As with everything else we use or consume today, electricity rates are climbing at a disturbing rate and we have very little control over that. Learning how to conserve and use less will help us to spend less on the power we each need for everyday living and keep our electricity prices down.
Electricity as a market
Economically speaking, electricity is a commodity and as such is bought, traded, and sold just as any other form of energy. The electricity market offers a systematic means of buying or bidding to gain the best cost advantage. Your electricity supplier will make these bids on your behalf and constantly try to keep costs down and purchase as much electricity as they can at one time, so as to buy it more cheaply. Often times this is dependent on supply and demand and varies throughout the year, according to the seasons. While the utility company buys at wholesale prices, they must make a small profit in order to remain in business. Then they pass on to their customer low cost electricity based on what it cost them at time of purchase.
Electricity prices determine cost to the consumer
By its very nature, electricity is extremely difficult to store for any period of time, and it must be available at time of demand. So when your electricity provider purchases that energy in large quantities, they must be assured it can be passed on to you, the consumer, as soon as possible. The supply and demand for electricity varies constantly so that it is difficult to correctly predict how much will be required on any given day, week, or month.
A costly commodity
Electricity prices since deregulation have varied more so than ever before in the history of electrical power. Prices must go up when there are times of high demand, and this seems unfair to those who cannot afford to pay more. Prices for electricity can also be seen to jump up whenever pricing "spikes" occur, and these are difficult to predict. Most things we buy will be found to lower in cost when the demand is high, but electric power is not one of these. Volume means more and higher demand, and when dealing with a product which has short term storage ability, the cost must climb.
Learning how to control cost of energy
In a 2007 White Paper report there was a meeting involving the energy challenges faced by the UK and it involved both domestic and international energy strategies and how they can best be met. It was determined that carbon dioxide emissions must be cut by at least sixty percent over the next several decades, and that energy supplies must be reliable and economical as possible in order to improve the productivity and ensure each household has an adequate and affordable means of heating. This of course, encompassed many forms of energy such as natural gas, fuel for transportation, and electricity prices. As energy is considered essential to most every aspect of daily life, we must all work together to learn how best to conserve and control the costs of our everyday energy consumption.
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For more information on how to compare electricity prices visit the Energy Choices website.
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