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Blog Jul 23, 2018

Utility vs. Electric Providers: What’s the Difference?

CommunityTexas Power

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.

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

Everything costs money. In our world today, it is almost impossible to find something that is truly free. But what that means is that there is now a competitive market for just about everything, from dog food to dishwashers, 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, there are countless different options and plans, and it can be overwhelming. But it does not have to be.

First, in order to understand how to find the best deal, you must understand how energy is delivered to your home.


Electrical Utility Companies

There are over 3,300 utility companies in the United States currently. Electrical utility companies engage in electrical generation and distribution of said electricity to homes and businesses throughout their region.

Utility companies own the wires and power lines that distribute the electricity. The process starts at a power plant, where a generator creates the electricity. Then the electricity is transmitted to substations, where transformers change the energy into high voltages to move longer distances through power lines. Then 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. Therefore, it is the utility’s job to repair downed power lines or large power outages. Additionally, the electrical utility company read the meter each month and note your usage for the month.

To summarize, the utility companies own and operate the way electricity is transmitted to homes and businesses. They handle 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 consumes the service of a utility company. Therefore, almost every person in the United States relies on the work of utility companies. In a regulated market, consumers solely rely on utility companies to provide their electricity. But in a deregulated market, consumers have more choices. These choices come from energy suppliers, or providers.


Energy Providers

In a deregulated market, there are other companies that own generators instead of just utility companies. These companies create and sell energy into the electric market, and energy providers can purchase that energy. Then they sell that energy to the customer. In this case, energy providers are a middle man between the generators (companies that generate electricity) and the consumer. 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 therefore, allow the customer to find the best deal. Utility companies offer a fixed rate that is often unavoidable, but energy providers allow consumers 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 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.

Now that you know and understand how electricity is delivered to homes, how do you find the best deal?

First, you need to know if you are in a regulated or deregulated market. If you live in a regulated market, your options will be more limited. But if you live in a deregulated market, you will have lots of options.

Research energy providers in your area. Learn about them and what they offer. Then, once you narrow down your search, contact a provider to receive an estimate. From there, you should be able to establish the best plan for you, and hopefully, the best price.

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