Electricity Pricing Components

    There are multiple components that make up your monthly electricity bill. Understanding these components, as well as what your supplier can impact is important.

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    Generation and Supply

    Electricity is generated and made available for purchase on the open market, which can be competitively purchased on your behalf by a direct supplier, such as IGS Energy.

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    Transmission and Distribution

    Transmission and distribution are handled by your utility, who gets the power to your business. In some utilities, transmission costs are part of the supplier's charges.

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    Generation and Supply

    When looking at the supply and generation portion specifically, energy and capacity are the most influential when it comes to your overall electricity costs.

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    COM_icon_dot1 Energy   

    Energy is the main component, comprising 50-60% of the overall price. Prices are subject to significant fluctuation throughout the day, often in response to natural gas prices. This is because natural gas is increasingly becoming a major source of power generation. Power is purchased at localized load zones in a forward-looking market. Each month has an "off peak price" applicable to nights and weekends and an "on peak price" applicable to weekday daytime hours when power is more expensive.

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    COM_icon_dot2 Capacity   

    Capacity is the other main component, comprising 15-25% of the overall price. Capacity ensures there is enough generation at a single point in time to meet your unique peak demand at the highest power consumption hours. These prices are a function of underlying costs of capacity, which differ by utility and typically change annually.

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    COM_icon_dot3 Other Components   

    There are several components that suppliers have little to no control over, which comprise 5-20% of the overall price. These include components such as line loss, ancillary services, and state-mandated renewable energy charges.

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    Managing the Components

    Our team will develop a strategy that may fix or float components, or a hybrid of the two. By customizing a plan for your business, we'll help you balance market opportunity with price predictability.

    Most Popular Strategies

    With energy and capacity as the most influential cost components, here are some of the common ways we combine these factors to deliver a customized electricity solution.

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    All-In Rate

    Benefit from price certainty with a steady rate through the duration of your term.

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    Capacity Pass-Through

    Float capacity while hedging other costs and offers the ability to assume risk in exchange for the potential of reward.

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    Capacity Adjustment

    Maximize current market opportunities to plan for long-term price certainty with minimal risk.

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    Energy Only

    Minimize market exposure while balancing slight variation in other charges.

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    Block & Index

    Mitigate upside risk while partaking in downside movement in the market.

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    Variable Index Rate

    Ideal for highly-engaged customers with a high risk tolerance that can capitalize on advantageous market movement.

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    Not sure where to begin? Answer these four simple questions and we’ll narrow your options and get you connected with an energy expert.