Variable Contract
The variable contract rate fluctuates monthly based on weather and market conditions.
It is determined at the end of each month from the actual daily market rates that month, plus a balancing premium.
Choose the variable contract if you:
- are comfortable with changes in your rate every month
- prefer actual market costs
- are interested in watching the market each month
You can choose options separately for electricity and gas. If you choose a contract for one, you don’t have to choose a contract for the other.
| Electricity | Natural Gas |
|---|---|
| + $0.02 per kilowatt hour (kWh) | + $1 per gigajoule (GJ) |
| Electricity (rate INCLUDES balancing premium) | Natural Gas (rate INCLUDES balancing premium) | |
|---|---|---|
| May 2023 | $0.17285/kWh | $3.287/GJ |
| April 2023 | $0.16234/kWh | $3.372/GJ |
| March 2023 | $0.19463/kWh | $3.971/GJ |
| February 2023 | $0.14350/kWh | $3.646/GJ |
| January 2023 | $0.14613/kWh | $4.536/GJ |
Calculation
Here is an example of how the variable rate is set using real market pricing from October of 2022. Remember, the variable rate for a particular month is set AFTER the month has elapsed. So, in this case, the rate would be known on November 1 and applied to the customer's October usage when they receive their October bill.
Using real market pricing from October 2022, the average of all daily prices for the month was $0.1423 per kWh. With the $0.02/kWh premium, customers would pay $0.1623 per kWh for every day that month rather than be subject to peaks (which are typically also high-usage days) and valleys.
Using real market pricing from October 2022, the average of all daily prices for the month was $3.2690 per GJ. With the $1/GJ premium, customers would pay $4.2690 per GJ for every day that month rather than be subject to peaks (which are typically also high-usage days) and valleys.
Benefits of a variable contract
The variable contract allows savings when commodity prices are dropping. Lower daily prices may bring down the average price for the month, and your price may end up lower than the forecast RRO and lower than the presently offered fixed price.
Furthermore, when usage is high, market prices typically spike. So on days, when you are consuming the most, instead of paying a 'spiked' price for that high consumption, you are paying a 'watered-down' price thanks to the average encompassing some lower-priced days.
Potential risks
- The variable contract rate reflects actual market price, which fluctuates up and down on a daily basis making costs less predictable
- You will not know your cost until after you've consumed the energy
- The variable rate will have price volatility
Frequently asked questions
| Why do we add a balancing premium to the average price? |
| There is typically more risk to the seller when averaging real daily pricing because in most cases, people use more energy on the days when price is above average (market price rises when people use more gas and electricity). The premium helps to balance that risk while still offering a competitive price to the consumer. |
| Who is eligible? |
| Residential, small commercial and medium commercial customers in the Medicine Hat service area are eligible for the electric contract rate options.
All customers in the Medicine Hat service area are eligible for the natural gas contract rate options. |
| Are there any fees or charges? |
|
There are no fees or charges associated with signing up for any of the energy plans. All contracts expire at the end of the 12-month term - there is no need to opt out of the program. If you wish to stay on a contract rate option, you will need to sign a new contract. Once you are in a contract, you cannot opt out and will be billed as per the contract for the entire 12-month period. Note: The contract terminates if you change your service location (i.e. move) and you have the choice to enter a new contract or remain on the default RRO. |
|
How do I know if I am on the variable contract? |
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Your utility statement will indicate the words (Variable) beside the service that is on the rate. It is also indicated on the front of your utility bill, as well as in your email notification. |
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Once I apply, do I have to renew the contract once it expires? |
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Yes, you will have to sign up again. With more than one contract option available, customers will need to sign up for one of the contract options each time their term expires. If you do not sign up for a new contract, your utility rates will go back to the default option, which is the regulated rate offering (market-based rate calculated monthly). If you wish to sign up for a contract option, call 403-529-8111 or fill out the online form. |
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How do I cancel? |
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Once you have committed to a contract, you are unable to cancel until the end of the contract term, which is 12 months for both the fixed contract rate and the variable contract rate. At the end of the contract, you will automatically return to the default option. |
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What if I move? |
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Contracts will automatically terminate when you move or sign off utility services at the service location. When you sign on to utility service at a new location, you will automatically receive the default option, which is the regulated rate offering (market-based rate calculated monthly). You will stay at the default option at the new location unless you choose to sign up for a new fixed or variable contract option. |
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Do I have to sign up for both gas and electricity? |
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You have full control of your pricing choices. You can enter a contract for either gas or electric, or both. |
The Variable Contract is only one of three choices you have for energy pricing in Medicine Hat.