If you are wondering if you should lock in your utility rate, please take some time to read these helpful tips and weigh your options. Make sure you select the best plan for your needs and budget by carefully considering all the factors.
Albertans have three options when purchasing their electricity and natural gas utilities:
- The default Regulated Rate Option (RRO)
- Locking in the fixed rate
- Choosing the variable (floating) rate (wholesale price + transaction fee)
Visit the page Choosing How You Buy Your Energy to learn the pros and cons of these options.
Note: Both the fixed and variable rates require a contract with a competitive retailer. Only a fixed rate plan will guarantee a certain rate.
Meaning of ‘locking in’ utility rates
Locking in utility rates means:
- Agreeing to a specific fixed price per kilowatt-hour (kWh) of electricity and/or per gigajoule (GJ) of natural gas
- This fixed price will apply to all of your utility usage for the duration of your contract
Considerations for locking in utility rates
You might want to switch from the Regulated Rate Option (RRO) or variable (floating)rate to a fixed rate if:
- You are comfortable with the guaranteed rate
- You believe the fixed rate can help you budget your monthly utility payments
- You want to have a stable rate to rely upon if your energy consumption increases
A fixed rate is a guarantee from your utility company that your utility rate stay the same for a specified period of time. Knowing the price you’re paying every month can help you better budget your monthly expenses.
The fixed rate does not mean that you will pay the same amount each month. Your monthly utility bill can be higher or lower depending on the amount of energy you have used.
Note: Fixed rate protects you from market fluctuations. If you lock in the rate and market rates increase, you still get to keep your lower rate.
When to lock in utility rates
You might choose to lock in a fixed rate if:
- Electricity and/or natural gas market prices spike
- Utility consumption increases because of extreme weather temperatures
- Energy demand becomes higher than usual due to energy supply shortages and raised energy generation costs
Energy markets are volatile and hard to predict. Generally, the balance between the energy supply and energy demand determines the market price. The historical rates chart on our Historic Rates page and the monthly RRO rates listing on our Regulated Rates page may give you an idea of where rates are headed, but the decision of when to lock is yours.
Tip: It is a good idea to monitor utility rates by checking out our Historic Rates page and the Regulated Rates page.
How to lock in utility rates
Follow the steps of this simple process:
Step 1. Use our Cost Comparison Tool to find the best fixed-rate plan for you
Step 2. Contact the utility retailer who offers this plan
Step 3. When you receive your new utility contract from your retailer, please read and understand the terms and conditions before agreeing to it in writing, verbally or electronically
Length of utility contracts
Depending on the retailer, you can usually get a fixed-rate plan for 1, 2, 3, or up to 5 years. 5 years is the maximum length of a contract. Using our Cost Comparison Tool, you can compare the rates and estimated bills by selecting a specific term in the “Contract or Term” filter.
If there is a period of declining rates, it may be beneficial for your to cancel or renegotiate your energy contract rather than staying with the existing contracts. Understanding the terms of your contract can aid in this decision.
Rate plan switching options
Some retailers offer an option to switch between fixed and variable (floating) rates within the same contract term. It is always a good idea to ask your competitive utility company if they have this option.
Choosing the best utility plan
If utility rates go down after you lock it in, you are bound to your fixed rate until your plan expires. Some retailers charge exit fees for ending the contract early, so make sure to read the Terms and Conditions section of your contract. If you are using our Cost Comparison Tool to select a fixed-rate plan, make sure you check for an exit fee amount in the Early Exit Fee section of the selected Plan Details page.
Tip: Check for the Early Exit fees before signing a fixed rate plan contract.
How we can help
The Utilities Consumer Advocate’s mediation officers can share advice on comparing utility rates, as well as provide information on utility issues and help settle disputes with your provider. Contact us toll-free at 310-4822, email at email@example.com, or visit the Contact a Mediation Officer page for more information.