This past cold winter caused electricity rates to skyrocket and they remained high well into 2014. Usually these rates moderate during the spring and keep low by the early fall. However this year, prices stayed high during the spring and they are just now starting to moderate in July. Almost every day in July has seen lower prices.
Two main factors that cause prices to rise and fall are: 1. the price of natural gas and 2. geopolitical unrest.
Natural gas prices typically go up each winter and geopolitical unrest can happen anytime. The typical scenario is that electricity prices go up in the winter when natural gas prices rise and come down in the late spring and summer, when natural gas prices fall. This year the combination of high natural gas prices remaining well into the spring with the unrest in the Ukraine and the Gaza Strip, electricity prices continued at high prices into the early summer.
Now that prices are coming down, it is time to examine your electricity bill and your term commitment. If your contract expires in the next 120 days, you should be able to shop around and sign a new contract with a provider that can lower your cost of electricity each month.
You should look for electricity rates for the energy itself at or below.060 cents per kilowatt hour (kWh). This is the deregulated or competitive part of your electric bill. The other part of your electricity bill is the delivery part, which encompasses reading your electric meter and delivering the electricity to your home or business. This part is the regulated part of your bill and it is not unprotected to competitive pricing. There are also associated taxes and fees included here.
All in, you should strive to keep your total electricity costs below 10.0 cents per kWh. When you find that prices are extremely low, you should select the longer term contracts, 24 or 36 months. If you are not sure about the current prices, then you should select the shorter term contracts, 6 or 12 months.
In any event, you should take a look at your electric bill and determine how much you are currently paying per kWh and how long is your term contract. If you are paying in the 12 to 16 cents per kWh, you are paying too much. Once you have determined when your contract ends, you should actively shop prices and lock in a low rate.
In the future, keep tabs on the prices of electricity and the time your contract expires. This will prepare you to be ready to keep your electric bills at the lowest rates possible.