Because laws for the electric industry were set in the 1920s, a key factor in price was living as close as possible to a power plant. Today, electricity moves from state to state on a far-reaching grid. Electricity suppliers pay transportation fees depending on the distance the current must travel. In states such as California and Massachusetts, lower electricity rates can be negotiated from a variety of suppliers on an open commodity-like market through bids. Prices for electricity can be indexed from the New York Mercantile Exchange or from individual state power-exchange systems that track electricity pricing by the hour.
Prices fluctuate constantly because of the selling activity caused by deregulation.
While a customer can change suppliers, in most cases, the transmission and distribution of the electricity continues to be provided by local utilities. Transportation and distribution usually represent about 16 percent of total commercial electricity rates. Newspapers need to have a plan for managing that volatility. Finchem advises publishers to consider locking in prices for electricity after analyzing their utility needs and potential costs. Amid the onslaught of marketers and the complexity of deregulation, with varying rates and applications from state to state, several daily newspaper companies are turning to consultants to help executives develop strategies.