Bill Crush recently reviewed the rates for residential energy in the Calgary area and the results are shocking (and confusing). It’s no wonder that the average consumer doesn’t shop around. The problem is, not shopping around could cost you up to 56% more, just because of the rate plan or energy provider you signed up with.
The Fix Is On
In Alberta we have energy providers that offer a variable or a fixed rate. The variable rate moves up and down based on the market rate and the energy provides add their “margin”. Their margin is the amount they charge over and above the market rate, and it varies by provider.
In the past, energy prices were more volatile, so people were pressured into locking into a fixed rate so that they didn’t have a heart attack when they got their bill. But things have changed, energy prices are really low (as anyone in Alberta knows all too well). Historically, the variable rate has been much more affordable than the fixed rate because of the market. If you are on a fixed rate, you’ll want to move to a variable rate and start seeing a decrease in your monthly energy bill.
Smoke And Mirrors
So why don’t people just shop around for the best rate on the energy bill? The answer is, it’s not that easy. Because of the market and variable rates, it can be challenging and confusing. We reviewed 13 different energy providers rates and found something very interesting. It was easy to compare the fixed rates, because they are locked in. But when trying to compare the variable rate, we found 3 different ways that providers presented their rates to the public. Here’s an example of electricity rates that will make you scratch your head:
Provider A: market rate plus 1 cent per kWH
Provider B: 3.4 cents per kWh
Provider C: no rate given, only historical rates and no disclosure of their margin
The problem with “provider A” is that as a consumer, we have no easy way of knowing what the current market rate is, so how do we compare our current rate to what they are offering? And providers B and C don’t tell us what their margin is, so how can compare them to provider A? This is the type of confusion that makes it easy for providers to charge more and for aggressive and less than sincere sales people to pressure people into contracts that actually cost more than their current ones.
Finally, Some Clarity
With choice, comes confusion. Have you seen the yogurt aisle at the grocery store lately? It’s paralyzing. The good news is that Bill Crush has done the research, confirmed each providers “margin” and can compare “apples to apples”. Bill Crush has been able to identify the lowest energy providers of natural gas and electricity for the Calgary area.
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