The price of electricity is
generally a reflection of the cost to build, maintain, and operate power plants
and the electricity grid. A lot of building and maintenance costsare involved
when electricity is generated and delivered through equipment that runs on
fuel. Your electricity bill has a direct connection with the increase or
decrease of prices of these things.
Cost
of Fuel
The
cost of fuel varies, especially when there is high demand. High demand for
electricity results in demand for fuel, like natural gas. This can result in a
higher price in the fuel and, consequently, higher costs for generating
electricity.
Weather
Conditions
Snow and rain make a significant contribution to the
generation of low-cost hydroelectric power. Wind provides cheap electricity
through turbines during favourable conditions. However, there can be an
increased demand for electricity to fulfil various requirements, and increased demand can drive the prices of
electricity higher.
Consumer
Type
Residential customers usually pay more per kilowatt-hour
(kWh) than industrial customers. This is because industrial customers are
supplied a more substantial amount of electricity at one time, which makes the
delivery and electricity generation cheaper and quicker. In contrast, it takes
more time and effort to generate power for the customers who use smaller
amounts, and therefore the cost involved in the process increases.
Minimum
Usage Costs
Some
electricity service providers require their customers to meet a specific usage
for their plan. It means that regardless of the amount of energy you use, there
is a minimum amount that you will always be charged. This can increase the
overall cost of your electricity.
Why
are Electricity Charges Higher During Summer?
Although
the cost involved in generating electricity varies, most of us pay electricity
charges based on the seasonal price of electricity. Availability of power
plants and generation sources and fuel costs directly impacts rates. Prices of
electricity are generally highest during the summers as the overall demand for
electricity increases and more power generation sources are required to be
added to meet consumer demand.
If you want to save money on your electricity
bills, compare electricity prices to ensure that you are on the lowest-cost electricity
tariff.
Conclusion
With several factors impacting the rates of electricity, it
is often challenging to find a single reason that is driving your electricity
rates up. But by understanding some of the factors that result in higher
electricity prices, you can ensure you are billed accurately.
