Calgary retail energy customers have the potential to save big on their bills this winter.
With the gap between fixed energy prices and the regulated energy prices widening, now is the time to take advantage said Blake Shaffer, a former energy trader and economics professor at the University of Calgary.
“Going into this winter, as close to 100 per cent sure that an economist can ever be, that’s where I am now that fixed price is the way to go for power, and I would definitely do gas as well,” he said.
Consumers have three options when selecting their energy pricing.
They can choose the regulated rate, which is the rate that the Alberta Utilities Commission allows energy providers to charge customers.
“This is like a default rate, and if you don’t choose anything you go on this one and every month,” said Shaffer.
Another option is variable market pricing, which a few of the energy retailers offer, but often leads to more volatile pricing.
The final option, and the one that Shaffer is encouraging consumers to pick, is fixed rate pricing. With this option, a customer will get a fixed price, month to month, for their kilowatt hours on their electricity bill.
Price differences favour the customer, not the energy companies
Right now, says Shaffer, customers can lock in a fixed rate of under 7 cents per kilowatt hour. Whereas the prevailing market rate is trending towards 14 cents per kilowatt hour.
“The tough part here that sounds like picking up pennies, because I guess we price electricity in pennies, and so most people just simply can’t be bothered,” he said.
But when people add up each month the number of kilowatt hours they use to power their home, this can translate into significant savings. For some home electricity users, this can add up to a savings of up to $100 per month.
“But a $100 a month for about five months, I’ll do that—buy me a new pizza oven,” he said.
Customers of major energy utilities can select a fixed rate contract directly online, or by phoning their retailer.
Shaffer said that he has received some push-back in the past from people more concerned about the other charges on their utility bills besides the kilowatt hour rate, but he said this will still result in savings for customers.
“That doesn’t negate the fact that you can still save this amount of money,” he said.
He said that as the energy futures market is trending towards higher prices over the next several months, and that will result in higher prices on bills.
“I am concerned that a lot of folks are going to be opening up their bills in the coming months, it’s going to be significantly higher than may have seen in the past and are expecting,” he said.
He said this would be especially important for lower-income Calgarians, who according to research, often don’t take advantage of the fixed rate savings during times of high market prices.
Customers can exit fixed rate contracts at any time
Albertans, especially new ones who are used to the way energy pricing works in other provinces, may not be aware of how fixed rate contracts work in this province.
Shaffer said that people often equate a fixed rate electricity price to a fixed rate mortgage.
But, he said, unlike banks, electricity providers do not quickly update their fixed rates, meaning there is a lot less risk for consumers to be locked in if prices decline.
“The largest retailer here in Calgary has not moved their fixed price offer, despite the fact that power prices have doubled,” he said.
Shaffer said that what the fixed rate really means for consumers, is that price is going to remain the same on their bills.
“The important thing to stress, is that for most retailers that when it says fixed rate for five years, that’s a guarantee by the retailer,” he said.
And if customers don’t like their rate, they can always jump back to variable pricing at any time during their contract period, unlike a mortgage.
“You can flip right back to floating when you want, and most retailers allow you to do that once per month even,” said Shaffer.
Province offers a price comparison tool
The Alberta Government’s Utilities Consumer Advocate has created a tool to allow customers to quickly compare pricing between energy retailers.
Customers can enter their location via city or by postal code, and receive a current list of energy plans and prices.
As of Tuesday, an ENMAX fixed rate plan for 5–years was showing a rate of 6.890¢ per kilowatt hour. Other retailers, depending on the term or whether customers wanted all–green–energy, were offering just above 7¢ per kilowatt hour.
Shaffer said the tool brings together a lot of information that would be hard for customers to get otherwise.
“Look, folks, there’s a way to save some money this winter.”