Electric costs are driven by demand. The cost of electricity, while subject to the law of supply and demand, is not a simple case of interaction between actual supply and actual demand. The cost of gasoline is such an interaction. When there is a shortage of gasoline, the price is increased until it becomes so expensive that buyers must cutback and use less.

Electricity is not like gasoline. The price of electricity is regulated. The price does not depend upon the demand at the time of purchase. Price is determined by the cost of always having more supply than is needed. The supply needed varies from day to day. The need is greatest on warm days. Electric supply is produced by plants that generate electricity by converting other forms of energy into electrical energy. The price of electricity which consumers pay must cover two costs — the cost of actual usage and the cost of maintaining generating facilities sufficient to produce enough electricity for cooling purposes on days of peak demand. The price which the Public Service Commission sets for usage is based upon the cost of usage plus the cost of construction of additional generating facilities to meet future demand and the cost of maintaining existing facilities. A percentage of the monthly electric bill finances the cost of facilities that will be built in the future.