 cents kWh.
If I were to pick an electricity only option today, the 6.29 cents per kWh five year term with Encor by EPCOR is the one I’d go with.
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.
FOR COMMERCIAL USERS
And for those of you who are not residential users, and maybe a bit bigger, give us a call. We are seeing even better pricing for commercial users so get in touch and we can help.