Commercial and Industrial Electricity Quotes
Chicago Energy Consulting Services
What moves Electricity markets? During normal market conditions, prices can remain in a predictable range, and market transitions are very gradual. However, unlike other commodities, Electricity cannot be easily stored. Therefore, the electricity market does not have reserves to draw upon when prices become volatile. The factors that affect electricity supply are complex and may include regional weather conditions, government regulations, source fuels, and geopolitical events.
Regional weather conditions - This is one of the more critical variables in market pricing. Weather is predictable to some degree but can change unexpectedly (extreme hot or cold), causing considerable variances in electricity demand. Government regulations - The wholesale electricity markets can change dramatically when regulatory agencies introduce changes in source fuels or environmental requirements.
Source fuels - In each region of the US, Electricity generation originates from a varied mix of energy sources such as coal, natural gas, nuclear power, hydro energy, solar energy, and wind energy.
Geopolitical events - an international event such as war or political unrest may produce short term and long term uncertainty in the energy markets. What are the cost components of Electricity?
Energy - this cost is based on the amount of power the customer needs from the wholesale market for a specific length of time.
Capacity - this cost reflects the guarantee that there will be sufficient generation to meet the maximum energy requirements of the market at all times.
Ancillary Services - the cost of maintaining reliable operation of the electric grid. Losses - the cost of lost energy occurring between the point of generation and the point of delivery to the customer.
Transmission - the cost of moving power from the energy generator to the local distribution utility.
Renewable Portfolio Standards - the cost to a supplier to produce energy from renewable sources mandated by the regulatory agency.
What should I compare? “Fixed all-in product” should contain all of the above components wrapped into one rate - your fixed price. There is a slight premium for this product, which provides maximum price protection for the customer and protects the supplier who must estimate the charges for the cost components over the duration of the contract.
“Fixed product with varying pass-through charges” only contains a fixed rate for the energy supply, and the customer assumes the risks for the other cost components. The energy supply price will usually be lower in this product compared to the fixed all-in product. Still, the customer should be aware of any so-called apples-to-apples comparison.
Commercial and Industrial Electricity Quote