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Why Is My Electric Cost Going Up When Natural Gas Prices Are Down?

Why Is My Electric Cost Going Up When Natural Gas Prices Are Down?

Your total electricity cost is not solely driven by natural gas, crude, coal and other energy commodities. Only a portion of the total cost is directly correlated to these commodity prices; there are other components such as generation capacity, network transmission, system administration fee, state and federal renewable energy mandates, and other utility related charges that make up your total cost. In the past year alone, generation capacity prices in PJM increased on average by $0.007/kwh from 2012.  Network transmission increased as much as $0.005/kwh in New Jersey and is expected to increase even more in 2014 due to upcoming transmission upgrade projects. These two components alone make up about 30% of your total electricity cost. These non-energy costs are tariff-driven or auction-driven and are necessary to ensure system reliability.

While the network transmission rate may continue to increase, we are seeing relief in generation capacity prices starting in June 2015.  While the cost of generation capacity is expected to go down, however, your consumption during summer months could negate the reduction in price. There are several ways that Constellation can help you manage your total electricity cost. We offer several products that can help you reduce non-energy related costs such as generation capacity and network transmission by managing your consumption.  Give us a call and we can work toward your energy reduction goals.

To learn more about generation capacity and network transmission you can visit the PJM website at http://www.pjm.com/ or request to speak with a Constellation representative: http://ar.gy/4ZdU

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