Why do electric prices differ between areas?
Have you ever noticed that energy rates seem to differ from one location to the next? Why does one person living in one part of the country pay more than another person living in a different part, even though they use the same amount of electricity? Why don’t we all pay the same? Average electricity costs in Pennsylvania are around 12.70 cents per kWh, so why does someone living in Washington, PA, only pay 7.15 cents per kWh while another person in Allentown, PA pays 8 cents per kWh? There are large variations on the cost of gas and electricity depending on where you live. Here’s why.
What are the main factors affecting energy costs?
There are three key factors that influence the price of electricity.
- How much energy a supplier sells in a particular area.
- How much energy a supplier buys from generators in a particular area.
- The charges imposed on a supplier by the local utility for its distribution network.
While you have the freedom to shop around and change your energy provider in Pennsylvania at no cost, these three factors are always part of the price of the electricity you buy from your supplier.
Why do power companies charge different rates?
Electricity rates reflect the cost of building, maintaining and operating power plants and the electricity grid. These prices vary locally because of the availability of power plants, fuels, pricing regulations and local jurisdictions. Higher energy demands increases the demand for fuel, which can then result in higher prices. The availability of power plants and reliance on expensive fossil fuels, such as diesel and petroleum, also plays a part.
High demand for electricity, particularly during the summer, can also overburden transmission lines. This causes transmission congestion when too much power is demanded and there’s not enough transmission line capacity to carry it. When transmission is constrained, the demand is still there but there is no way to send all the electricity to meet the demand. Consequently, electricity must be generated by other sources and sent by a different route which adds additional costs to the electricity, sometimes to the tune of millions of dollars per megawatt. Historically, southeast Pennsylvania had one of the highest occurrences of transmission constraints in the whole U.S. but new, high-capacity power lines can relieve that and lower Pennsylvania electricity rates.
The EIA also cites several reasons the price of electricity varies from region to region:
- The cost of generating fuels.
- The cost of building, maintaining and operating power plants.
- The cost of delivering electricity and maintenance of the system.
- Weather conditions. Rain, snow and wind provide for low-cost energy, while extreme temperatures increase demand and drive prices up.
- Local regulations.
What can I do to save money?
There are some things you can’t change about your electricity bill, but that doesn’t mean you need to keep paying more than you should. Consumers in Pennsylvania have the right to shop around for their electricity and change suppliers whenever they want. With PA Energy Ratings you can compare plans quickly and easily and find the best deal to suit your individual needs.
Remember, you can head over to https://www.paenergyratings.com/electricity-rates to find the cheapest PA electric plans right now.