How Electricity Prices are Determined ?
1. Core Components of Electricity Pricing Electricity prices reflect the full cost of delivering power , which includes: Generation Costs : Fuel (coal, gas, oil), renewable integration, carbon pricing, and plant operating costs. Transmission & Distribution (T&D) : Infrastructure maintenance, grid modernization, and loss recovery. Regulatory & Policy Costs : Taxes, subsidies, renewable obligations, and cross-subsidies. Retail Add-ons : Metering, billing, and customer service charges. [eia.gov] , [energy.con...lation.com] 2. Market Structures and Price Formation Regulated Markets : Prices set by regulators using cost-plus or performance-based tariffs . Deregulated Markets : Prices formed via wholesale bidding in power exchanges and bilateral contracts. Wholesale vs Retail : Wholesale prices depend on marginal cost of generation , fuel prices, and grid constraints. Retail prices include wholesale cost + T&D + taxes + fixed charges. [nyiso.com] , [callmepow...