What Factors Affect the Price of Electricity?

Market prices change depending on a number of factors, including the amount of supply and demand for electricity, the availability of power plants, local fuel costs, pricing regulations, distribution costs, seasonal costs, and weather conditions.

Electricity prices also reflect the costs to build, finance, maintain, and operate power plants and the electricity grid (the complex system of power transmission and distribution lines). Some for-profit utilities also include a return for owners and shareholders in their prices. These prices rise and fall much in the way gasoline and some grocery prices change.