Default Rate

On November 20, 2023, City Council passed a new gas utility bylaw (Bylaw 4798) to provide consumers with a single Market Reference Price based on wholesale market commodity prices (the weighted average cost of the natural gas purchased for that particular month of consumption) plus $0.07/GJ to recover transactional costs and a small rate of return. This new rate will take effect January 1, 2024.

Consumers may still enter Fixed or Variable natural gas contracts up until December 31, 2023, at which time all contracts will expire in favour of the new rate. You may choose to return to your contract that was in effect prior to January 1, 2024 by contacting customer_accounts@medicinehat.ca by email by February 1, 2024 and will be subject to the terms of that contract for the duration of the initial contract.

On October 16, 2023, City Council voted to pass a new electricity bylaw (Bylaw 4796) to provide consumers with a single best of market interim electricity rate. This new rate automatically took effect on November 1, 2023.

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Natural Gas

Electricity

In most parts of Alberta the regulated rates are reviewed and approved by the Alberta Utilities Commission (AUC) and can change from month to month. Generally, the balance between the energy supply and energy demand determines the market price.

Benefits of the default rate

• The default rate always provides the current projected market price
• You don't need to sign a contract or remember to renew
• If the price drops, you share in the savings
• For natural gas, during some months, the default rate may be lower than the fixed or variable rates

Potential risks

• The default rate reflects the current market price, which fluctuates up and down making costs less predictable
• For natural gas, during some months, the default rate may be higher than the fixed or variable rates

Calculation

For electricity, the single best of market interim rate will be calculated based on a twelve‐month forecast of the wholesale electricity energy market. The set rate will remain in effect for three months with a recalculation occurring at the end of each quarter based on this rate setting methodology.

Two main objectives are achieved by setting rates in this manner:

1. The rate is expected to beat the one-year contract rate of other large retailers because those retailers reference the same wholesale price, but layer on additional retailer fees and other charges; and,
2. It allows for more stability (fewer price spikes) by forecasting for a twelve-month period (creating an averaging effect), while remaining aligned with market prices because it is adjusted every three months.

A Recovery Rate is currently added to the calculated electricity price as part of the recovery from the Government of Alberta temporary price protection. See below.

The default rate for natural gas is calculated based on the average of the monthly gas charges set by Alberta gas distribution (pipes) owners. The City of Medicine Hat calculates the Monthly Reference Price based on the average of the rates approved by the Alberta Utilities Commission.

*Temporary electricity price protection

As part of Alberta's Affordability Action Plan, the Government of Alberta provided price stability for regulated rate option (RRO) customers in January, February and March 2023 by enforcing a temporary price ceiling.

As of April 2023, the cost difference between the RRO electricity rate from January to March and the $0.13500/kWh cap will be added to the current RRO to recover costs over the 21 months until December 2024.

Frequently asked questions

The Regulated Rate is only one of three choices you have for energy pricing in Medicine Hat.

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