Electricity pricing

Electricity transport via high-voltage line

Electricity pricing (also referred to as electricity tariffs or the price of electricity) can vary widely by country or by locality within a country. Electricity prices are dependent on many factors, such as the price of power generation, government taxes or subsidies, CO
2 taxes,[1] local weather patterns, transmission and distribution infrastructure, and multi-tiered industry regulation. The pricing or tariffs can also differ depending on the customer-base, typically by residential, commercial, and industrial connections.

According to the U.S. Energy Information Administration (EIA), "Electricity prices generally reflect the cost to build, finance, maintain, and operate power plants and the electricity grid." Where pricing forecasting is the method by which a generator, a utility company, or a large industrial consumer can predict the wholesale prices of electricity with reasonable accuracy.[2] Due to the complications of electricity generation, the cost to supply electricity varies minute by minute.[3]

Some utility companies are for-profit entities and their prices include a financial return for owners and investors. These utility companies can exercise their political power within existing legal and regulatory regimes to guarantee a financial return and reduce competition from other sources like a distributed generation.[4]

  1. ^ Stanley Reed (22 September 2021). "Here's What's Behind Europe's Surging Energy Prices". The New York Times. Retrieved 24 September 2021. High carbon taxes are also stoking power prices
  2. ^ Weron, Rafał (2014). "Electricity price forecasting: A review of the state-of-the-art with a look into the future". International Journal of Forecasting. 30 (4): 1030–1081. doi:10.1016/j.ijforecast.2014.08.008.
  3. ^ "Factors Affecting Electricity Prices – Energy Explained, Your Guide To Understanding Energy – Energy Information Administration". www.eia.gov. Retrieved 3 May 2018.
  4. ^ Prehoda, Emily; Pearce, Joshua; Schelly, Chelsea (2019). "Policies to Overcome Barriers for Renewable Energy Distributed Generation: A Case Study of Utility Structure and Regulatory Regimes in Michigan". Energies. 12 (4): 674. doi:10.3390/en12040674.