Quick Answer
The best electricity rate depends on your priorities. If you prefer predictable monthly bills, a fixed electricity rate offers price stability. If you’re comfortable with market fluctuations and want the potential to save money when wholesale electricity prices are low, a floating (variable) rate may be the better choice. Alberta’s deregulated electricity market gives you the flexibility to choose the plan that best fits your budget and energy goals.
Understanding Your Electricity Rate Options
One of the advantages of living in Alberta is the ability to choose your electricity retailer and rate plan. Unlike many provinces, Alberta has a deregulated electricity market, giving consumers more control over how they purchase electricity.
The two most common options are fixed rates and floating (variable) rates. Understanding how each works can help you make a more informed decision.
What Is a Fixed Electricity Rate?
A fixed electricity rate locks in the price you pay per kilowatt-hour (kWh) for the length of your contract.
This means your energy rate won’t change if market prices rise or fall.
Benefits of a Fixed Rate
- Predictable monthly electricity costs.
- Protection from sudden increases in wholesale market prices.
- Easier household budgeting.
- Peace of mind during periods of market volatility.
Fixed rates are often a good fit for homeowners and businesses who value stability and prefer knowing exactly what they’ll pay for electricity.
What Is a Floating (Variable) Electricity Rate?
A floating rate, sometimes called a variable rate, is tied to Alberta’s wholesale electricity market.
The cost of electricity changes hourly based on supply and demand and is averaged over the month. Your rate is based on that market price, plus a retailer transaction fee.
At Smart Utilities, the floating rate is calculated as:
Market price + 0.50¢/kWh transaction fee
Because the market changes regularly, your electricity price may increase or decrease from month to month.
Benefits of a Floating Rate
- Opportunity to benefit when market prices are low.
- Historically competitive pricing over longer periods.
- Flexibility without locking into one rate.
- Can produce meaningful savings during periods of lower electricity demand.
For customers who are comfortable with some month-to-month variation, a floating rate can be an attractive option.
Can a Floating Rate Save You Money?
It can.
When Alberta’s wholesale electricity prices are low, customers on a floating rate often pay significantly less than those on many fixed-rate plans or the default Rate of Last Resort (ROLR).
For example, Smart Utilities’ recent floating rate averages have been well below Alberta’s average ROLR pricing during the same period. While past performance doesn’t guarantee future results, it demonstrates how variable pricing can provide savings when market conditions are favourable.
What Is the Rate of Last Resort (ROLR)?
If you’ve never selected an electricity retailer, there’s a good chance you’re receiving power through Alberta’s Rate of Last Resort (ROLR).
The ROLR is the default electricity option approved by the Alberta Utilities Commission (AUC). While it guarantees access to electricity for eligible customers, it isn’t always the lowest-cost option.
Many Albertans assume they’re already getting the best available rate simply because they haven’t switched providers—but comparing your options could result in meaningful savings.
Fixed vs. Floating: Which Should You Choose?
Both options have advantages, and the right choice depends on your comfort level and financial goals.
A Fixed Rate May Be Best If You:
- Prefer consistent monthly bills.
- Want protection from price increases.
- Like knowing exactly what your energy rate will be.
- Value budgeting certainty.
A Floating Rate May Be Best If You:
- Are comfortable with some monthly price changes.
- Want the opportunity to benefit from lower wholesale prices.
- Prefer following market trends rather than locking into one rate.
- Are looking for long-term savings potential.
Taking the Guesswork Out of Variable Pricing
Many customers hesitate to choose a floating rate because they worry about market fluctuations.
That’s why Smart Utilities offers RateRewind, designed to help customers enjoy the benefits of variable pricing with greater confidence. Rather than worrying whether you’ve chosen the “wrong” rate at the wrong time, RateRewind helps remove much of the uncertainty that often comes with market-based pricing.
Remember: Not Every Charge Is Controlled by Your Retailer
When comparing electricity providers, it’s important to understand that not every line item on your bill changes.
Your bill includes both:
- Regulated charges, which are set by government or utility providers and remain the same regardless of which retailer you choose.
- Deregulated energy charges, which are where retailers like Smart Utilities can often help you save money.
Understanding this distinction makes it easier to compare electricity plans accurately.
Whether you’re looking for stable pricing or the flexibility of market-based rates, Smart Utilities can help you find an electricity plan that fits your needs. Our team is happy to explain your options, answer your questions, and help you choose the rate that makes the most sense for your home or business. Contact us today or explore our available electricity plans to get started.