Calgary’s utility market is still dominated by Enmax, but dozens of smaller businesses are battling for a piece of the pie.
Will they save you money? They could. It depends on your bill.
With inflation rising costs at all levels, many Calgary residents are looking for a deal. And they tell us that energy contracts are like a “black box” – confusing, especially when you’re wary of a scam.
“You’re trying to find an answer and there’s really no documentation,” said Ariel Espinosa, a homeowner, management consultant and one of 850 residents who sent us text messages about utility bills.
High prices last winter prompted him to call Enmax for answers.
He was tempted by the Direct Energy seller. The rate was lower, but what about administration fees?
The information was simply not clear.
So we gathered questions from our text messaging community, then went into the company’s websites, interviewed key players, and created spreadsheets.
Here is what we found.
The big 3: Beware of high administration commissions
The first thing to know is that Alberta’s energy system is only partially free market. The only option you have is the energy retailer. This means that each company must charge the same transmission, distribution and other fees set. What changes is the administration / retail tariff and the cost of energy or gas.
Let’s start by looking at the three largest companies by market share.
The giant is Enmax, which was once a Calgary city department and still pays a dividend to the city.
Enmax is the default option for anyone who has not signed another contract. In Calgary last year, 27% of households were still in the default option, and an additional 57% joined EasyMax by Enmax, where they chose between fixed and variable rates.
Enmax, which started as a municipal business, is now a wholly owned subsidiary of the City of Calgary. (Evelyne Asselin / CBC)
ATCO and Direct Energy are as follows.
ATCO has five percent of the market and its rates are almost identical to EasyMax. There is no real savings or additional cost.
Direct Energy has a 6.5 percent market share and offers a $ 25 annual return option plus a free Google Nest Hub with a five-year electricity contract.
But this is where the rates can get you. You are losing $ 5 a month by paying extra for your administration fee. So with the money back, you’ll end up paying $ 3.80 a month more.
Is it cheaper? It depends on how much you want this Google Nest Hub.
Cost savings for a large home
So where can you save money? It depends on the size of your home.
A quick search at UCAhelps.alberta.ca (the provincial attorney’s website) first shows nearly a dozen companies that manage their billing and customer service through the same Calgary-based company: Energy Sponsor. This includes franchise companies such as Energy for Less, Burst Energy and Regional Energy.
UCAHelps lists them as having the best rate. But again, watch out for these higher administration fees.
That’s why it’s just a cheaper deal for a bigger house.
For example, look at Energy Sponsor (which manages other companies’ billing systems and sells the energy itself). Its fixed rate per kWh is 7.94 cents and charges a daily retail rate of 50 ¢. It’s a lower rate than EasyMax, but a higher administration fee.
Thus, a small duplex with 500 kWh per month would end up paying $ 5 more per month with these companies than if they signed with EasyMax.
As energy costs rise, the people of Calgar are paying more attention to their use of electricity. (Talia Paiz)
Both offers reach 1,000 kWh per month. And a big five-bedroom ranch house or a place with a 2,000 kWh hot tub a month would save you $ 5 a month.
But each of these companies is not just trying to sell cheap energy. Sponsor Energy, for example, creates partnerships with local charities to sell their power.
Dan Brownsberger, the company’s community development manager, says he donates $ 50 to the charity you choose for any new enrollment, which is about half of what the company earns per customer each year.
“Our model was based on the charities that spread the word,” Brownsberger said. “Electricity, natural gas: it’s a grudge purchase. But at least (customers) can feel good that, you know, their choice made a difference to their favorite charity.”
Energy saving for a small house
So what about a small house? In this case, one way to lower the bill is to make a deposit, called “prudent” in the world of utilities.
There is a second group of 26 small businesses operating this model, with support from the Calgary Utility Network. Companies like Get Energy, Abode Power or non-profit EmCo require a $ 100 to $ 200 deposit to reduce the risk of default.
The savings are still small. With Abode Power, for example, this small duplex could save $ 4 a month on EasyMax at a fixed rate (7.91 cents per kWh and $ 6.31 a month in administrative fee). But it can add up. A house with 1,000 kWh a month would save $ 100 a year with these rates.
Darren Chu is the program development manager for Utility Network, a Calgary-based company. (Submitted by Darren Chu)
“It’s just a way to secure these lower rates,” said Darren Chu, Utility Network’s program development manager and son of the founder.
“We, as a licensed retailer, have to issue prudence. Our energy sellers publish prudence with us. Therefore, we allow customers to publish their prudence and pay them 5% interest. It’s a way “Assuring our prudence and as a way to get the customer back a little bit. You know, it’s probably hard to find a five percent interest rate anywhere right now.”
These interests are credited annually to a customer’s account.
Many of these 26 companies also try to stand out in the market by donating to different charities, between 10 and 100 percent of the profits. Or they have specific rates aimed at homes with solar energy and sell the idea of personal and local service. The family business has only 25 employees, including the Calgary Call Center.
But do I really want to shut up?
Most contracts now do not have a penalty for early departure. So it’s not really blocked, and you can switch between the floating rate and the fixed rate when you need it. But due to the switch to a market-based electricity system, analysts predict that the fixed rate will be cheaper than a variable rate for at least another year.
There are also options with variable rates, but they are not that easy to compare. Many small businesses try to compete with the big players by offering a wholesale fee plus a transaction fee.
But these rates are not posted online. Chu asked his analyst to extract monthly data for the past five years. He shared this spreadsheet with us, suggesting that 60% of the time, the variable utility network offering was better than the regulated option set by the Alberta Utilities Commission for Enmax.
But we have no data to see how the variable rates offered by EasyMax or ATCO compare.
Are there good options for natural gas?
We found fewer options for natural gas. EasyMax and ATCO have flexible fixed rate options.
The Sponsor Energy group of companies offers fixed rates, but they have a $ 250 fee to cancel the contract early. Their website says this is because they buy gas in bulk in advance for customers.
Utility networking companies no longer offer fixed prices. They just couldn’t compete in that market, Chu said.
“We have to cover and supply our own energy. And right now, it’s very expensive to secure any kind of volume-sized coverage in order to sell them at fixed rates.”
Good luck and caution
The best resource we found was the cost comparison tool at UCAhelps.alberta.ca. But the rates quoted were often slightly below the rates posted on each company’s website. Give a place to start if you are willing to continue digging.
Also, these rates are always changing. So don’t rely solely on this analysis. Check the rates yourself and see if you like and trust the company.
Want to share your experience with utility bills? Leave a comment or join our text messaging community by adding your number to the box below.