Electricity Pricing Components - Peace Power

Electricity Pricing Components - Peace Power Most business owners are unaware of what goes into the pricing of their energy bill. This leads to understandable frustration when the bill continues to go up and up even as the price per kilowatt hour remains the same.

Knowing electricity pricing components is critical so that you can put yourself in a better position to know what product, offering, and supplier will work best for your business. Today we dive into these common components so you are fully aware what may or may not be included in your quoted price.

 Ancillary Services – Services required to support and maintain reliable operations of the electric grid.  Capacity- Required of operators in several electricity pricing markets, capacity charges help guarantee that there will be sufficient generation to meet the maximum energy requirements of the market at all times.  Energy- The actual cost of the commodity itself. This is usually calculated by your supplier as the cost to purchase the amount of power you need in the wholesale market for the specific length of time (term or delivery period) you are seeking.  Losses- Electricity losses that occur between the point of generation and delivery to your business. These include any marginal loss credits and other types of line losses or transmission and distribution losses (T & D losses).

 Renewable Portfolio Standards (RPS) – If your state mandates participation in a renewable energy program, your supplier is required to procure a portion of your power from renewable sources. Other compliance costs include Auction Revenue Rights (ARR), Reliability Unit Commitment (RUC)/congestion, and Reliability Must Run (RMR).  Transmission- Charges associated with the cost of moving power from the generator to your local distribution company. Transmission charges can be billed by either your supplier or your local utility, depending on your state and the type of product.

Now that you understand some of the common electricity pricing components, you can see how your bill can fluctuate each month. If you sign on for a fixed product with varying pass-through charges, their variation is what can cause your energy bill to increase.

In order to plan a consistent budget, you’ll want to look for a fixed, all-inclusive product that wraps all these components into one rate. It’s the only scenario where you won’t receive pass through-charges.

If you are still unsure what you’re looking at when researching electricity pricing for your business, let us help. We provide no-cost audits via our experienced energy providers. Simply call us at 18002079410 or email us at contact@peacepower.ca