Many people might have noticed that natural gas and other energy fuel costs have been trending down. They similarly may have realized that electricity charges, though, are up. It is because electricity prices are complicated and are set by numerous factors. Article source: Falling oil prices not affecting electricity rates

Drop in gas does not mean drop in electricity

Many people have noticed decreasing prices on things such as oil and gas. There has also been a 43 percent decrease in natural gas costs from last year, according to the Huffington Post. Natural gas costs have been declining for a while now.

It is anticipated that people will see $3 extra on their monthly power bills very soon with the increases in power costs though. Even with every little thing else decreasing in price, power costs are really increasing. From June to August, it is expected that the average power bill will charge 12.4 cents per kilowatt-hour. That number was 2.3 percent less last year, and it is anticipated to go up 2 percent in the rest of the year. Any person with a monthly power bill may have noticed the increase in rates.

Price of power

The price of most commodities is set by the relative scarcity. If a wheat harvest is bad for most farmers, less flour can be made and thus a loaf of bread costs just a little more. Electricity is a little different.

According to the Chicago Tribune, power companies will go to power generation companies and purchase years' worth of power years in advance. They have to make sure they get power for the whole region or city, so they need to lock in the prices. This means prices are locked in years in <a href="https://personalmoneynetwork.com/cash-advance">advance</a>, according to the Huffington Post.

Another factor in electricity rates is getting the power to consumers. That comprises roughly 40 percent of the bill, according to the Huffington Post. Maintaining the power grid, as in power lines and transformer stations, and so forth, is costly and those costs have been increasing in recent years. In some areas, it has gone up so much that drops in natural gas, oil or a coal cost is erased.

Finding more increase

The area largely determines the amount paid in power bills though. In fact, according to the Scranton Times Tribune, areas such as PA really saw decreases in electricity rates. This is because some of those places use natural gas plants for power. According to the Chicago Tribune, the small increases in rates right now are nothing compared to what you will see in 2015.

In 2012, the power was sold at $16 per megawatt, which is enough electricity to power 800 homes, at a PJM Interconnection auction. Fox News explained that the business controls power for 13 states. That price dramatically increased for auctions for 2015 and 2016. In fact, power was $136 on average per megawatt for that year, and it was as high as $357 per megawatt in Northern Ohio, which is a massive amount of money. A ton of the issue has to do with coal businesses that need to pay to put in emissions controls but need to pass the cash on to customers. Many of those areas are powered by coal.

Sources

Huffington Post

Chicago Tribune

Fox News