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Commercial Energy Prices are Low, But Your Bill isn't Getting Cheaper: Here's Why

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Electricity and natural gas prices are low in just about every region of the United States. 

In fact, according to the 2018 Sustainable Energy In America Factbook produced by Bloomberg New Energy Finance, “Power prices for industrial users remained low [in 2017], giving the U.S. a global competitive advantage in attracting energy-intensive industries.” 

Commercial electricity prices have steadily declined over the past five years, thanks in part to low-cost natural gas and a major increase in renewable energy generating capacity. 

On average, the drop of wholesale power prices is between 25 to 40 percent

But while electricity prices have dropped, consumers are paying an average of 8 percent more for electricity. 

Why Cheap Electricity Doesn’t Result in Cheaper Bills 

Electricity pricing structures have changed rapidly. 

While the price of electricity supply has dropped, the cost of getting it to your business - and maintaining an aging power grid - has increased dramatically. 

Five years ago, your bill might have looked like this:

  • 70 percent of bill - actual kilowatt hour usage

  • 30 percent of bill - "other" charges

Sample Traditional Fixed Rate Energy Bill 

Today, your usage charges might make up only 50 percent of your bill. 

When "other" charges for capacity and transmission accounted for 30 percent or less of your bill, you could afford to buy energy based on a single price per kilowatt hour. 

But today, that’s not the case. 

What You Can Do About It 

To position your business for long-term success you must take control. 

Non-market-based charges from utilities and other regulating bodies are eating up an increasingly larger portion of your total energy costs, charging you for transmission and distribution based on your peak load contribution

To simplify – your peak load contribution (PLC) is the amount of power you use on the five days per year that there’s the highest demand on the grid.

Those days vary by power pool – but let’s reiterate the point: in many cases, the “extra” charges you pay are determined by how much power you use on just a handful of days. 

 What is Peak Load Contribution? And why does it matter right now? Here's the quick explanation 

If business leaders have a strategic energy plan, it’s not difficult to reduce those fringe charges, and thus your manage your entire energy budget year-over-year. 

Make sure you have a plan - we’re giving you the tools and tactics you need to make one. 

To learn how, download our newest, free report!

Download the Report

Posted: July 11, 2018