Components of Electricity Rates

The electricity rates paid by consumers at the retail level can be broken down into several components - 

• Power cost - This is the cost of producing electricity and a strong function of the fuel cost. This can be easily more than 50% of the consumers' electricity bill. 
• Transmission and Distribution costs - these costs are generally regulated and reflect the cost of building, maintaining, and operating the bulk transmission network and the local distribution networks. 

Here are some figures taken from the NE ISO Electricity Cost Whitepaper published in 2006 - 

Components of the average forecast New England retail consumer cost of $156/megawatt-hour in 2006

Components of the wholesale electricity cost for a typical hour with gas units on the margin. 95% of the cost (total = $76.25 / MWh in 2005) is due to fuel and capacity payments.