Natural gas and power rates set to drop for April
Natural gas and power rates in Medicine Hat that are set at the provincial average will drop for April — a signal not only that the lower-use spring season is arriving in Alberta, but also potentially that demand is predicted to fall as industrial and commercial activity slows.
In April, the cost of power to local utility customers on default pricing plans will sit at 5.735 cents per kilowatt hour, down a penny from March and much lower than winter months, when prices spiked.
Natural gas for residential and small- to medium-sized businesses moves down to $1.57 per gigajoule in April, about one-third lower than the previous month’s rate of $2.29.
The city’s utility department has aligned with a provincial program to halt any late fees until June 18, to free up short-term cash for those affected financially by the COVID-19 pandemic. Local administrators strongly suggest residents and businesses stay as current as possible to avoid facing huge bills coming due this summer.
Each month, utility providers across the province submit rates to the Alberta Utilities Commission based on forward price estimates. The city then averages those submitted prices to determine local commodity rates.
Prices typically drop in the spring and fall, which are known as “shoulder seasons” to higher-demand time periods when cold or hot weather puts furnaces and air-conditioners into service.
When demand drops, so do prices in Alberta’s deregulated energy market, and that is already starting to show up in some pricing calculations.
Medicine Hat’s industrial and large commercial customers on default contracts are charged the average grid price of the previous month plus a 2-cent premium.
This month the rates sits at 6.2 cents, which is close to normal, but less than half the prices of March and February (both about 14 cents), when prices rose dramatically in extremely cold weather.