Several factors influence electricity prices. Before you figure out the elements that contribute to the cheapest electricity plans, it is first important to know what goes into your electricity pricing.
Factors That Influence Electricity Price
• Fuel – Fuel, especially natural gas and petroleum, see their price increase when the demand is high or when there are fuel supply disruptions because of an accident or extreme weather events. Higher fuel prices result in high electricity costs.
• Power plant – The maintenance and operation of power plants also costs a significant amount of money. When a new power plant is being constructed, or when there are sudden repairs to one or more old power plants, the price of electricity is bound to increase.
• Transmission and distribution – The electricity gets transmitted from the power plants to your home. These also include operation, construction, and maintenance costs. Moreover, there are also costs involved in repairing the system because of damage caused by weather or accidents.
• Weather – Extreme weather conditions increase the heating and cooling demands, leading to a surge in electricity usage. This also pushes up the electricity and fuel prices.
• Regulations- The public service may be regulating the electricity in some states, while other states may have a combination of regulated and unregulated prices.
Now that you know what external factors affect your electricity prices, here are some tips to help you find a cheap electricity plan.
Tips To Buy A Cheap Electricity Plan
As a consumer, you need to be aware of the following before you shop around. These elements will let you narrow down the choices and get a cheap energy plan.
• What type of energy will you need? This is a crucial thing to consider to pick the best energy plan for yourself and for your family.
• Check your current plan – This will give you an idea of what you are paying for every energy unit. Once you are aware of what you are currently paying, it makes it easy to shop for a cheaper plan.
• Understand what your energy patterns are – The energy requirements may fluctuate between seasons and between days. This can help you to plan on energy conservation and include habits that can let you budget better. It will also help you understand how the utility rates vary month on month.
You must also understand the difference between variable and fixed plans. A variable plan will not let you know the exact amount you are paying towards the energy bills until you get the bill. The fixed plan lets you know the exact rate that you will be paying for every energy unit that you use.
Should You Switch To Another Plan?
One way to find out how good or bad your current plan is, is to compare it with the plans offered by various energy companies serving in the region. When you compare plans, you will also be able to identify which providers offer the cheapest electricity plans in your area. You can make your decision then.
Standard plans let you switch with no fee. However, if you are on a market-rate contract, you will have to pay an exit fee. Work out the math and understand your consumption to see if the new plan can help save you money.