In Alberta, even if you’ve locked into a fixed contract rate for 1–5 years, you’re free to switch to a different plan — or even switching utility providers entirely — to get the best energy prices.
Having a fixed contract doesn’t prevent you from switching and you don’t need to wait for your contract to expire. It’s actually your provider — not you — that’s “locked” into honouring a specific rate for a predetermined amount of time. Some providers might charge an early exit fee if you switch before your contract expires but most allow you to switch at any time without penalty.
This flexibility allows homeowners in Alberta to choose between a variety of competitive retailers.
And don’t worry, switching retailers won’t interrupt the delivery of energy to your home.
In fact, the biggest challenge usually isn’t switching — it’s knowing how to compare rates between providers and choosing the best option for your home. This article will give you three important things to consider as you weigh whether or not to switch plans or providers.
1. Low Energy Rates May Still Result In You Overpaying
As consumers, we often focus on the cost per unit of energy. Low rates always seem like they’re the best option … even if providers tack on a slightly higher fixed charge. But the truth is that the less energy you use, the more the fixed cost impacts you.
In some cases, you might wind up paying a higher total cost annually even if you locked into a rate with a comparatively low cost per unit of energy. This can make the entire contract more costly vs. a contract with a slightly higher cost per unit of energy and a lower fixed cost.
Here’s an example. Note that, for the sake of simplicity, this example focuses on the cost of energy + fixed fee, excluding additional fees like delivery charges, rate riders, and taxes.
In this example, the break-even point is roughly 800 kWh per month. If your consumption is higher than 800 kWh per month, you save more money with Contract A. If your consumption is lower than 800 kWh per month, you save more money with Contract B.
Note that the energy consumption of the average Canadian household is roughly 7200 kWh/year (600 kWh/month if you smooth for seasonal ups and downs), so the average Canadian household would actually benefit from locking into the plan with higher cost per unit of energy!
The takeaway: the less energy you use, the more fixed costs impact your total cost.
Pro Tip: Consider your energy usage before signing up for a fixed contract rate.
2. Online Energy Comparison Sites Can Be Misleading
Comparison websites can help you find lower rates per unit of energy but they don’t always help you understand which option is right for your household. These websites typically use generalized consumption estimates rather than the actual energy consumption patterns of individual households.
For example, the Utilities Consumer Advocate (i.e., the Alberta government) website calculates your total electricity cost (“Estimated bill”) based on the assumed average consumption of 471.24 kWh. This is a fantastic resource if your consumption falls around that number. But if your household’s consumption is significantly lower than the assumed average, the fixed fees associated with the plan could mean your effective rate per kWh is much higher than advertised.
Pro Tip: It’s not just about the rate; it’s about your total (monthly and annual) costs.
3. Utility Rates Change All the Time
Utility providers often talk about “setting and forgetting” your utility rates like it’s a good thing — but usually, they’re the ones benefitting.
While it’s true that a fixed contract rate can protect you against sudden increases, it can just as easily result in you paying more if market rates go down. Because it’s so easy to switch, it’s to your advantage to watch the market and lock into a lower rate whenever possible.
For example, if you “set and forget” a three-year natural gas contract from this provider around July 2022, you’d be kicking yourself by July 2024 as natural gas rates in Alberta fell to some of the lowest they’ve been in years.
Pro Tip: Try to check market rates every few months to see if switching plans or providers could save you money.
Sounds like a lot of work? Jotson can help.
Manually figuring out which utility plan is best can be a lot of work — and almost nobody has the time (or sprawling spreadsheets) required to keep track of everything.
This is where Jotson can save you a lot of time (and money!). Jotson automates this process and we pay attention to the energy market so you don’t have to. We use your annual consumption. We consider fixed and variable costs. We check the rates every month.
Best of all, our built-in utility contract analysis toolkit will automatically apply current rates to your actual consumption and alert you when new cost-saving opportunities are available. You’ll be able to see exactly how fixed contract rates from major utilities compare to your current rate.
The best way to effortlessly stay on top of your energy is to download Jotson.
