Electrical Energy Use and Tariffs

When using electrical energy, whether for residential, commercial or industrial clients, we enter into a contractual agreement to pay a certain price for consuming a unit of electrical energy, called 1 kilowatt hour. For example, 1 kilowatt hour of electrical energy can be considered the energy used by a commercial toaster or a coffee brewer of 1 kilowatt for 1 hour or the energy used to light 10 100-watt lamp bulbs for 1 hour.

Unit cost of energy is contingent upon numerous factors such as:

• Type of fuel, such as coal, natural gas, or uranium

• Cost of preparation and processing of fuel stock, such as mining or purification processes

• Availability of the fuel stock resources

• Transportation costs of fuel stock to power generation centers

• Operation costs of power generation station

• Wear and tear and life expectancy, or life cycle, of the power generation equipment such as turbines

• Cost of electrical power transmission from the generation plant to a point of use

• Cost of operation and maintenance of power transmission lines

• Cost of power voltage transformation

• Loss of energy transformation from point to point