how do energy/electric companies allow people to switch providers in some areas?


I’ve seen things with people in different regions talking about how you can switch to a different company for electricity or natural gas. How does this work? Do places where this is the case have lots of pipes and conduit running for each company, or is it somehow shared among them?

In: 12

Think of it like a community pool that everybody gets water from.

The pool is filled up, bucket by bucket from the river. So If I want to use 10 buckets of water a day, somebody needs to put 10 bucks in the pool on my behalf. So lets say I pay Company A to do it. I’m not going to physically take their water, as its all mixed in. But because they are providing water, if I pay them, I can take an equal amount out.

Its similar to that way with power. Its all a connected grid. If I buy power from Company A, that power is not actually being sent to my house on Companies A lines. Instead company A is placing power onto the grid, and I am free to take an equal amount from the grid.

Also, even though I buy power from Company A, my energy company still maintains the lines. So I pay my company a distribution charge, and I pay company A the generation charge.

You purchase electricity and gas from a utility. The utility owns the pipes and wires that run to your house, and all through the system. The utility purchases electricity and gas from various suppliers. Each supplier has its own means of production or they contract with other producers, but put that last part aside for the sake of simplicity. So the suppliers own the power plants or solar farms or hydroelectric dams, gas pipelines and transport and storage facilities, gas wells, etc. Used to be the utility bought all of what it needed from all the different suppliers and then just resold it to you. Now, the utility can do that, but you can also buy directly from the supplier. Of course, you’re not actually buying the specific molecules of gas or electrons supplied from a particular supplier, but you and all the other customers are telling that supplier to put X amount of gas or electricity into the system (in a sense). The supplier bills you directly for the amount it “put into the system” based on your usage, and the utility charges you a distribution fee based on the amount it transported to you.

End of the day, a watt is a watt… it doesn’t need to go from your provider to you specifically, they just need to provide the same amount as you used into the grid.

It’s got nothing to do with the power, it’s all about billing. The companies get paid and you get billed.

You buy electricity and gas from a supplier. The supplier does not own the pipes and wire that run to your house.

The supplier purchases electricity and gas from various producers. They make their own arrangements with the producers.

The electricity and gas produced by the producers is transported by the transmission system (over long distances) and the distribution network (over short distances). During transmission and distribution, the electricity and gas mix.

When you use electricity or gas, you draw that energy out of the distribution network operator’s wires and pipes. That is recorded by your meter.

At the end of the month, your supplier reads your meter and works out how much energy you used over that month. They then make sure that they actually bought the correct amount of energy from the suppliers. Sometimes they will need to make a top-up payment, or find another supplier, because they didn’t order enough in advance – sometimes they will get a refund because they ordered too much.

Sometimes there is a similar problem with producers – maybe a wind farm pre-sells some power to a supplier, but the wind doesn’t blow on that day. There is a complicated process where all the suppliers and producers get together and work out who over-ordered, and who under-ordered and make sure that all the accounts match up.

The main role of the supplier is to find the producers and negotiate the prices with them, deal with all the meter reading, billing and customer service. At the end of the day, the final bill includes the price that the producer sold at, shipping charges from the transmission system operator and distribution network operator, metering charges from the meter operator, plus a cut for the supplier for their work.