Factors Affecting the Energy Rates

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We all are consuming energy every minute of our life and paying the bills for the use of resources. But, have you ever experienced a sudden difference in the amount on the bills? Yes, I have experienced one so through this post I will provide you with the information regarding the factors affecting the Electricity plans . Hold on and have a flick over the content.

In my word line, here is the list of the factors that affect the energy rate of energy;

Production Charges

Production of different energy sources requires variant methods and machines. The production charge has a wide effect on energy rates.

Meanwhile, responsibilities such as the re-licensing of the nuclear plants, conversion of the coal into natural gas, investments involved in gas pipelines, and transmission capacity of electricity affect the energy cost.

Transportation Charges

Energy products such as oil, gas, coal, etc are transported from place-to-place to resulting in a higher payoff. The distance covered during the transportation effects determines the price. In case, a country is importing certain products, then the price will enormously increase.

Weather Conditions

The temperature change can either raise or drop the gross energy rates. For example, during summer the demand for electricity increases excessively due to the high use of cooling instruments. The extreme request for electricity results in the high up of the rates. On the other hand, heavy rains result in the conservation of adequate water that ultimately lowers down the hydro-power cost. Similarly, wild winds can easily rotate the turbines resulting in the production of wind energy at a lower price.

Cost of Speculation

Speculation is the process of trading any financial instrument that involves high investments and risky transactions. The aim is to gain profit without the high fluctuation of the cost. The cost involved in speculation is never transparent to everyone and sometimes results in advance bills.

Availability of Sources

There are two types of energy sources, renewable, and non-renewable sources. The non-renewable sources are limited, but a sudden change occurs with the availability of renewable energy. Even in an hour, the prices of these resources can fluctuate.

Governments decision

The governments have the power to change the cost of the supplies whenever they want. This policy might vary depending upon the country, or state you live in. In some countries, the government possesses the ultimate power, while the status may not be the same for the other.

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Changes in currency

The changes in the price of production and transportation in the global market significantly affect the energy charge. The prices of each energy source are linked with each other, wondering how? Here is a case study, Europe supplies a huge portion of the gas to Britain since the price of gas and electricity is interconnected, a slight modification in the currency strength of ponds compared to the euro’s will raise or reduce the cost tremendously.

Global Cases

The price of oil is directly linked with gas, and electric power supplies as oil is a mandatory requirement to generate them, but global events extensively affect the oil rates. Back in 2015, the prices of oil were raised in the US due to global events.