Compare your current electricity bill with one from a few years ago. You will notice that the price you pay per kilowatt hour (kWh), as well as your overall total power bill, have increased over the years. In fact, retail electric rates have been steadily rising for quite some time now.
To understand why they have become so expensive, we first need to step back and look at how power prices are calculated in the first place.
What it costs the utility to provide you with electricity
The price of power typically reflects how much it costs the utility to source and supply the electricity. There are two ways that utilities generate power and those are:
- To generate the energy at their own plants.
- To purchase the power from an energy supplier.
Both of these options cost money. Generally speaking, your electricity rate measured as cents per kWh is a reflection of how much it’s costing your utility.
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