How are Electricity cost Set

1
How Are Electricity Cost Set?

• How does an electric provider determine the cost
  of your electricity.

2

• Electricity cost comes about through the rates
  that are charged and the prices that are set
  partly by the Public Utilities Commission, or
  PUC, of each state. Each state has the ability to
  rename the utility watchdog agency, so it is wise
  to check to see what the name is in each
  different state. These organizations oversee each
  power provider to maintain that consumers are
  being charged a fair rate. These were once put in
  place to regulate the power industry when it was
  regulated, and now they oversee the deregulated
  areas as well.
• The electricity cost that consumers are charged
  may vary according to which state they reside in,
  whether or not their state has deregulated
  energy, and whether or not they live in an area
  that is included in the deregulation. The reason
  this is important is because in a deregulated
  state, a customer will have the option of choice
  when it comes to a power provider. In a regulated
  area, there is only one provider without a
  choice. Some states are divided into regions that
  have both deregulation and regulation. That
  utility commission will be able to answer
  questions regarding which type of market it is.
• Electricity cost for a business is going to be
  different from that of a residence. This is
  mainly to do with the voltage that is required
  and the amount of consumption that the two
  different types of customers will consume. There
  are charges on the bill other than just usage at
  the rate that was quoted. These are charges for
  taxes and overhead expenses that must be
  maintained in order for the power company to
  provide service. They include things such as
  employees, technicians, facilities, fuels, repair
  vehicles, and many other types of things that are
  necessary to not only have but to properly
  maintain in order to keep uninterrupted service
  on.

• Electricity cost is derived mostly from the rates
  that the consumer is paying. The rates are listed
  on the energy bill next to the kilowatts of
  consumption that was used in any cycle or
  statement period. The rate is decided upon by
  doing a simple math equation that divides what
  the utility makes by the amount that they sell.
  The end result is the per kilowatt rate.
• A consumer has some control over what the
  electricity cost will end up being. While a
  consumer cannot control the final rate that is
  charged, there are things that can be done that
  will ensure that the end result will be the
  lowest bill possible such as practicing energy
  conservation.
• Consumers can ask the power provider for a
  detailed explanation of all of the charges that
  appear each month on the statement. This will aid
  in understanding where the money is going and
  why. Being an informed consumer can allow
  customers to make better decisions which will
  eventually lead to paying less for power. Saving
  money is important to every family, and
  understanding how the bill is cycled and what is
  included is the first step to savings.