How Often Do Electric Rates Change?
Written By: Warm Thoughts Communications on April 11, 2022
Learn What Influences Electricity Rates
Electricity prices are influenced by a wide variety of factors and are ever-changing throughout a calendar year—as often as daily. Below, we’ll discuss what causes electricity price fluctuation, and what you can do to take control of your energy costs.
7 Factors of Electricity Rate Fluctuations
According to the U.S. Energy Information Administration, some of the factors affecting electricity prices include:
- The price of fuel: Many consumers don’t realize that electric power plants rely on traditional fuels like natural gas and petroleum to power the plants as electricity is generated. When demand increases for electricity, this can increase fuel prices and as a result, electricity rates may go up as well.
- Supply and demand: Electricity prices can be further compounded by fluctuation in supply and demand due to strain on the infrastructure responsible for transporting electricity, as well as storms, weather events and natural disasters that may halt electricity production and delivery.
- Power plant overhead: The price of electricity must factor in the cost associated with the power plant operating expenses, along with their financing, construction, maintenance, and other costs.
- Cost to transport and distribute electricity: Just like power plants have overhead costs, so do the entities tasked with the transmission and distribution of electricity to customers. These entities must have funds on hand to conduct maintenance and upkeep of their operations, as well as for expansion, construction, and damage control. Repairing damage to the transport system caused by accidents and bad weather events can be costly, as can strengthening cyber security to ward off potential cyber-attacks.
- Regulations: Some states and municipalities impose regulated price requirements that must be factored into the cost of electricity.
- Extreme weather: Climate change is increasing extreme temperatures at both ends of the spectrum and we are seeing more storms, hurricanes, tornadoes, and other natural disasters. Temperature extremes put an increasing demand on heating and cooling, hiking up prices while problematic weather events can decrease the supply for certain electricity generators. For instance, if wind speeds are too high or too low, or a drought occurs, hydropower and wind generators will have lower production. Likewise, even traditional electrical plants are impacted by extreme weather since it can halt production when extensive repairs are needed to infrastructure.
- Season and locality: Electricity is in higher demand during the summer because cooling typically requires greater energy than heating. Locations that require cooling for a greater portion of the year, such as in warmer states, will likely have higher electricity prices.
Take Control of Your Energy Costs with Discount Power
If you’re tired of seeing your utility bills fluctuate without any control over what’s happening, you’ll love Discount Power. Don’t worry, your utility company will still respond to power outages, and send you your statements. But now you’re not stuck with their limited options.
With hundreds of thousands of customers across eight states, Discount Power has proven to be a safe, easy way for customers just like you to take control of their energy costs, providing them the flexibility to choose plans that fit their needs, and save them money too!
All our available electricity plans are 100% clean and green, so you can feel good about reducing your carbon footprint and enjoying a more sustainable lifestyle without compromising your electric services. Find out more about our green energy options in the Northeast United States and lock in your rate from monthly up to 36 months! The choice is yours.
Do you use both electricity and natural gas? We offer both services in many states. Contact us today to learn more about all your options.