Fixed, Floating or Regulated Energy Plans

Fixed, floating or regulated electricity rates in Alberta: these are the three options Albertans have when they begin the search for Alberta utilities. Whether in Lloydminster, Edmonton or anywhere else in the province, these three energy plans can result in quite different energy costs, depending on the average (kilowatt-hour) kWh per month in Alberta.

When it comes to Alberta electricity costs, consumers need to analyze not only current energy rates but also the historical averages and the electricity price forecast, as well as the pros and cons related to fixed and floating (variable) rates. Most Alberta natural gas and electricity providers, including ENMAX, ATCO, Direct Energy and Just Energy, allow you to choose between variable, regulated, and fixed-rate plans.

When you learn the differences between fixed, floating, and regulated energy rates, you increase your chances of getting the best electricity and natural gas deals — in other words, energy bills that fit both your pocket and your energy needs.

Fixed rates in Alberta

Price security is the primary goal behind fixed electricity rates in Alberta. Such energy plans allow you to lock in rates for long periods (usually there are one-, two- and five-year options), and protect your bills from market volatility. When you choose fixed electricity rates, you’re reducing your vulnerability to market fluctuations and price spikes.

The energy market is considerably dynamic, and anything can affect electricity prices — from changes in regulation to natural disasters. Fixed rates resulted from people’s need to have more cost certainty added to their finances.

Due to the high number of variables in the energy industry, it’s quite difficult to predict what future electricity rates are going to be in Alberta. For example, electricity prices experienced a boom in 2021-2022 following the COVID-19 pandemic. Electricity prices also reached high levels in 2023, with the RRO averaging 31.486 ¢/kWh in August 2023 and variable rates averaging 24.751 ¢/kWh in June 2023. While fixed rates increased from 7.26 ¢/kWh average in 2021 to 10.37 ¢/kWh in 2023, it still provided greater price stability than other rate plans.

Who can benefit from fixed rates?

In times of sudden rate increases, fixed rates will bring predictability to your budget. Let’s say you’re under a 9.89¢/kWh, fixed-rate contract for three years. In such a scenario, even if floating rates go above 30¢/kWh, you will still pay 9.89¢/kWh month-to-month.

Consumers who care about cost certainty will benefit from fixed electricity and natural gas rates. However, some consumers can be more harmed by price fluctuation than others. Large consumers of electricity — such as large homes, small businesses, small commercial, and large commercial and industrial customers — will benefit the most from fixed rates.

After all, depending on your average electricity consumption, unexpected spikes in rates can deeply harm your monthly budget.

Floating rates in Alberta

Consumers with floating-rate plans may face entirely different electricity costs in Alberta, depending on the current market situation. When under a variable-rate plan, your electricity bills can change considerably from month to month based on the current electricity rates in Alberta.

Some consumers prefer floating rates to ensure they pay as little as possible when rates are low. However, such plans can be quite risky as their rate fluctuates with current market conditions. As an example, a household could see its electricity prices change from 10 ¢/kWh to 20 ¢/kWh from one month to another.

Electricity rates in Alberta can fluctuate a lot, so a variable-rate plan isn’t ideal for consumers who prefer a predictable budget. For example, the floating rate increased steadily in 2022 heading into 2023. The rate continued to decrease and increase throughout 2023 before entering a downward trend in 2024.

If you want to know more about the number of factors that can affect electricity prices in Alberta, here’s an interesting article on how Calgary’s energy rates are impacted by many different reasons.

Who can benefit from floating rates?

Floating rates can be low for long periods. In some cases, it can even go lower than fixed rates. Still, they are riskier than fixed prices. If you don’t mind taking financial risks — and can afford sudden price changes — then you probably won’t have problems with floating rates.

In terms of electricity consumption, floating rates are less harmful to small consumers of energy, such as someone who lives alone or spends most of the time out of the home. However, floating-rate plans can be especially risky for large consumers of electricity in Alberta, such as small or large businesses, industrial customers or even large families.

Regulated Rate Option

The Regulated Rate Option (RRO) is the default electricity rate option in Alberta. Customers who do not sign up for a fixed or floating plan with a retailer are automatically placed on the RRO. The rate is determined by the Alberta Utilities Commission (AUC) on a month-to-month basis. It is calculated based on the current market price for electricity in Alberta and short-term price projections for electricity.

Because the RRO is calculated on a monthly basis, it is prone to unpredictable price swings. This was evident in the summer of 2023 when RRO rates reached as high as 32.539¢/kWh in August. The RRO lowered in 2024 and is expected to become more stable as the Alberta government is restructuring how the rate is set. Beginning on January 1, 2025, the RRO will be renamed the Rate of Last Resort. The new rate will be set every two years rather than on a monthly basis. The Alberta government believes these changes will make the rate more predictable and affordable.

How to cut electricity and natural gas costs: The importance of energy rates comparison

If you still don’t know if you should choose fixed or floating electricity rates in Alberta, the best you can do is compare current energy rates. At EnergyRates.ca, you can check all the available Alberta electricity providers and compare fixed and floating prices for electricity and natural gas. You will be able to have a quick, unbiased energy rate comparison.

All you need to do to compare electricity and natural gas rates in Alberta is fill in your postal code and check the cheapest available prices in your area. You can also find more information about the Alberta electricity market, regulated providers (RRO), energy-saving tips, and a comparison of Alberta’s electricity and natural gas historical prices.