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7 Key Factors That Impact Electricity Prices

You don't have to be an expert to know that electricity prices sometimes go up and sometimes go down. Electrical rates in Texas are expected to rise this year due to several factors, some obvious and some not so obvious.

To understand what's going on with recent energy costs, it helps to look at an electricity price comparison to see how rates have changed over previous months and the year at large. But an even better way to get insight into the situation is to examine the 7 key factors that have an effect on the overall price of consumer electricity.

What Causes Energy Prices to Fluctuate?

  • Seasons: It's obvious—but people tend to use more energy during the coldest months of the year
  • Weather Patterns: Extreme weather patterns usually cause at least a temporary spike in energy prices
  • Geographic Location: Some places are warmer than others, which is why people who live in the coldest parts of the nation tend to pay a lot more for heating their homes. Those who live in hot places spend more money on air conditioning. Residents of temperate regions spend less, overall, on energy
  • Distribution/Transmission Costs: These are industry expenses related to sending electricity out to consumers residences and businesses
  • Power Plant Costs: The power plant owner’s cost to build, maintain, and operate power plants affects consumer costs
  • General Price of Fuel: Generating and then delivering electrical power has fuel-related costs that fluctuate based on the prevailing prices of various fuels used in the process
  • Laws and Regulations: Local and national laws determine how prices are set

What Can Consumers Do?

Even though the factors listed above seem like things you have absolutely no control over, there are ways to keep your own energy costs as low as possible. By focusing on reducing the amount of energy you use, it's possible to bring utility bills down by a lot. Likewise, many consumers opt to take advantage of fixed-rate plans and special rates available in off-peak hours to chop extra dollars off their monthly expenses. Here's a quick look at what you can do to reduce your electric bill:

  • Choose an off-peak rate plan
  • Install a programmable thermostat
  • Choose a fixed-rate electricity plan with your local provider
  • Make sure your home is properly insulated

It's important to remember that even though there are a lot of economic forces at work behind the general cost of electricity, you—as an individual consumer—also have the ability to bring your monthly costs down by choosing certain rate plans and opting for off-peak usage.


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Location: Dallas, TX, USA

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