How the Market Affects Pricing

In most electricity markets, the price of natural gas typically drives electricity pricing and can be propelled by fluctuations in supply, demand, and regional factors. There is even linkage between natural gas prices and oil prices because both supplies often come from the same wells.

As demand for a product or commodity increases, often, so too does the pricing. Similarly, when demand wanes, prices may fall. The amount of available supply can also have a direct impact on market volatility and pricing. For instance, if a surplus exists, prices may decrease; and when supplies run short, prices often climb.

Pricing Factors

Regional factors that can often affect power market pricing include:

Power generation availability: Demand may require additional power plants to generate enough power to support consumption.
Sufficient pipelines to support demand: This variable will only grow more valuable as gas plants begin carrying more burden of demand with the retirement of many coal-fired plants in the years ahead.
Weather: For instance, extreme weather events can drive prices above 20x the average price. These events are typically short-lived, but volatile.

The danger occurs when two or more variables combine. That’s when you might see severe impact to the market, and therefore changes to electricity pricing. For example, the polar vortex event of 2014 caused New England households to pay as much for electricity in one quarter of the year as it had for all power used in 2013. A fixed-rate plan can help mitigate the risk of market volatility.

About electricity choice

Electricity service to your home consists of two main parts:

Energy supply (kWh) – the actual electric energy or power you use every day
Energy delivery – how the energy arrives at your home, e.g. via poles and wires

Before electricity choice, both the energy supply (kWh) and the energy delivery came from one company – the regulated utility. For instance, in Houston, the regulated power utility was Houston Lighting & Power Co. (HL&P). HL&P split into three companies when competition started, and created the TDU now known as CenterPoint Energy. Energy was regulated, and the utility could raise rates without losing customers. More importantly, you did not have a choice when it came to who supplied your energy.

Electricity choice, or competition, introduced choice to once-regulated markets in more than half the United States – giving you control to choose who supplies your energy.

Today, electric suppliers, like Constellation, compete to provide your energy supply by offering a variety of electricity plans, such as fixed or month-to-month plans, and by offering competitive energy charge pricing for the actual kilowatts you will use.

What changed?

In the areas we serve, Constellation provides:

Straightforward plans and pricing
Friendly, reliable customer service
Hassle-free switching, no sign-up fees from Constellation
Protection against market volatility when you select a fixed-rate plan
Flexibility when you choose a month-to-month (variable price) plan

What remains the same with electricity choice?

Your local utility continues to:

Transmit and deliver electricity to your home
Provide equal service to all customers regardless of the energy supplier selected
Read your meter each month

Constellation offers a variety of power options for residential and business customers across 17 states. Now you have the choice to choose a retail electric provider as solid as Constellation.

Compare Energy Rates

Enter your zip, and a promo code if applicable, then click "get started." You'll see Constellation's available electric, renewable and natural gas plans near you. Residents can compare fixed-rate energy plans with no sign-up fees.