Why do some utilities offer time-of-day electricity prices?

Some utilities offer their customers time-of-day pricing to encourage electricity conservation and to reduce peak demand for electricity. Retail electricity prices are usually highest for residential and commercial consumers because it costs more to distribute electricity to them.

Why are electricity prices so high in the summer?

Prices are usually highest in the summer when total demand is high because more expensive generation sources are added to meet the increased demand. The cost to supply electricity varies minute by minute. The wholesale price of electricity on the electric power grid reflects the real-time cost for supplying electricity.

How do higher fuel prices affect electricity costs?

Higher fuel prices, in turn, may result in higher costs to generate electricity. Power plant costs: Each power plant has financing, construction, maintenance, and operating costs.

What is the largest component of the price of electricity?

The cost of generating electricity is the largest component of the price of electricity. The cost to supply electricity changes minute by minute. However, most consumers pay rates based on the seasonal cost of electricity. Changes in prices generally reflect:

How does weather affect electricity prices?

Weather conditions: Extreme temperatures can increase demand for heating and cooling, and the resulting increases in electricity demand can increase fuel and electricity prices. Rain and snow provide water for low-cost hydropower generation, and wind can provide low-cost electricity generation when wind speeds are favorable.