Delivery vs. supply on your electric bill

If you live in Georgia or Idaho, this distinction is invisible: one company does both, sends one bill, and quotes one price per kilowatt-hour. If you live in Pennsylvania or Texas, it is the organizing fact of your electricity bill, and getting it wrong will cost you money.

Why the split exists

Generating electricity turns out to be a business several companies can compete in. Maintaining the poles outside your house is not — running four parallel distribution networks down one street would be absurd. So beginning in the late 1990s, a number of states “unbundled” the two: they opened generation to competition and left distribution as a regulated monopoly.

The states that did so, and where retail choice for residential customers still operates in some form:

What this does to a bill

In an unbundled state your bill has two halves that behave completely differently:

• The delivery half is set by your utility’s regulator. It is the same for every household on your street regardless of who supplies them, and no amount of shopping changes it. It typically includes the fixed customer charge and most of the riders and surcharges.
• The supply half is either your utility’s default rate — usually called the price to compare, standard offer service, or basic service — or a contract you signed with a competitive retailer.

This is why the phrase price to compare exists on bills in these states. It is the supply-only rate that a competitive offer has to beat, and comparing a retailer’s advertised price against your total per-kilowatt-hour cost is the single most common way people talk themselves into a worse deal.

Why it matters for rate comparisons

It matters here too, and it is the reason we filter what we publish. A tariff document that covers only delivery will list per-kilowatt-hour prices that look wonderfully cheap — because they are only part of the bill. Put such a tariff next to an all-inclusive one from a bundled state and the comparison is nonsense.

We ran into this early. A delivery-only tariff in New York showed a peak-to-off-peak spread of nearly 15×, which is spectacular until you realize that the supply half of that customer’s bill barely varies by hour at all. Include supply and the same plan’s real spread drops to about 3×. The first number is not wrong; it is just not an answer to any question a household is asking.

Every one of the 583 plans in our index is an all-inclusive tariff covering both delivery and supply, and each rate page states which components are included, quoting the tariff’s own words. Where a document was ambiguous we left it out rather than guess.

How to tell which you are looking at

Three reliable signals, in order of usefulness:

• Your bill has two rate sections. If “delivery charges” and “supply charges” appear as separate subtotals, you are unbundled.
• A supplier name that is not your utility. If the supply section names a different company, you have an active competitive contract — check its end date, because the rate after a promotional term expires is where the money is lost.
• The tariff’s own component list. On any of our rate pages, the “Where this comes from” box lists exactly which charges the filed document covers — generation, distribution, transmission, and the various riders.