Compare Electricity Prices: How To Do It

To compare electricity prices, a lot of formulas have been set forth in order to give us a means of determining our future consumption

. Electricity is such an integral part of our modern lives that it is hard to think about life without it. All the automations that we are used to, just simply cannot run without the power created by electricity. Our homes will not be as comfortable if they were not cooled with air conditioners or illuminated by electric lights. But the high price of our modern day conveniences also drains us financially.

There are always speculations about how electricity prices will go up in the future, and indeed they have. So in order to give us a glimpse of how much it will cost several years from now, we have to do a comparison of prices on a monthly or annual basis. The outcome can tell us roughly how much our electricity will cost in the future. But before we can compare electricity prices with certain accuracy, it is important to know the components that determine the consumer price, and what makes it go up or down.

Among the determining factors of electricity prices, fuel cost is one of the biggest contributors. This is the amount used in fueling the plants that are employed for power generation and the corresponding transmission of it, so electricity can get to your homes or offices. Fuel availability also affects the price of certain fuels so a change in its basic cost and availability affects electricity price. Another price contributor is the construction cost of power plants. On top of these you need to add the maintenance and operation cost and you get a rough estimate of power generation charges. To compare electricity prices based on generation cost, have a look at how expensive it was five years back, and you can estimate how much the electricity will increase over the next few years.

Another factor to be analyzed is the supply and demand situation in your locality. Any changes in the demand for electricity will affect its supply. Too much demand without a change in supply will increase the electricity prices while increasing electricity supplies with the same or lower demand for it will cause electricity prices to go down, even if the generation cost remains high. If you compare electricity prices based on past supply and demand trends, you can have a pretty accurate estimate of future price changes.

Local and international events also affect the price of electricity even if the event happened on another continent. Another is the weather condition affecting a locality or region. Countries that regularly experience typhoons often have irregular electricity prices. When you compare electricity prices based on these conditions, watch how much the additional charges are for each event or calamity. Often, the severity of such conditions dictates how much an increase is. However, do not be too dependent on this information, since your computation may be different from the actual calculation.

by: Tom Jones

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