Factors That Affect Your Energy Rate

Think of the stock market. There are many factors – good and bad – that impact the stock market, and it can be difficult to predict. Similarly, there are many things that affect the energy market and the rate you pay for your business’ energy, including:

• Supply and demand. Much like any product or service, supply and demand drive the energy market. When natural gas supply is low, prices are typically higher for both commodities. When supply is high, prices tend to be low. The opposite is true for demand. While it’s not always easy to predict supply and demand, based on market trends, we can guess that natural gas demand is highest in winter when organizations are heating their buildings, and electricity demand is highest in the summer when using air conditioning.
• Weather. As noted above, seasonal changes to the weather can have an impact on your energy rates. These trends are somewhat predictable, however less predictable are cases of extreme weather, such as hurricanes, floods, draught, tornados and more. These weather events put strain on the energy grid and are extremely difficult to combat.
• Gas storage. Did you know that gas storage affects the price you pay for your electricity? While they are two separate energy sources, natural gas is used to create electricity. So, when natural gas supply gets low, electricity prices tend to increase.
• Government regulations. There are two governing bodies that control much of the energy industry – your state’s Public Utility Commission and the Federal Energy Regulatory Commission. These organizations are responsible for creating regulations and initiatives that dictate a lot of what utilities and retail energy suppliers can and cannot do. To keep up-to-date with what’s happening in your state, visit your state’s public utility commission website.

While some factors that affect energy rates are beyond your control, there are a few things you can do to protect your business from fluctuating prices. If you’ve partnered with an energy supplier and currently have a fluctuating energy plan, make sure to manage your load. Changes in how you use your energy can help offset some of the changes that you don’t have control over. If you would prefer to “set it and forget it”, you could consider a fixed price plan that locks in stable pricing for the duration of your contract. Using a supplier for your business’ energy allows you the flexibility to choose what works for you.

If you have additional questions about your energy supply or would like to get started with AEP Energy, contact the Small Business Solutions Account Management Team at 1-888-924-7111 or aepenergyrenewals@aepenergy.com.

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