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Blog Jul 23, 2018

Energy Providers vs Utilities: What’s the Difference?

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As a consumer, you should always look for the best deal on the market. Whether it be for groceries or for electricity, there is always a way to find the best deal and save the maximum amount of money. In order to find the best deal, you need to know the difference between an energy supplier and a utility company. Once you learn this, you will be equipped with all the information you need to get the best bang for your buck.

energy suppliers

Powering your home with energy and electricity is an expensive feat. Do you understand how your electricity is delivered to your home?

Powering your home with energy and electricity is an expensive feat.

Do you understand how energy suppliers deliver energy to your home?

The service industry is defined by bringing in new customers, retaining old ones, and ultimately growing market share. For companies within the same line of business, what that means is that there is now a competitive market for just about everything. From fast food to cable, there will always be a good deal somewhere out there. The same can be said for home energy. But how can you find the best deal? When it comes to energy providers, there are so many different options and plans, and it can be overwhelming. But it does not have to be.

In order to understand how to find the best deal, you must begin by first understanding how energy is delivered to your home.

What is a Utility Company

There are over 3,300 utility companies in the United States currently. These electrical utility companies are entities responsible for generating and distributing electricity to homes and businesses throughout their region.

These same utility companies own the wires and power lines that distribute the electricity. In order to provide homes and businesses with energy, the process of passing along power starts at a power plant, where a generator creates the electricity. The electricity is transmitted to substations from there, where transformers change the energy into high voltages to move longer distances through power lines. After that, the electricity is distributed through power lines to homes and businesses. Once it is distributed, the electricity reaches its point of consumption when it is physically used, from turning on a light to running a load of laundry.

The utility companies own and control all of this. With it comes the responsibility of maintaining and repairing methods for transporting electricity. In the event of a large power outage or a downed power lines, it is the utility’s job to remedy the situation. Additionally, it is the utility company that reads the electric meter each month and notes consumer usage over the span.

Simply put, utility companies are the ones who own and operate the way electricity is transmitted to homes and businesses, providing a constant supply of energy and handling emergency situations like power outages. Utility companies take care of everything related to the service of your energy and its distribution to your home.

Everyone that consumes energy relies on utility services. As a result, almost every person in the United States depends on a utility company, even if they don’t fully understand what a utility company is. In a regulated market, consumers solely rely on utility companies to provide their electricity, but this is not the case in some areas. When that occurs, residents and businesses reside within a deregulated market, giving the consumers more choices as to how they would like to receive their service. These choices come from energy suppliers, or providers.

What is an Energy Provider

Energy providers are a middle man between the generators (companies that generate electricity) and the consumer. In a deregulated market, utility companies are not the only ones that own electricity generators as energy providers are able to own them as well. The provider will use the generator to create and sell energy into the electric market, and energy providers can purchase that energy. They then sell that energy to the customer. Energy providers do many things for the consumer, including but not limited to:

  • Buy electricity at wholesale value
  • Sell electricity to the customer at a competitive rate
  • Serve as the direct contact with the customer for electric service issues
  • Bill the customer
  • Provide customer service

Energy providers create a competitive electric market, and enable customers to find better deals. Not only does this improve the plans that individuals have to choose from, it also increases the savings that consumers can do. Utility companies offer a fixed rate that is often unavoidable, but energy providers allow consumers the flexibility to select their plan and rate.

It is important to note that if you are in a deregulated market and work through an energy provider, the utility or generator companies are still the ones to call in the event of an emergency, whether it be a power outage or a downed power line. Those companies own and control the wires, the energy providers are the middleman to help you get the best deal.

Finding Deals On Electricity

With a better understanding of how electricity is delivered to homes, the next thing to figure out is how to find the best deal possible. To begin, you’ll need to determine if you are in a regulated or deregulated market. The options for those living in a regulated market will be more limited, while those who live in a deregulated market will have a number of options.

In order to find the best deals on energy, the most important thing individuals can do is research the various plans and companies that are accessible within their area. In deregulated electricity markets, these companies offer competitive deals and rates meant to compete with other providers and entice consumers to sign up. Getting a better grasp on the details of those offers will give consumers more power and present several options. The first is making the switch from your provider to one with better rates. As you stumble upon different offers, narrow down your search and contact providers to receive estimates. From there, you should be able to establish the best plan for you, and hopefully, the best price.

The other option available to consumers is looking into various plans and leveraging that information to get a better deal from their current provider. What this will likely entail is communicating to your energy supplier of the possibility of leaving for another unless better deals or a better rate is offered.

Here’s how you can save on energy supplier costs

Some companies may be accomodating and outline different ways they can help you to save while others may be less willing to adjust the terms of your service. At that point you will be armed with valuable information on the various options you have at your disposal, allowing you to make an educated switch from one energy provider to another.

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