City officials are urging local utility customers to strongly consider signing on to fixed rates as prices for electricity continue to climb.--NEWS FILE PHOTO
cgallant@medicinehatnews.com@CollinGallant
With power prices set to climb, city officials are again stressing local customers should consider signing on to fixed rates for the power and gas they use.
That’s after more than a year of near or record-setting power prices for those without fixed contracts as default rates have risen to new highs.
Indications are that high power prices will remain well into the fall, while the price of natural gas appears to have levelled off.
Travis Tuchscher, the city’s manager of energy business analysis, says about half of the city’s 30,000 customers have moved to fixed utility rates in both power and gas.
“It is a tool people can use to manage they’re costs,” he told the News on Thursday. “There is a time commitment (customers must sign on for at least six months), so they should be considering a bit of a longer-term (analysis).”
The city’s fixed rate for power in 2022 is 8.5 cents per kilowatt hour, though the default monthly rate for October – set at the average of other default rates in the province – will likely be 10 cents above that.
For a typical home using 500 kilowatts each month, the difference would be $50.
That’s apart from an automatic $50 credit provided by the province each month until March to address high power prices. Single power connection households and smaller business accounts receive that automatically, fixed rates or not.
A provincial natural gas price cap goes into effect when the price rises above $6.50 per gigajoule, but that rate won’t be reached in October.
Filings to the Alberta Utilities Commission this week show the two main distributions, Apex Utilities and Direct Energy, at $4.60 and $5.63, respectively.
That would set the Medicine Hat default price at $5.12 per gigajoule when it is announced next Monday.
The city’s fixed rate is $4.35, available until late December, at which point administrators will reevaluate and offer new rates based on forecasting into next year.
The issue was discussed at the Sept. 22 meeting of the utility committee with administrators stating fixed prices are based on costs plus marginal return.
That leaves some potential profits “on the table” but it’s good business practice for customers.
“There’s lots of power and gas supply, but the question is at what price,” said division managing director Brad Maynes, who reiterated that the wholesale market has been its most unpredictable in memory.
He said the city has sold to natural gas to fixed-rate customers below purchase cost off the major transmission system at times in 2022, but the difference is much less in terms of actual dollars than several years ago.
He said distortions in gas trading first came from futures traders reacting to global uncertainty and the situation in Europe, and is now reversing as North American traders are predicting recession.
Power prices on the Alberta grid spiked this week as the interconnection with British Columbia went offline and prices for electricity rose to the mandated maximum of $1 per kilowatt hour. The typical rate is around 10 cents.
