Utility vs. Retail Energy Supplier: What’s the Difference?

Put simply, your utility provider owns the infrastructure that brings energy (i.e. electricity or natural gas) to your home. Your retail energy supplier packages energy produced by energy producers and sells it to the consumer.

Your utility provider and energy supplier can be the same entity, or separate. It all depends on whether you live in a deregulated or traditional energy market.

Key Takeaways

  • A utility provider delivers electricity through power lines and bills the consumer.
  • An energy supplier purchases energy and sells that energy to the consumer.
  • In a traditional energy market, your utility provider is also your energy supplier.
  • In a deregulated energy market, you can choose to purchase your energy from a retail energy supplier.

Traditional vs. Deregulated Energy System

Table comparing traditional versus deregulated energy markets

In a traditional energy system, the utility provider is also your utility supplier. They package the energy from energy producers to sell to the consumer, and they own and operate the infrastructure that physically brings the electricity to your home.

Utility companies in a traditional system function as monopolies. This means that the consumer does not have a choice about where their energy is supplied and cannot switch energy suppliers. 

Since they function as monopolies, they are regulated by a state’s public utilities commission (PUC). The PUC will set utility rates so the consumer is not taken advantage of.

In recent years, certain states have switched to a deregulated energy system. In this system, the utility provider is not the only one that can supply energy to consumers. The consumer is allowed to pick their energy supplier. The PUC is still there in deregulated states to help solve disputes and ensure customers are treated fairly and ethically.

Deregulation is mainly associated with electricity, but natural gas has also been deregulated in many states as well.

Your Utility Provider In A Deregulated System

Utility provider in a deregulated system

As already stated above, your utility provider gets the energy to your home using the infrastructure that they own and operate. 

Your utility provider is still the company that reads your meter and bills you, even if you have a different energy supplier. 

Since they own and operate the infrastructure, they are also the ones that make sure your energy is delivered reliably. This means that they are the entity to contact if you are having any issues with energy delivery.

Your Energy Supplier In A Deregulated System

Diagram showing what your energy provider does in a deregulated system

Your energy supplier is the company that purchases energy from energy producers, packages it, and sells it to the consumer. 

The suppliers decide where their energy is produced. This means suppliers can offer different packages based on the energy source, sometimes offering 100% renewable energy. 

They then set their rates for different packages. The consumer can then compare retail energy packages and choose the right one for them.

The only reason you need to call your energy supplier is if you are calling in regard to your energy supplier service (i.e. to switch/cancel/start a plan). Remember, your utility provider is responsible for getting the energy to your home. They are the ones to call if you have any issues with your service.

Can Your Utility Provider Be Your Energy Supplier?

Yes, your utility provider can be your energy supplier even in a deregulated market. In fact, if you didn’t switch after deregulation, they most likely still are. Their rates just have to compete with other retail energy supplier rates.

How Do You Switch Energy Suppliers?

You can switch electricity providers right here at ElectricityRates.com. All you have to do is type in your zip code, compare plans, and switch. Your new rate will then come into effect within two billing cycles.

There is no interruption to your service because your utility provider stays the same. The only thing that changes is your energy supplier.