There is a clear cut way - the wholesale rate. In New Zealand, an auction happens every 30 minutes where demand is tallied by the system operator (Transpower) at a Grid Extraction Point, and generators bid in what they think it&#x27;s worth.<p>The system operator then purchases the cheapest electricity available (taking into account demand is different throughout the network, and the network can&#x27;t transfer all electricity to all parts of the grid because of line constraints).<p>This is the cost of the &#x27;raw materials&#x27; of the retail electricity price. A solar panel on your house really isn&#x27;t any different that a little power station. You still have to transport that electricity somewhere, maintain those lines, maintain the voltage, run a power station when it gets dark, bill you, etc.<p>It&#x27;s not a big conspiracy, it&#x27;s just that the cost of energy makes up about half the costs of the electricity system. If you set at a rate higher than the wholesale rate, then there must be other reasons to do so rather than pure financials.<p>A good example would be if an Energy Utility wanted to attract solar customers, sell them solar systems, and put it on the bill to make them more sticky customers.