Energy rates can be confusing. There are variable (floating) rates, fixed rates and regulated rates.
Fixed rates are set rates that do not fluctuate with the market and are guaranteed for the duration of your contract term. Fixed rates require a contract, with a minimum one year commitment.
Fixed rates can be a good option with market prices are volatile.
Floating rates change with the market prices and can provide you with low energy costs when the market is low, however when prices rise, this can cause a big surprise on your energy bill.
Regulated rates are energy rates that are controlled by the Alberta Utility Commission.
These rates fluctuate, and up until recently had a maximum price cap to protect consumers from run away prices. Recent changes by our government have removed the price cap, exposing regulated rate customers to the volatility of changing market prices.
Choosing The Right Rate
To choose the right type of right for you, you need to consider what the market rates are in comparison to the fixed rates being offered on the market.
Historical Average Alberta Natural Gas Rates
You’ll notice that the variable rates for natural gas are usually less than the fixed rates on the market.
Historical Average Alberta Electricity Rates
You’ll also notice that the fixed rates for electricity are much lower than the variable rate.
Making The Right Choice
Making the right choice in terms of which type of rate can be confusing. You could choose to go with the type of rate that is currently the lowest, based on the above historical rates.
The second option would be to look into our crystal ball to see what is going to happen to energy rates.
Since we don’t have one handy, let’s look at what the analysts have to say. According the Deloitte’s oil and gas forecast (December 2018), natural gas prices are expected to rise but stay under $3 per GJ.
Sadly we have not been able to locate a credible forecast for electricity prices, but will update this post when we find one. In the meantime, the variable rate is well above the fixed and regulated rates, so it is best to lock in with a fixed rate or sign on for a regulated rate.
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