Electricity Pricing Models

Electricity pricing models determine how consumers are billed for their energy use. Common approaches include time-based rates, like peak and off-peak pricing, encouraging usage during less busy times. Others use tiered pricing, charging higher rates as consumption increases to promote conservation. Some models incorporate wholesale market prices, reflecting real-time supply and demand, which can cause variable rates. Regulatory and policy factors also influence pricing, aiming for fair costs and sustainable energy development. Overall, these models balance supply costs, grid management, and consumer behavior to ensure affordable and reliable electricity.