Do you overpay for utilities?

For this week’s No More Ls column, we’re looking at how to get cheaper utility bills.

There’s one set of monthly bills many Canadians pay without much thought: the utility bills. We want to keep the lights and heat on, appliances running and our many devices charged, so we pay the bills and move on. Most of us don’t understand what we’re actually being charged for or whether we could be paying less.

Blake Shaffer is not most people. An associate professor of economics at the University of Calgary, Shaffer spent 15 years working in energy trading before turning to research on electricity markets and climate policy. In other words, he actually enjoys digging into what’s behind that monthly charge. 

And Alberta, where he lives, is a particularly interesting place to study utility bills. The province’s fully deregulated market gives Canadian consumers an unusual degree of choice in how they buy electricity and natural gas. Albertans can shop around for energy providers, much like they would for a mortgage—only power prices are far more volatile than interest rates. 

However, in most other provinces and territories, residents don’t get that choice. “You don’t have to think about it,” Shaffer says. There are exceptions: Ontario’s partially deregulated electricity system gives some options, and provinces like British Columbia, Saskatchewan and Manitoba allow limited natural gas choice. But for many Canadians, choosing the provider behind monthly utility bills is largely out of their hands.

Still, Shaffer says, everyone has one form of control: “You can make decisions around your consumption.” And a few small changes can add up to noticeable savings. 

Start with what you can actually control

When you look at your utility bill, it helps to know which charges you can influence. Some costs are fixed, such as the delivery fee for the wires and other infrastructure that brings electricity into your home. Look for the per-volume or usage charges that are tied directly to the amount of electricity, gas or water you consume. “With the usage decisions, that’s where you can change your bill a little bit,” Shaffer says. 

Home heating and large appliances account for most of your home energy use. Air conditioners, for example, are power-hungry. Simply using them less or adjusting the set point can make a noticeable difference on your bill. Larger energy efficiency investments, like improving insulation and upgrading to more efficient appliances, can help you save even more. (Homeowners generally have more flexibility here than renters.) 

Save by shifting when you use power

Another way to save is through time-of-use rates. Under this model, common in Ontario and emerging elsewhere in Canada, power costs more during high-demand hours and less when demand drops. 

“If you’re in a province with time-varying rates, know when those periods are and try to identify the larger, more meaningful devices in your home that you’re willing to be flexible with,” Shaffer says. In Ontario, for instance, the off-peak rate can be about one-tenth the on-peak cost per kilowatt hour (kWh) under one plan residential customers can choose. “The utility is basically telling you, ‘we want you to shift.’ You’ll save money and it’ll save the system money, because power is cheaper then,” Shaffer says. 

While you may not want to bake bread at midnight, many energy-heavy tasks can wait for off-peak hours. Technology helps too. “Increasingly, there are apps that will do it for you,” Shaffer says.

And those small shifts can add up. Fully charging an electric vehicle, for example, uses around 75 kWh. “If I can save close to 20 cents per kWh, that’s $15 every time I fill up my EV completely,” Shaffer says. Imagine saving $15 on gas just by choosing a different time to fill up.

When it’s time to shop around

If you don’t have access to time-of-use pricing, as in Alberta, you may face a different choice: variable or fixed rates for electricity and natural gas. A variable rate fluctuates monthly with market conditions, while a fixed rate stays the same.

In Alberta for example, the province recently introduced a “rate of last resort” for electricity, a default fixed rate of about 12 cents per kWh. If you’re on it, Shaffer recommends getting off as soon as possible. “To be blunt, it’s a terrible fixed rate,” he says. “It’s more expensive than any competitive retailer out there.” By shopping around, Shaffer says Albertans can find fixed rates closer to nine cents per kWh, saving roughly $21 a month for a typical household using 700 kWh. 

Shaffer, known for his social media posts explaining Alberta’s electricity rates, says choosing between a fixed or variable rate right now depends on your comfort with risk. “It’s not as obvious as it was before,” he says. Do a bit of research using the cost comparison tool from the province’s utilities consumer advocate to pick a decent rate, then set it and forget it, he adds. 

Pay attention to pay less

Utility bills will probably never be fun for most of us. Shaffer hears the same thing again and again: “I’d rather just not think about this.” But making a little effort to understand what you’re paying for and how to tweak your energy use can make sure you’re not overpaying month after month.