Muvar Inc.

With High Energy Prices, Should I Go With Regulated or Fixed Rates?


Looking to switch energy?

The rising cost of living and global energy prices are a significant concern for homeowners in Alberta this winter. Many Albertans who are on RRO or variable rates may see their electricity consumption costs nearly double in this year compared to the previous years. To mitigate this burden, the Government of Alberta has introduced a price cap of 13.5 cents per kWh of electricity used by RRO rate customers during the heavy-use winter months. Any costs above the 13.5 cent price ceiling will be deferred and repaid over 21 months from April 2023 to December 2024.

A typical RRO electricity customer in Alberta can expect to pay approximately $100/month more in electricity consumption costs this winter compared to the previous year. However, customers who fixed their rates last year will likely not be affected by this increase.

The question of whether it’s still a good time to switch to a fixed rate depends on the current market conditions. As stated in one of our earlier publications, The Regulated Rate  Options (RRO) are cheaper when energy supply is abundant and more expensive when supply is limited. Therefore, those on regulated rates tend to benefit when energy is cheap, but pay more when it’s scarce. Given the current global economic situation, it is unlikely that there will be an abundance of global energy supply in the near future. Therefore, switching out of the RRO rate to a competitive fixed rate, which may be lower than the 13.5 cents per kWh price cap, may be a wise decision. You may follow this link to compare current fixed electricity rates from leading competitive retailers in the market.

The chart below illustrates the historical fluctuations in Alberta’s RRO electricity rates. It shows that the rate was 10.91 cents per kWh in March 2022, but rose to 29 cents per kWh in January 2023. On the other hand, the average fixed electricity rates have been less volatile over time.

Looking for affordable "Fixed" rates?