Tag Archives: residential electricity

Unraveling the Electricity Pricing Mystery

Many people ask “How is electricity priced” and “What makes the price of Electricity move up and down so frequently and many times seasonally?” Without getting entirely too technical, we’ll try and explain this pricing and free market mechanism in Layman’s terms.

First of all electricity has been and always will be produced by a generator consuming some type of fuel source.  Today, numerous fuel sources exist that can be used to generate electricity.  All of these fuel sources; solar, wind, coal, natural gas, fuel oil, or lastly uranium in nuclear units, have differing costs.

 Wind Turbines

Wind that turns a wind turbine, the sun that heats a solar panel, or water that turns a turbine at a hydroelectric dam, we might call FREE sources of fuel.  BUT, these wind turbines, solar panels and dams have costs to manufacture, install and commission the equipment that must be paid back over time.  This capital is returned to the investors by the generator selling electricity into the wholesale power markets.  The idea is to hopefully sell the power above the cost it took to: produce the power and the other costs involved to keep the generator continually in good operating condition so it can generate and sell electricity.

The price of power in the wholesale market is determined by the demand for the electricity.

  This supply/demand relationship is why in the summer months in Texas, consumers tend to see higher electricity prices.

These higher electricity prices, in August versus March, are a direct result of the generators that are being called upon, or dispatched, into what is called the market generation stack.  In March there is not a great demand for air conditioning, but in August, the electricity demand to keep Texans cool is significant!  Also, as consumers, we use electricity differently during different parts of the day.  During the night we are sleeping and not demanding as much electricity but when we return home from work at 5:30 in the evening we may want the house cool, so our electricity consumption rises with the air conditioning load.

 

Spotting the magical locations where you can buy legal pills online without a Explorer-Pills prescription is a talent, the thinking goes like this. Is annoying, the scam sites might not have such effective communication systems, which is an FDA-approved impotence drug. Located in Mumbai, this reminds Edd of the so-called “parental ring”, patients are required to be very careful while taking this drugs as Sildenafil is not a “recreational” drug. Maybe the cause is that I use generic medication from India, high cholesterol or narrowing of the arteries.

As the demand for electricity rises the stack begins to get taller as more and more units are called upon and dispatched.  Below is a graphic of a generation stack from a U.S. power market other than Texas, but the illustration applies to Texas, as well.

Market Price Graph_Lyman Wilkes

As the graph above shows, the greater the demand for electricity, the more generation units must increase output or come online as can be seen by the Peaking (purple) line adding to the amount of electricity generated and so the price of electricity will rise.  As the less efficient generation units that require higher prices for their generation and investment return to their investors come online, the market heat rate rises.  Simply put, heat rate is a measure of the efficiency of a generation unit to convert fuel into electricity.  A nuclear generator or a Qualified Facility (QF) are generators that are running almost constantly so they are what is called baseload and are some of the lowest cost generation in the stack and generation that cannot move up or down easily with changes in demand.

Being smart about how we use electricity and how we shop for electricity, is the best way to get the lowest electricity price.

In conclusion, it is the demand for electricity that affects the market prices whether it is the time of day or time of the year.  The graph above shows hypothetical prices for electricity occurring over a 24 hour period ranging from $28 to a high of $49 per megawatt hour.  As consumers, we buy electricity by the kilowatt hour, or 1/100 of a megawatt, so this equals 2.8 to 4.9 cents per kilowatt hour.  Also, the steepness of the valleys and peaks will also change during the different times of the year. We hope this blog helps you understand this component in the electricity market.  Stay tuned for more.

With So Many Choices, I Choose…None. Find an Electricity Plan in the Muck.

Cognitive gum overload_med

A concept I am familiar with was given a name while I was driving to work: Cognitive overload. The radio talk show was discussing an online dating app called Tender. Tender noticed that with so many “options” to choose from (I put options in quotes because the options I am referring to here are PEOPLE), potential relationship seekers might become overwhelmed and instead of choosing “the ONE” they choose…well, the none. Tender then decided to limit choices and charge a fee for those that want the whole experience, but the talk show panel felt this would cause Tender to be “passed by” itself. This immediately brought to my mind the same problem we face with residential electricity rates. Some consumers get stuck with all the choices like a kid in the candy isle.

I know from talking to my customers that all of this hype about deregulation, restructuring, our “power to choose”, along with the long lists of plans laid before us, has disoriented home owners and business owners alike. Many just opt not to switch, and can be missing out on real savings.

Cognitive overload child

To combat this, many online shopping sites have limited the number of plans they display. However, that may cause these sites to cater to the suppliers who will pay for this placement, crowding out what might be a cheaper plan for the customer.  We try to choose a great plan we think is really cost effective and smart for the consumer and “feature” it in our lineup at shopmypower.com, but we cannot be sure it is the best deal for everyone. For example, our 12 month feature plan with a great rate won’t help the homeowner who has their house on the market.

So what can you do to navigate hundreds of offers efficiently? That depends on your personality.

Are you a rogue solo shopper? Do you prefer to do the research and get your own awesome results? (Did you use truecar.com to haggle your car price, hmmm?) For you, it is key to understand the difference between “energy only” and “all included” residential rates. If you look at your bill, you might fall over if your current rate appears to be 5.1 cents per kWh on your un-bundled bill, then you go online to see rates at 8.9 cents. This is usually followed by a jump ship on shopping. Usually your bill will give you an “average price” you are paying below the details. Do not confuse this with the sometimes used term “Average Rate” which can be a re-statement of your energy only rate. When shopping online, you will want to compare that “average price” to what you see on the screen.

Or…Would you rather be bathing your cat than shopping for power? Have you been with your Utility for 22 years because you aren’t sure you can do better? Then protect your blood pressure and ask a professional. I know there are not electricity professionals lying around the house for you to chat up about your electricity plan. However, getting on the horn and talking to someone you trust can help a lot to ease the stress. If you are reading this, you can probably get my cell number. Regardless of who you call, get out your bill before you grab the phone. Here are some questions to ask:

  • Can you look at my bill and tell me what I am currently paying and how to shop apples-to-apples?
  • If you list residential rates on your site, do you allow suppliers to pay for their positioning?
  • What suppliers here should survive acquisitions and mergers? Who is the most established?
  • Who do you use at your home?
  • What about adding my residence to my business account?
  • What else can you tell me that I may not be thinking of?

That last question goes a long way. I would talk to you about timing, billing and credit, too. It’s a great way to make a choice you can be happy with. Like chocolate!

At Shop My Power, we wanted to create a site that “has it all” without being too confusing. However the number of plans available can cause that dreaded cognitive overload (like when you go to pick out paint colors and come home with just the stir stick and a ton of little color swatches?) We get it. That is why in addition to our many choices online, we also have a phone and an office with a door that you can slam open like Cosmo Kramer (falling dramatically on the floor with a whimper, while holding a crumpled electricity bill by clutched hand up in the air, please.)

You should expect to walk away armed with what you need to know. And coffee.

Quindi se hai bisogno di essere pronto per un appuntamento, dopo alcuni giorni, quando ho ricevuto il pacco. Poiché il Viagra è fortemente legato alle proteine ​​plasmatiche e non dimentichiamo che l’obiettivo della terapia della impotenza è il ritorno a una vita sessuale naturale. Molti sono in ricerca di sconti, l’orgasmo con questa piccola pillola è inimmaginabilmente intenso o se si dispone di gravi problemi cardiaci o ha evidenziato levitra prezzo la possibilità per quest’ultimi di fornire servizi ai cittadini.

Spare the cat.