Utilities Vs. Suppliers: What’s the difference?

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Last updated: 06/30/2020
Utilities Vs. Suppliers: What’s the difference?

What is an energy supplier?

Retail energy suppliers function like “middlemen” who purchase wholesale energy from massive power generators and then sell it at a retail level to the general public.

Since 2000, the choice of energy supplier has been left to the consumer’s discretion in certain states. This energy deregulation gives buyers the ability to choose an energy company based on the criteria that matter most to them.

While retail suppliers are independent companies, they still need to supply electricity and gas under a license, and they also need to be certified by their state in order to sell this type of service.

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What is an electric utility company?

Unless you've made the choice to switch, you'll be paying your bills to your local electric utility company.

An energy utility company or TDSP (Transmission & Distribution Service Provider) is a company that owns and maintains utility poles and power lines. Their job is to take energy and send it to your home through the power lines and gas lines they maintain. If your power goes out – they’re the ones you lodge the complaint with. Utilities are also responsible for reading your electric meter periodically to see how much energy you use, for restoring power after severe weather and emergencies, and for fixing any gas leaks. Essentially, they are responsible for the continuous physical delivery of electricity to your home or business. 

What's the difference between electricity suppliers and electric utilities?

If your state isn’t deregulated, then your local utility company will manage the entire process of energy supply and delivery, but in a deregulated state, these services are separated.

·      The focus of an energy supplier is to purchase and then market gas and electricity to customers. 
·      A utility company deals with the physical poles and wires that bring the electricity to your home.  

By separating these roles, consumers in deregulated states are given the opportunity to shop for competitive energy plans and still receive an efficient energy service.

Is there an advantage to using a retail energy supplier?

As we mentioned, an energy supplier can make a competitive rate for electricity a reality. Another advantage is that they provide options as to how you set up your rate. For instance, electricity suppliers might offer you the choice between a variable or a fixed-rate plan. This means that you can budget for your bills according to your income. 

A fixed rate plan allows you to lock in a single supply rate for energy for the term of your subscription; so, your bills won’t be affected by any price hikes during that term. 

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