Residential Energy Rates in Alberta: What to do? August 2021

By Cameron Mitchell

Solution 105 Consulting Ltd.

HOT TIMES

Even as summer is starting to wind down, the electricity market continues to stay hot. July electricity rates came in at about 13 cents per kWh for the month. August and September forward rates suggest those months’ will be coming in at around 12 cents per kWh and 9.5 cents per kWh respectively. The remaining calendar 2021 is expected to come in around the 9 cents per kWh range. As forward rates are looking high, we would highly recommend locking in a fixed electricity rate for your homes.

Floating natural gas rates are expected to come in around $3.40/GJ for August and September. Short term rates have moved up recently and we may even see some months above $4/GJ this winter. If this keeps up, we might start considering a fixed rate for gas as we get closer to October.

WE RECOMMEND:

  • 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:
      • Encor by EPCOR has recently raised their rate to 6.69 cents/kWh option. Rates stable for up to 5 years. $7.00/month admin. Free termination.
      • EasyMax by Enmax has a 6.69 cents/kWh option. Rates stable for 3 years. $7.10/month admin. Free termination.
    • Best floating rate option:
      • Best option is Acorn Energy as their floating rate is spot plus 0.22 cents/kWh. Monthly admin fee now $6.24/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 3.7 cent per kWh savings compared to other fixed rate offers, should lead to a savings of about $333 per year. On the gas side, I use about 100 GJ per year, and the fixed rate of $3/GJ is about the same as what I might have to pay if I stuck with DERS… so close to $0 difference. Therefore, it would appear the Three for All offer would save me about $333 per year, and lock in my rates. If something way better were to come along, I could still terminate by paying $50.

NATURAL GAS

For gas, we are not seeing any super exciting residential fixed rate offers. The retailer offers we have seen are no better than $3.79/GJ. Short term pricing is now around $3.50/GJ, and longer-term pricing is below $3.00/GJ for 2023 to 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 July, the DERS rate is $3.028/GJ. Approximately $0.20/GJ of this figure is to reimburse for previous overcharges. 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 $0.08/GJ, we recommend residents stay on the default gas rate.

ELECTRICITY

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 higher than the current 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 12 cents per kWh in August and 9.5 cents per kWh for September. July averaged about 13 cents/kWh. At this point, 2021 forward market rates suggest the remainder of the year could average around 9 cents per per kWh.

If I were to pick an electricity only option today, the 6.69 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.

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.

Leave a Reply

Your email address will not be published. Required fields are marked *