Electricity is such a thing that without it the whole world will become dark, in fact it will be impossible to live in a world without electricity. From our childhood days we are taught in our schools to conserve energy and avoid unnecessary wastage of power. But today in the 21st century, the world is technically advanced and the requirement of electricity among people has increased drastically. So the demand is more than the supply. In the freaks of demand and supply the price of electricity is going higher.
This continuous up and down of electricity rates happens mainly due to its demand and consumption. There is a need to turn the tide because this is a vital problem. It is noticed that mostly the rates rise up than going down.
There are many reasons as to why the electricity companies raise the electricity rates. Some of the reasons are listed below:
Electricity produced from non renewable sources which are limited in supply, mainly rises when the availability of such materials reduces. So there is a need for introduction of specially designed projects for utilizing renewable sources.
Electricity rates also depend upon consumption. If there is a high demand of electricity then electricity is taken from additional sources to meet the need.
The consumption of electricity in business is required because it needs more electricity for operating costs. As their expenses rise they try to compensate their expenses through their customers.
Inflation is another reason of price rise of electricity along with other commodities.
Conversion of non renewable sources to renewable sources is a costly affair because the present infrastructure has to be modernized. This expense would be compensated through the consumers of electricity. But once the project for this transition is started it will involve an initial cost but it would be beneficial in the next years.
These were the basic reasons, why non-deregulated companies raise their prices.
Now let us discuss the reasons, why deregulated companies raise their prices.
Time is a factor for raising prices of electricity. This is because due to passage of time the infrastructure that needs to be upgraded is a costly affair. The money has to come from somewhere and so it is consumed from the customers by raising the rates.
Inflation is also a factor of rising electricity rates in both non-deregulated and regulated companies.
When fuel cost increases the company’s expenditure rises especially if it has to depend on heavy machines, ultimately electricity rates also rises.
Price of electricity depends upon the source from which it is produced. So when the availability of the source decreases the effect can be seen on the electric bills.
Very high or low demand of electricity can also affect the rates. If there is a low demand then the company loses the revenue stream and if there is a high demand then due to shortage of electricity the provider has to buy extra electricity to meet the need.
Due to all these reasons the electricity providers sometimes raises and sometimes decreases the power rates.
Author’s bio: Jimy Jones’s articles provide us extensive knowledge about electricity providers. To know more visit Electricityproviders.net.
