It can be easy to take electricity for granted, especially now that generations of people have lived their entire lives with a plentiful power supply delivered straight to their homes. This can sometimes make it difficult to understand why prices can change so rapidly, which requires looking at the bigger picture of precisely how the cost of electricity is determined.

The company you pay to deliver electricity to your home may generate its own power, but in most cases, at least some of the electricity they provide has been bought wholesale from other suppliers. If the cost of wholesale electricity increases, and energy suppliers are forced to pay more, these costs may then be passed on to consumers in the form of increased electricity bills, as a means to help energy suppliers curb their losses.

There are other short-term effects that can influence electricity prices too, such as the weather - households tend to use more electricity during the winter months, while there may conversely be more power generated by wind turbines on gusty days. However, to truly understand the reasons for changing electricity prices, it can pay to look at the longer term effects, such as observing changes in the market over the last 10 years.

Electricity, like many utilities, tends to be more expensive today than it was a decade ago, and this is not only due to inflation. The rising cost of underlying resources such as oil also plays a crucial part in determining the price of electricity, and as natural resources become scarcer, this can lead to households footing the bill.

That doesn't mean the future outlook is bleak for UK electricity prices though, especially as continuing investment in renewable energy sources could provide a practical alternative to fossil fuels and reduce the cost of supply. Continuing competition among the nation's major electricity suppliers will also yield many more deals and discounts that consumers can take advantage of to reduce the cost of their supplies, which represents a much more appealing prospect than a single company holding a monopoly, as is the case in some other countries.

The rise of the internet has also made electricity companies less complacent and more determined to keep their prices affordable, as it has become easier than ever before for customers to compare electricity prices online and find a better deal. Households no longer need to remain with an unsatisfactory electricity supplier when it's so simple to switch to a new tariff and enjoy lower prices.

Mildred Potts writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.