You’ve probably noticed that gas prices are on the rise… or you’ve already taken action on our last post. Either way, it’s important to know how the price of gas affects your utility bill. Our experts have broken it down below.
As you can see in these charts, the price of gas and the price of power have stronger correlations in some areas than others. Though the correlation may vary, it’s present in all markets.
What causes this correlation? Let’s turn to your utility bill for the answer.
At the bottom of your bill, you may see a line item called “Fuel Cost Adjustment” (FCA) or “Energy Cost Adjustment” (ECA). What does that line item mean? From month to month, the cost of generating power changes. Instead of constantly adjusting your rate to cover their costs, utility companies add this to your bill instead.
Don’t see it as a separate line item? Some utility companies simply add it to your overall kWh.
This change of cost is caused by one main factor, the price of fuel. Some of your electricity is generated by burning coal or natural gas, and the cost of these fuels change on a monthly basis. The railroads have also increased the costs of delivering coal to power plants through diesel-fuel adders and high natural gas prices. As a result, you are paying more for electricity to cover these changes.
To put it simply: when fuel prices rise, it costs more to generate electricity… which raises costs for your utility company. Then, you owe more on your bill to cover those costs.
So what can you do to avoid all these extra charges? Jasmine Graham, an energy justice policy manager at We Act for Environmental Justice non-profit, answered, “We need to move away from a model that’s reliant on corporations, and move toward a democratic, renewable energy system that prioritizes energy affordability...”
When we take the power away from large utility companies (see what we did there??) and use solar instead, electricity becomes more affordable.
Instead of paying for kWs and cost adjustments, you’re investing in a system that will generate power for you, add value to your home, and save you from the fluctuating prices of fuel and electricity.
Want to escape the fluctuating prices? Click here and talk to our team of experts and get started.
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