There are a variety of factors that can cause price changes on your energy bill. These variables can dramatically affect your bill’s total cost from month to month, so you should be aware of the reasons why you may see your bill fluctuate and how to better understand why that is.
Weather can directly affect your bill because of seasonal differences. For instance, during peak summer months in regions that tend to get very hot and/or humid, a large number of people and businesses will be using air conditioning, adding to the demand for power. On the opposite side, regions that have really cold winters will show a spike in demand because of people and businesses using their heat more than usual. Although weather is usually predictable and allows for you to expect seasonal market cycles, be prepared to expect unforeseen variances in demand.
Extreme weather takes on a different, more extreme demand for power. These extreme weather events can consist of hurricanes, blizzards, floods, and tornadoes, all of which have the potential to cause huge power outages and infrastructure damage. You’ll see market pricing reflect these situations, pending on the likelihood of an extreme weather forecast and also the impact of that extreme weather after it happens.
Government regulations will affect your bill when regulatory agencies introduce changes or new laws to the market. You also have to take into account government changes to fuel industries as those can inadvertently affect the natural gas and electricity market.
Outages can happen in two different ways. The first is when power production facilities need to do scheduled maintenance, they will partially close off some of the facility, resulting in less power generation. The second factor for an outage is when some type of extreme weather is affecting a power generation facility, such as freezing temperatures, hurricanes, floods, etc…
Source Fuels such as crude oil and coal correlate with the natural gas and electricity markets because of companies seeking the lowest cost for their energy. When companies switch sources, this causes a price change on one type of fuel, which in turn affects the price of the others. Source fuels are also used in the generation of electricity and heating and cooling, resulting in impacts to pricing on all markets.
Geopolitical events are hard to predict and no one can guarantee what may happen when they do. These events can include political unrest, war, trade embargos, and even hostage situations. When such events happen, there are usually immediate effects to the market, which can affect short-term prices. If the event is one that has a long term expectancy, a level of uncertainty is maintained, causing wholesale market prices to escalate. On the other hand, when positive political events happen, such as new trade agreements or peace agreements, the market prices can see an advantageous turn to cheaper pricing.
Certain information sourced from:
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