What Affects the Cost of Electricity?
By Admin Cheap Texas Electric Rates: January 24, 2010, Updated 2/5/2010
Odessa, Texas
What affects the cost of electricity?
The final electricity price that an electric company charges is a result of many different factors. These factors are different for each company, that is why you might see different companies with differing price structures.
Key Factors in electricity price are:
Location: This dictates what power sources are available. Water driven hydro-power generated electricity tends to be the cheapest and natural gas generated electricity tends to be the most expensive.
Weather: In areas where hydro-electric power is the main source of electricity, rain storms can provide for added electric generation at lower cost. Wind storms can provide energy for Wind generated electricity. High summer temperatures in the summer can cause an increase in the demand for electricity, and cause short term energy cost spikes in a given area as demand nears capacity.
Transmission and distribution lines: The electric wires that carry electricity to your home or business must be maintained. This would include materials and labor costs. Inflation of prices can play a role here.
Power plants: The cost to construct, finance and maintain power plants is an important consideration to the overall cost of electricity for a state or region.
Regulation: Some states are fully regulated in their pricing by the Public Service (Utilities) Commissions. In others it is a mix of regulated pricing (generation) with unregulated pricing for power transmission and distribution.
Texas and New York Residential Electric Users
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The average prices can vary by location: Average price for electricity in 2007
Highest electricity prices in 2007:
Hawaii: (21.29 cents per kWh)
Connecticut: (16.45 cents per kWh)
New York (15.22 cents per kWh)
Lowest electricity prices in 2007
Idaho (5.07 cents per kWh)
Wyoming (5.29 cents per kWh)
West Virginia (5.34 cents per kWh)
The Hawaiian costs for electricity are highest because nearly all electricity was created by fuel oil. Idaho showed the lowest costs to produce electricity because of hydro-electric dams.
Electricity is also different for the types of users. 2007 electric prices by user was:
Residential electricity is usually the highest: 10.65 cents per kWh
Commercial electricity: 9.65 cents per kWh
Industrial electricity: 6.39 cents per kWh
Commercial electricity is lower than residential electricity usually because it buys more per month, thereby getting a small discount because of the larger purchase.
Industrial use gets the lowest prices of all because they usually consume more energy, and can use it in higher amounts. Therefore there is no extra cost in lowering the electricity voltages for them.
Smart Meters
The introduction of smart meters for residential and businesses have the promise of lowering electricty costs for business and consumers because it gives them the opportunity to purchase more electricity at lower cost during off-peak times, and less during peak times. Houston Texas is currently installing 2 million smart meters for residential customers.
Texas Industrial and Business Electric Users
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Lets us supply your Business or Industrial electricity needs in Texas: Just send us a message telling us contact information, location, and energy needs and we will get right back to you with an energy quote. We can also get you an energy auction if your usage is high. Contact Don consultant(at)cheaptexaselectricrates.com
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