When demand for natural gas is high, its price is higher. That means the price of the electricity generated from natural gas also goes up. Transportation of fuel from its source to a power generation plant also drives its price.
Alternative power sources are desirable for environmental reasons, but they can be expensive. Power generation companies are responding to these challenges by diversifying the types of fuels and energy sources they use to average out costs and gain more flexibility. Prices vary by state and even where you live within a state. If you live close to a power plant, the cost to bring power to you is lower.
Other power plants are located close to inexpensive fuel sources that can cut costs for surrounding communities. The average cost for electricity by state , as tracked by the U. Current events, foreign activities and regulation changes all affect the price of electricity. On the other hand, government deregulation has made coal more viable for some and may also have an impact on electricity rates.
Less predictable and controllable are natural disasters and political unrest that can damage infrastructure or impede its operation. Even events in other countries can affect fuel production for and shipping to the United States — and thus our electricity rates. Using energy when electricity is cheapest takes a little planning, but it could be worth the effort. Pay attention to what time of year electricity rates are lowest in your area. When energy prices go down in either the fall or spring, that might be the best time of year to lock in your electricity rates.
Contact Us Log In. Search Close. What Is Water Conservation? What Is a Smart Home? Fixed-Rate Energy Plan? When Are Electricity Rates Lowest? Short-Term vs. It is becoming increasingly popular for utilities to offer time-of-use TOU plans to their residential customers.
In a standard electricity plan, you pay the same rate for your electricity regardless of the time of day. TOU plans are different: the cost of electricity in a TOU plan depends on the time the energy is drawn from the grid.
If you have TOU rates, you can lower your electric bills by waiting for the cheapest time of day to use electricity before you run a clothes dryer, start the dishwasher, or charge your electric car.
Utilities offer TOU plans to reduce demand on the electric grid by motivating their customers to reduce electricity use during peak hours.
California is the first state to require that everyone who installs a solar panel system has to switch to a TOU rate plan under their net metering 2. Time-of-use electricity pricing is a common option for commercial buildings as well, especially if tenants have flexibility in when they can use the most electricity.
In some cases, time-of-use plans can cost you more in the long term, but they also offer significant opportunities to save money. Before you opt into a TOU plan, ask yourself the following questions:.
Peak hours will always be the most expensive time of day to use electricity. Many utility companies offer more than one time-of-use policies. Summer rates are often higher than winter rates because of energy-intensive air conditioning systems running during hot days. With standard electricity plans, the cost of electricity remains the same at all times. But utility companies are increasingly offering time-of-use plans, which charge more for electricity during peak hours but offer cheaper service during off-peak times.
Think of it like the surge pricing that Uber uses. When electricity is high in demand and the grid is strained with lots of people plugged in, then prices are higher. When things aren't so busy, you can get more favorable pricing. If your utility company has you on a time-of-use plan, you can take advantage by figuring out peak hours and off-peak hours and timing your electricity use to the periods when electricity is at its cheapest.
Bring your home up to speed with the latest on automation, security, utilities, networking and more. In a time-of-use electricity plan, peak hours — sometimes referred to as on-peak hours — are the hours of the day during which demand for electricity is the highest. During this time period, you will be paying the highest amount per kilowatt-hour kWh used. Some electricity use is going to be unavoidable, whether it's your refrigerator keeping your food cool or your security system that's always on and protecting your home.
But peak hours are a bad time to do tasks that can wait. If you're running large appliances, whether it's your dishwasher or washing machine, it's going to cost you extra during peak hours.
Conversely to peak hours, off-peak hours are the times when electricity prices are cheaper. This is typically the case because there are fewer people trying to access the grid during these hours, meaning there is less overall demand and you won't have to pay a premium for each kWh that you use.
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