ENMAX EasyMax is offering one-year free power to new customers signing up on a five-year contract.
Enmax Energy Rate Comparison
That is right, zero – zip – 0 cents per kWh for 1 full year. Free Power? Really?! Nothing in life is ever free…..
Or better stated in the Calgary urban dictionary sense: “ENMAX giveth and ENMAX taketh away.”
Here is the skinny on the EasyMax Free Power giveaway:
A. Conditions:
1. You must sign up for both Electricity (at 8.45 ₵ per kWh for the following four years) and Gas ($5.99 per GJ for all five years).
2. Administration Fees are $7.10 per month for Electricity and $7.10 per month for Gas = $14.20.
3. The customer will receive electricity at 0 ₵ per kWh up to a maximum of $1000 in their first year: this is only applied to the electricity portion of the bill. (The $1000 is not what the customer would receive, but rather is a cap on what the offer is valued at. This is equivalent to a customer using about 986 kWh per month – to achieve the maximum benefit).
4. If the customer cancels the contract, the penalty is $95 per year per Electricity Site and $95 per year per Gas Site calculated for the remaining term of the 5-year contract. (A double-dip penalty – will be expensive!)
B. Analysis:
1. One-year free electricity effectively pushes the cost of electricity over the five-year term down from 8.45 to 6.76 ₵ per kWh (8.45 less 20%). However, take note: only if you stay for the full 5-year term will the average cost go down to this level.
The average Alberta household uses 600 kWh per month or 7200 kWh per year. Comparing Peace Power’s current residential fixed price of 7.50 ₵ per kWh to ENMAX’s 6.76 ₵ per kWh, the customer would be saving 0.74 ₵ per kWh on electricity for five years. This equates to a savings of $266.40 over five years. Not too shabby. However……
2. Also, remember that you must buy gas to get one year of free power, and you must pay $5.99 per GJ for all five years. Over the last couple of years (including the spike in price during February of 2014), the average Regulated Rate for Gas was $3.08 per GJ. Using history for comparative purposes, consumers signing up for gas at $5.99 would be paying almost double for Gas compared to what they would have paid if they were on the Regulated Rate. Further, if we look at the forward market price for Gas over the next five years, the average price is expected to be $4.24 per GJ (as of May 11th, 2014). This is a full 30% cheaper than the fixed-rate ENMAX is asking you to sign up at.
The average Alberta household uses 10 GJ per month or 120 GJ per year. At $5.99 per GJ they would be paying $210 more for Gas each year than if they stayed on the Regulated Rate. This equates to $1,050 over the 5-year term.
3. Take Note: Hidden in the “Fine Print,” ENMAX has now implemented a cancellation fee which it never had before. If you need to get out of this contract, it will be expensive. If you cancel at the end of the first year of free power, the penalty cost would be $760. On an annual basis, the exit fee is not $95 but instead $95 X 2 (for both commodities, electricity, and gas) = $190 per year remaining on your contract.
4. ENMAX’s combined administration fees for electricity and gas are $14.20 compared to Peace Power’s monthly admin fee of $5.95 and the Regulated Rate for a gas fee of $6.78 = $12.73
So there you have it. The profit for ENMAX is in the gas formula, with consumers expected to be overpaying by about 30% for their gas (based on posted future numbers) compared to the Regulated Gas rate over the next five years. With the glut of gas on the market right now – regulated prices are expected to stay low, and consumers that sign up with ENMAX will pay a premium for no reason. As I said – “ENMAX Taketh Away.”
When you crunch the numbers, it makes far more sense to get on Peace Power’s fixed rate for electricity at 7.50 ₵ per kWh and ride the Regulated Rate for gas. Over the next five years this will save you $1050 – $266.40 + $88.20 (admin fee savings) = $871.80. Further, neither rate has cancellation penalties, so you are free to leave whenever should you choose to do so.
The numbers don’t lie, stay away from ENMAX and switch to Peace!
Cheers,
Chad