Ila Sears enjoys writing articles on retail energy providers and other informative alernative energy topics. He is the primary author for cheap business electricity.
Savings With Your Commercial Electrical Provider
Since deregulation began within the state of Texas at the turn of the millennium, Texans have learned as much or more about how electricity works than people in any other place in the world. Many businesses had to establish a baseline of knowledge on how they have to know the market to get the best rates. Some of the lessons learned could be considered more symptomatic of the times than as part of the bedrock of how the market will always function.
One of the lessons that we’ve all learned and been taught to expect is that electricity rates will always go up, sometimes way up, during the summer heat season. If any business owners exercises a little common sense, this tendency is fairly intuitive. What else would you expect? Since the days before deregulation, Reliant’s rates jumped each summer from May – November.
What causes the second rate increase? Corporate greed? State mandate?
What many business owners do not understand is that energy providers simply increased their expenses to offset higher use levels. Why does it cost more money to create electricity in the summer than it does in the winter? Simply put, it does cost more to generate electricity in the summer.
How can this be?
Logically, with more air conditioners running during the summer months in Texas, not only for home but businesses as well. It takes more A/C power to heat the same room at the same temperature as the outside heats up, too. The A/Cs have to run longer and later to keep homes and businesses cooled off. Due to the higher demand, the grid has to be filled with even more electricity than usual. This increase is grid demand causes a higher demand on generators that he utility companies use to generate the power. The generators that are forced to come on line during this period are usually more expensive to run for the provider – which is why they’re not the first generators online each day. This higher level of expense must be accomodated somehow and is, as usual, passed on to the consumer. The retail electricity provider has to pay more and the customer, ultimately, has to pay more as well.
The trends seems to condition consumers to expect rate increases each summer. Will this persistantly be the case? Possibly not.
Frequently this interesting relationship is addressed, but usually only briefly before the speaker goes into the price of natural gas. Most Texas electricity consumers do not even know that the generators used in the high demand times are powered by natural gas, so the prices are linked together. Natural gas, as opposed to coal, nuclear, or various other products also used to generate electricity within the grid, is a much more expensive and volatile product on the price side. Take for example, last summer which had record high electricity prices that directly followed the increasing natural gas prices.A secondary example is this summer, in which natural gas prices have remained very low, decreasing electricity prices. Does this indicate that electricity prices will stay relatively steady? Given that natural gas prices should remain low, it is reasonable to expect a slower increase in electricity prices. This is a graphic illustration in how supply and demand eventually work out the kinks in the market.
Please note that is not all there is to the story. The problem arises when the demand for electricity is treated as a constant, instead of a changing and dynamic force in and of itself. And why wouldn’t it be?There is no such thing as a cool summer in Texas, right? Nobody wants to suffer through a hot Texas summer without air conditioning, right? People would call in sick for work every day without air conditioning, right?
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