It may seem like turning on a light bulb or a fan in your room is not a miracle anymore. However, determining electricity prices is no short of a miracle. Electricity prices are changing every minute, but consumers are priced either seasonally, monthly, or bi-annually. It’s a reliable service that comes with unreliable factors.
Similar to any fuel source, electricity needs to be produced and transmitted. Electricity is processed using fuels such as petrol and natural gas. Since the input fuel prices vary, it can influence the cost of producing electricity as well. Petrol and natural gas prices become unpredictable because of erratic weather, political instability, and civil unrest.
An increase also influences electricity prices in demand, such as in remote village areas. Supplying electricity to isolated towns and villages is subsidized because of increased running and operating costs. Electricity-producing constraints such as thunderstorms and accidental damages to transformers and wires will increase electricity costs.
So further elaborating on the weather influencing factor, demand for electricity in summer increases manifolds than in winter. This is primarily due to the constant cooling requirement in homes and businesses. The increase in seasonal demand may increase the cost of electricity, which may increase the electricity bill amount sent by utility bidders.
These days electricity is being produced using wind or hydropower. These are inexpensive alternatives to producing electricity using petrol. Sustainable means of producing energy are also better for future generations. However, in periods of drought and no rain, even these natural phenomenons can greatly influence electricity cost.
Type of Consumer
The nature of the customer heavily affects electricity prices. You may be surprised to know that industries are charged less kilowatt per hour of electricity than domestic and commercial consumers. A large amount of electricity is supplied to the industries, so they negotiate cheap rates. Increased electricity consumption reduces delivery costs as well.
On the other hand, supplying to residents and commercial centers requires more time and effort. Separate meters, connections, and a wire laydown are required. Setting up an individual connection can be very expensive and require heavy public funds. The methodology is the same as bulk purchase compared to buying a single unit.
Laws and Regulations
Regulations heavily influence electricity prices. Regulations can mean modified national laws, provincial provisions regarding electricity supply, or even local laws designed to protect the limited number of residents. Other factors that influence regulations are controlling production costs, commission, or any mismanagement in electricity supply.
Authorities are constantly struggling to implement regulated prices. Sometimes industries are not satisfied with the supply, and sometimes, domestic consumers are annoyed with electricity disruptions. This is especially the case in third world countries where inadequate energy resources and population growing at a fast rate is not an ideal combination for an adequate electricity supply.
Electricity supply faces numerous challenges before illuminating your house or office spaces. Therefore, it is appreciative that we, as consumers, use electricity wisely and efficiently to experience a better tomorrow.