Delivery and Supply
These are the two main components of your electric and natural gas bill. In a deregulated state, which we will touch on next, your supply portion is the part or rate that you can shop, while your delivery always stays with the utility company. The supply represents the cost of the energy you use (electric and natural gas usage) while delivery represents the distribution and transmission of the power (the cost of delivering the power to your house or business from the generation facilities through the lines).
In order to create competition in the market and steer the energy industry away from being a monopoly, the majority of states choose to deregulate the market creating price optionality for residential and commercial users. A handful of States started partial deregulation in 1996, which increased to around 24 States in 2012. For a full list of deregulated areas for electric and natural gas click here. Now, just because you switch to a third party supplier does not mean that your source of electric or natural gas will change,
The most common and widely known type of energy supply agreement is a fixed-rate contract. Just as it sounds, your rate is fixed for a certain amount of time. When it comes time to contract your fixed agreement, you can choose a term anywhere between 6-60 months depending on the energy supplier. Based on your location, type of business, utility usage, and the supplier, you can fix portions of your supply or all components.
When you are with the utility or go out of contract, you are on a variable rate which means that your rate is not fixed and will fluctuate based on the market. This is important to know when you do enter into a contract as once your agreement ends, the variable rate will start.
What Does a Broker Do?
When you choose to switch to a third party supplier for electric or natural gas, you can either go through the supplier itself or through a broker that can provide pricing for the entire market. A broker can help you negotiate your deal with suppliers and structure a contract that fits how your place of business operates. You can work with a broker to strategize how you can best benefit from the market and time your energy agreement to save the most money on energy.