Eli5 How do people choose different electric companies if it’s all on the same power grid?
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There is likely only one regulated supplier in your area. They are subject to governmental oversight and an actual utility company. (in my area, that’s com ed.) They maintain and manage the power grid. If you choose an alternative power company you are selecting an unregulated supplier. They have negotiated an aggregated price for power usage and what you’re really signing up for its to be part of their prenegotiated price plan, rather than being billed at the utility’s going rate. But in practice this is really just the illusion of choice. The utility company is still the one delivering the power to you. And in my experience the utility company likely has the better prices anyway.
Speaking specifically in the context of Pennsylvania: you choose the company that generates the electricity, then it all gets fed into the same grid and delivered via Penelec. Which means that you can’t guarantee the electricity that makes it to your house came specifically from your chosen supplier, but rather that an amount of electricity equivalent to your usage was provided to the grid by your chosen supplier.
This accomplishes two things. The first is that your bill has a generation component and a delivery component. The generation component is priced according to your supplier (at whatever rate they charge), while the delivery rate is the same for everyone.
The second thing it does is give you the ability to choose generation based on a specific concern, typically renewable or nuclear energy. So, for example, my supplier promises that all my electricity is generated by renewable energy. In practice this means that if I use 100 kWh of energy in a month, they’ll produce 100 kWh using renewable energy sources and contribute that to the grid. Even if the electricity that makes it to my house didn’t specifically come from their plants, I’ve still caused renewable energy to be generated instead of fossil fuel energy. So it works out largely the same for me.
The power plant generates electricity that is fed in to the grid, and end consumers use it. That’s the practical.
Financially, the power plant sells electricity by the Kilowatt Hour to 3rd party companies in large amounts for low prices. These 3rd party companies then resell those KW/Hr to end consumers for a profit. As a customer, you are choosing between the amount of profit you are giving to a company.
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