When you get your monthly electricity bill, most probably you don’t ask yourself how the electricity cost was computed. It is common for most people to just ignore the whole discussion on the much they spend on energy and if they can do anything to reduce the electricity costs. In those countries where bidding for electricity supply is possible, it would be best to competitively contract the electric power supplier after comparing several of them. That way, you can cut the electricity expense.
Here are some of the factors that affect electricity prices:
Power Plant Costs
The electricity power supplied to your house and other places like factories and business premises have to be generated in power plants. Because there are costs involved to set up and run the plants, the same are apportioned to the final consumer, and forms part of the electricity bill. It is therefore given that the higher the operating costs of those generating plants, the higher the power bills will be. Of course, you have no control over the plants’ operating costs so the best way to reduce this portion of the bill is to look for the most efficient power plant and buy from them.
Fuel Costs
Generating and supplying electricity needs energy and the source of the energy is fuel. Because fuel prices are ever varying, their movements affect the price of electricity to the users. Unfortunately, uses have little or nothing they can do about the fuel prices thus they have to absorb those costs.
Weather and Season
The weather may favor or work against electricity consumers. It affects the prices due to the ease of production and electricity demand. If you depend on hydro-power, rain and snow could make the production of power easier and cheaper hence lowering the final price. Also, windy weather makes turbines to be turning throughout. On the other hand, extreme weather conditions that increase the demand for electricity drives up the prices due to increased demand.
Seasons also impact energy prices in that during summer people need more power, supposedly for air conditioning. If a season leads to more people demanding more energy supply, the need to efficiently produce and deliver electric power shoots. Consequently, the price also shoots due to the rising demand.