4/03/2011

Whammo!.. Here comes Spring...here comes a spike to your power bill...

It's already April... and April Fool's Day is behind us... Facebook walls were disappointingly quiet this year though 24 people wished me a happy birthday on Friday (yes...my birthday is in September for the 3 people who did remember) and most enjoyed my "perverted lamp" profile pic... And, I did enjoy another friend's AF's Day comments on moving to Vancouver for work, voting Liberal, loving the Calgary Flames, and Nickelback, best band ever... anybody who has met him will realize how ridiculous those comments were on Fool's Day...

Anyways, springtime is here and we're feeling confident again! Snow is finally melting with the weather turning around with exception to the snowstorm in Calgary; the Edmonton spring Real Estate market has begun and sales are picking up again; the stock market has been on fire as of late with earnings continuing to show improvement in the economy and remains to look bullish despite slight recent corrections from the Japanese and Libyan events; future job growth looks optimistic after a relatively dismally slow winter with Oilsands activity looking to pick up after announcing several billion dollars ready to be spent on new projects throughout Alberta in the next 5 years.

But amid the good news comes the bad... grocery and food retailers such as Loblaws and Tim Horton's and George Weston have already announced price increases coming as soon as last month due to increased costs in transportation and commodity prices increasing.

Now energy and utility prices are set to rise sharply over the next few months and some suggest for the next few years due to wholesale power prices spiking.

In fact Epcor's floating rates have already been set... announcing electricity rates to increase to 11.763 cents per kWh in April 2011 from 7.093 cents/ kWh in March 2011; a 65.8% INCREASE!!! So looking at my previous electricity bill for March usage.. using 1020kWh of electricity in March; at a rate of $0.07/kWh totalling $71.40 in usage alone. The rate increase would constitute a $119.98 tab if the same amount of power is used for April; hence, a $48.58 jump in my bill!! Suddenly, people probably wished they would have participated in Earth Hour this year a little more diligently (Edmonton power usage rose for 2011 Earth Hour)... well maybe not... turning off the Edmonton-Calgary hockey game in HD and Facebook obviously is a lot harder to do than originally thought despite ambitions to save the world...

Is it time for a contract? Going over Epcor's energy rate archives, I averaged out what the rates were over the past 13 months: power rates only averaged 6.9185 cents per kWh with only 6 of those months going over the 7 cents per kWh I am paying with a contract with Enmax! Estimated savings going with Epcor's floating rate for the last 13 months would have only saved me around $10 but nonetheless it was on average cheaper to keep a floating rate.

But, the new increases are a different story now. Since the beginning of 2011, monthly floater rates have been over the set Enmax rate of 7 cents and with rates jumping 66% and more over the next few months, a contract may not seem like a bad idea now, especially considering most provinces are considering going with time-of-day pricing like that of our US counterparts. Couple that with their ridiculous rider rates and admin fees, we're in for a world of hurt this summer. Here are the current fixed plan electricity pricing for Edmonton area:

Disclaimer: Contract prices may change periodically. Please contact the retailer to verify current pricing.

Fixed price plans


Company

Plan

Electricity ¢/kWh

Gas $/GJ

Comments

One Year

Direct Energy competitive offers

Effective until April 28, 2011

Dual Fuel8.49¢/kWh$6.59/GJCancel
with 30 days notice. No early exit fees.

Admin fee
$4.50 for each electricity or gas site(or meter) for dual fuel plan.

Direct Energy competitive offers

Effective until April 28, 2011

Fixed Single9.99¢/kWh$6.59/GJCancel
with 30 days notice. No early exit fees.

Admin fee
$9.00/month for single fuel

Spot Power competitive offers

Effective June 4, 2010

Fixed Electricity6.5¢/kWh Cancel
with 15 days notice. No early exit fees.

Two Years

Direct Energy competitive offers

Effective until April 28, 2011

Super Flex Dual Fuel 8.99¢/kWhFlex-Through Price plus $1.50/GJCancel
with 30 days notice. No early exit fees.

Admin fee
$4.50/month for each electricity or gas site (or meter) for dual fuel plan.

Spot Power competitive offers

Effective June 4, 2010

Fixed Electricity6.8¢/kWh Cancel
with 15 days notice. No early exit fees.

Three Years

Direct Energy competitive offers

Effective until April 28, 2011

Simple Three Dual Fuel9.99¢/kWh$6.99/GJCancel
with 30 days notice. No early exit fees.

Admin fee
$4.50/month for each electricity or gas site (or meter) for dual fuel plan.

Just Energy Alberta competitive offers

Effective until further notice

Flat single or dual energy7.79¢/kWh$5.79/GJEarly exit
fee of $75 for each electricity or gas site(or meter) may apply for each year left in the contract term.

Admin fee
$6.90/month for 1site; $9.85/month for 2 sites plus $2.95/month for more than 2.

Five Years

Enmax Energy Corporation competitive offers

Effective until
April 30, 2011

Fixed Bundle (dual energy)8.0¢/kWh
$6.59/GJ
Cancel
without penalty with one month’s notice, and if our electricity rate drops, switch to the lower rate at any time.

Admin fee
Same as charged by your RRO provider. If less, then $5.90/month.
Fixed Electricity8.0¢/kWh

Cancel
without penalty with one month’s notice, and if our electricity rate drops, switch to the lower rate at any time

Admin fee
Same as charged by your RRO provider. If less, then $5.90/month.

Just Energy Alberta competitive offers

Effective until further notice

Flat single or dual energy7.99¢/kWh$5.99/GJEarly exit
fee of $75 per site for each electricity or gas site (or meter) may apply for each year left in the contract term.

Admin fee
$6.90/month for 1site; $9.85/mo for 2sites plus $2.95/month for more than 2.


Floating price plans


Company

Plan

Electricity ¢/kWh

Gas $/GJ

Comments

Enmax Energy Corporation competitive offers

Effective until
April 30, 2011

Floating Dual Energy PlanPrice matches regulated rate in your areaFlow-through price plus $0.47/GJ**

Cancel
without penalty with one month’s notice, and if our electricity rate drops, switch to the lower rate at any time

Admin fee
Same as charged by your RRO provider. If less, then $5.90/month.

Floating Electricity PlanPrice matches regulated rate in your area

Cancel
without penalty with one month’s notice, and if our electricity rate drops, switch to the lower rate at any time

Admin fee
Same as charged by your RRO provider. If less, then $5.90/month.

Spot Power competitive offers

Effective June 4, 2010
Basic Plan: Floating Energy PriceFlow-through price plus 1¢/kWh*

Cancel
with 15 days notice. No early exit fees.

Admin fee
$4.00/month



*Flow-through prices for electricity are based on hourly Alberta Pool prices with additional charges to reflect line losses and unaccounted for energy, load shaping and administrative fees.

**Flow-through prices for gas are based on daily wholesale market prices in Alberta with additional charges to reflect transportation charges and administrative fees.



Expect these contracts to end soon with wholesale electricity prices spiking like they have. Beware of scammer door to door sales of these services also. Just Energy, formerly Alberta Energy Savings, were recently investigated for their salespeople signing fraudulent contracts that homeowners did not approve of; so read your contract carefully and don't agree to anything without doing your own DUE DILIGENCE first!!!

Other alternatives? Back during the natural gas deregulation days and spikes up to $13/GJ rates circa 2003, I countered energy price spikes by buying energy and royalty trusts that paid me monthly dividends directly to me or into my trading accounts. But, doing that now, with the new royalty trust rules in Canada since January 2011 is not as lucrative as it once was as the distributions are much more heavily taxed now and distributions are less because of that.

But, as rates increased so did the payouts as utility companies were collecting more, they paid out more to its unit holders. And, holding the power and utility companies such as TransAlta, Capital Power, and Canadian Utilities may not be such a bad idea as most pay a 5-8% yield at current price; Canaccord believes with the demand growth for electricity, they expect utility company yields to also rise with electricity pricing increases. So, an investment of $12,950 for 500 shares of Capital Power (CPX-T) at Friday's closing price of $25.90 per share will bring in a gross $157.50 every 3 months (or $52.50 per month) plus some capital gains; it would counter the increase in your electricity bill if you don't include the dividend taxes and transaction costs.

Or you can install solar panels for your home that supply the electricity you need and feed extra unused energy back into the grid giving you some extra revenue dependent on your electricity provider. But, expect to pay out an initial cost of $20K- $80K for the installation. A fellow I talked to recently, installed solar panels on his acreage lot 7 years ago for about $45,000 CDN cost; he says this year his solar panel system will be paid off via the rebate cheques he has received from TransAlta Utilities and electricity savings. A seven year 100% return on investment is a pretty good deal; that's like getting a 10% yield compounded annually on a GIC held in your TFSA! But, I do doubt a residential solar option is hardly feasible with its high installation costs compared to its small output size for a residential home and its longevity has yet to be seen though Home Depot has 20 year warranties on their solar panels they sell, I could imagine the boys putting a hockey through one; though it is worth looking into to save a few bucks long term and perhaps do our part in saving the world...

How to look at these increases in almost everything? Well... it hurts..this year in particular I have noticed it is much harder to save money than ever before!

In the grand scheme of things...if a loaf of bread dropped to 89 cents per loaf, is that cheap enough for you? How about gas at the pump being 49.9 cents per litre instead of the 110.9 we see now? Average home price in Edmonton $124,094.00? It would be great no?

Well, you still couldn't afford those at those prices if you weren't working.... That's what they were during Alberta's dip in the economy circa 1996...

My tax return filed for 1996 reported 9 different companies all over Alberta and BC that I had worked for that year and still included $8399.00 in UI benefits paid out (about 20 weeks of unemployment cheques) totalling $33,914.45 BEFORE tax income for that year!! The wife's income (fiancee at the time) was $23,882.36 before taxes working full-time for an entire year! Together as a household we would have pulled in only $57,796.81 BEFORE taxes and were looking to purchase a home and save up for our wedding the following year..... The Canadian dollar averaged $0.73033USD... meaning our household income in 1996 was comparable to those earning $42,210 in the United States! And considering we pay our expenses with after tax money, we didn't have much back then... and, we were better off than most of our peers too!

Yeah, I think I'd still much rather have the situation we have now... utilities going up..bring it on!

Unless of course, I lose my current job... then uh-oh....it may seem though that Ft. McMurray may be in my near future if the bills keep rising like this.... and why did it seem we had so much more disposable income back in 1996???





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