Floating vs. Fixed - Alberta Electricity Rates

What’s our opinion about floating vs. fixed rate contracts? The easy answer would be to say it depends, but that’s not really an answer.

With a floating rate contract you will never lose out to the electricity market, but will you ever beat it? Floating rates used to provide the cheapest source of power to consumers in Alberta, but in mid-2018 the volatility of Alberta’s electricity pricing increased. This was a result of tighter supply/demand, coal to gas conversions and weather events. The market is anticipated to remain volatile until 2024 when additional generation opportunities come on line. So is now the right time for businesses and institutions to switch to a fixed rate electricity contract?

Fixed rate electricity contracts provide cost certainty, stability and potential savings to pool pricing. Businesses need to be aware of the contract terms and mid-range planning, but now could be a good time to reduce exposure to the market and lock in stability and potential savings for the next few years.