Fixed vs. floating electricity rates in Alberta: What to choose? That’s the question that will come to mind whenever you start searching for Alberta utilities. Whether in Lloydminster, Edmonton or anywhere else in the province, these two types of 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- and fixed-rate plans.
When you learn the differences between fixed and floating 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 spikes in rates.
The energy market is considerably dynamic, and anything can affect electricity prices — from changes in regulation to natural disasters. Fixed rates, then, 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. In spite of that, electricity prices went above 7 cents/kWh in 2018 for the first time in almost four years, and consumers have been receiving higher electricity bills since then. As the Alberta economy recovers from the recession, the electricity rates forecast for 2019 indicates that people can expect rates to keep increasing in the months ahead.
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 5.89 cents/kWh, fixed-rate contract for three years. In such a scenario, even if floating rates go above 30 cents/kWh, you will still pay 5.89 cents/kWh every month.
Anyone who cares 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, large commercial and industrial customers — are the ones that 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 costs of electricity 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 make sure they pay as little as possible when rates are low. However, such plans can be quite risky, as they depend on what the market looks like now. As an example, a household could see its electricity prices change from 3 cents/kWh to 15 cents/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 to have a predictable budget. In early 2019, many consumers paying for floating rates in Alberta were surprised by higher electricity costs. The reasons for such increases aren’t always easy to predict, so it’s not rare to see people surprised by the price changes in their energy bills.
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.
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 rates 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 electricity and natural gas historical prices.