In the world we live in, electricity is essential for everyday life. Since we need it in our daily lives, it is important to find the lowest electricity rates possible. No one wants to spend a ton of money on energy. Even with a great plan, there are going to be times that market energy prices go up causing you to have to pay a bit more for electricity. There are several reasons for this, and here are a few.
Supply and Demand
A major factor in the cost of your electricity is supply and demand. If there is a high demand for electricity, the rates will go up because of the limited supply. Electricity rates are usually the highest in the summer. This is because, due to the heat, many people are using much more energy than usual just to stay warm. As the need for energy rises, so does the price.
Weather
As I mentioned before, the weather plays a major part in the price of electricity. It also affects the demand for energy which can cause electricity rates to spike or drop. Extreme heat, especially in the summer months can cause a dramatic rise in electricity rates. Although the cold weather does not have as drastic of an effect as the heat, extreme cold can cause rates to rise. This is because many people are going to start using more electricity than usual to keep their homes warm. Extreme weather conditions can also cause damage to power plants, forcing electricity rates to spike.
Regulations
In some states, energy prices are regulated or partially regulated. In some cases, the government determines the energy prices. Other states have a combination of regulated and unregulated prices. For example, they may regulate the price for transmission and distribution, but not regulate prices for generators.
Location
Location can also play a part in your electricity rates. If you are near a power plant, your rates could be less than if you lived far away from one. This is because transportation cost plays a part in the cost of your energy. Your location can also affect your rates based on the local energy cost.
How to Keep Your Rates Consistent
There are several factors that can cause your electricity rates to change, but with a fixed-rate energy plan, you do not have to worry about changes in your rates. If you decide on a fixed-rate plan, you will have a set rate that you will agree to at the beginning of your term, and your rates should not change for the duration of your contract.
