utility companies buy power at a “wholesale” rate and sell to consumers at a “retail rate.” the retail rate is higher than the wholesale rate. the retail electric rate charged by utilities are the final rates that customers get charged for using electricity. the utilities calculate these rates by taking into consideration the cost of the purchasing the power (the wholesale rate) and the fixed costs the utility incurs. fixed costs are items are such as installing electric poles and wires, putting meters on people's homes and businesses, and implementing technology to maintain the electric grid. the wholesale rate is what the utility pays electricity providers to buy their electricity. a competitive marketplace exists from which utilities can purchase electricity. throughout a single day, the price of electricity on the wholesale market can change.