The Difference Between Energy Distributors and Suppliers

Maneuvering your way through the different utilities terms and options can be confusing. From picking a supplier to monitoring your monthly bill to knowing what to do and where to turn when your power goes out, there are plenty of opportunities to get lost.

Consumers who understand the relationship between suppliers and distributors can feel more confident that they’re making the right decisions regarding their utilities. To help you feel more confident during the decision-making process, let’s take a look at the difference between distributors and suppliers and the role they play in the energy supply chain.

Distributors:

Energy distributors are responsible for getting electricity from the supplier to your home or business. They own and operate the powerlines, substations and cables that transfer energy. For this reason, consumers do not have much of a say over who their distributor is. Instead, your distributor is decided by who owns the power lines in your area. If your power goes out, the distributor is who you would call for information, since they are in charge of resolving the problem. On the other hand, if you have questions about your energy bill themselves, your distributor won’t have an answer for you. Instead, you’d turn to the supplier.

Suppliers:

Suppliers provide energy to the distributor and send you your monthly utility bill. While consumers don’t choose their distributor, in certain situations they do get to pick their supplier. In deregulated states, suppliers set the price of energy. Therefore, consumers have some control over the rate they pay. Home and business owners can shop around and compare different suppliers to determine which price works best for them. There are also different options available to you depending on your particular situation, such as variable or fixed-rate energy plans.

In states where electricity use is regulated, the supplier owns and operates all electricity with complete control.  The middleman is cut from the equation, and suppliers must abide by electricity rates set by the state. While this type of market is much more limited on consumer choice, its benefits include more stable prices and long-term certainty. Of course, there are pros and cons for both.

Who do you call?

When the supplier is creating your bills each month, they include a small percentage to be given to the distributor in order to maintain distribution. In essence, you pay both distributor and supplier out of your monthly bill in order to get power to your building. When the power goes out, you call your distributor. If you find an issue on your bill, you call your supplier.

The world of utilities can be confusing, especially in the business space, but navigating it becomes a bit easier when you understand who the players are.