Fixed Natural Gas Rates in Alberta
| Pros | Cons |
|---|---|
| A fixed rate offers a stable electricity price in the face of high price volatility | A fixed rate may mean missing out on savings if prices fall |
| If prices rise above fixed rate, you may save money on your bill | If prices fall below fixed rate, you will pay more money than you might have otherwise If prices rise significantly above your fixed rate, you are not guaranteed the same price once you renew your contract |
What is a fixed rate plan for natural gas?
A fixed-rate contract offers you a certain rate that will not change during a certain time period (up to five years, depending on the contract). These are offered by the four larger competitive price companies (Direct Energy, Epcor, ENMAX, and Just Energy). There are in fact two types of 'fixed rate' plans offered by energy supply companies: some offer a fixed rate at which your gas consumption is charged (so that your monthly gas bill will vary in function of how much you consume), and other companies offer a plan similar to the 'budget payment plan' on a regulated rate where customers pay a fixed rate per month regardless of the quantity of energy consumed (within a certain limit).
Why Would I Choose a Fixed Gas Price Plan?
The main interest in signing up for a fixed gas price plan is for the stability and possibility to save money
Can Fixed Gas Prices Offer Price Stability?
Source:Alberta Energy
Natural gas prices are notoriously volatile, and can rise or fall dramatically from month to month. A fixed rate allows you to anticipate your monthly gas bill, which can help with monthly budgeting. Also, gas prices tend to increase dramatically when demand is greatest, which is usually in the winter when people want to heat their homes and offices. This can lead to expensive natural gas bills at a time when people need their natural gas the most. Choosing a fixed rate can offer some insurance against price volatility and rapid bill increases. A contract that allows you to pay a fixed price throughout the year, regardless of your monthly consumption goes one step further, and allows you to spread out the cost of heating over the whole year. This might be attractive for you if your budget is tight, or if you find this payment system more convenient.
Source:Direct Energy Regulated Services
Our Take:
Fixed gas prices offer price stability and allow you to better anticipate your monthly bill
Can Fixed Gas Prices Save Me Money?
A fixed rate could save you money over the long term if prices increase. While natural gas prices are likely to remain low in the near term, the Alberta Energy Regulator expects them to slowly increase over the next decade with increasing demand. If this is the case, a fixed rate may enable you to save some money (though you will not necessarily be guaranteed this price once it is time to renew your contract) on your bill. That being said, with natural gas production in the United States constantly increasing (and to a lesser extent in Canada), prices for the short term are not expected to rise in the near future. The Government of Canada forecasts:
Overall, for the 2014-2015 winter heating season, Canadian consumers can expect similar prices to last year, with less variability, and a return to even lower prices in 2015 both compared to historical prices and relative to other heating fuels.
Source: NRCan
That being said, also remember that the price of gas supply is only one part of your gas bill. Monthly administration fees may be more or less than your RRO utility provider, and the competitive retailer may be operating with lower costs and overheads. Some also energy retailers offer other benefits when signing up for a fixed rate plan (AirMiles, discounts with partner retailers, credits on your bill), which might also be attractive to you.
Our Take:
Choosing a variable gas price option over a fixed price is your best bet for saving money on your gas bills
Is a fixed rate contract right for me?
A fixed rate plan may be right for you if:
- You want to pay a stable electricity price
- You are able to make a long-term (multi-year) commitment
- You prefer price stability over lower prices
If you are not sure which type of gas rate is best for you, we recommend you look in to the pros and cons of fixed and floating rates for gas, as well as to learn more about regulated natural gas rates.
Can I cancel a fixed rate contract?
Some energy retailers, though not all, may also charge a cancellation fee if you decide to leave your contract early. However, there are rules for when, and how much, energy retailers can charge for contract cancellation, so make sure you check the terms of your contract and are aware of your rights as a consumer.