Choosing an electricity supplier vs. choosing a rate plan: which one are you doing?

Two halves of one bill

Every electric bill has a delivery half and a supply half. Delivery is the wires, poles and meter, provided by the local utility under regulated prices; you cannot shop for it. Supply is the electricity itself. In most states the utility provides both and the distinction is invisible. In the retail-choice states — Connecticut, Delaware, Illinois, Massachusetts, Maryland, Maine, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Texas, plus DC — the supply half was opened to competition, and a separate industry of retail suppliers now sells it. This guide explains how the split shows up on the bill.

What switching supplier changes

Only the price per kilowatt-hour of the supply half, and how that price behaves. The utility’s default supply price — called default service, standard offer, price to compare, or basic generation service depending on the state — is set by regulated auctions and changes every few months. A retail supplier offers instead a fixed price for a term, a variable price, a green-power product, or some bundle of those. The wires charge does not change. Your utility does not change. The plan the utility uses to bill delivery does not change.

The market has a well-documented pattern: introductory offers below the default price, followed by variable rates well above it once the term ends. Several state regulators have published analyses finding that residential customers on retail supply paid more, in aggregate, than they would have on default service. That is not universal — a fixed rate bought at the right moment can beat a default price that then rises — but it means a supplier switch is a bet on prices, not a structural saving.

What switching plan changes

The rules by which every kilowatt-hour is priced. A time-of-use plan bills the same electricity at a different price by hour. A tiered plan bills it differently by quantity. A plan with a lower fixed charge and a higher energy rate suits a small household and punishes a large one. None of this is a bet on the market; it is arithmetic on your own usage pattern, and it can be checked before switching. Of the 515 household plans we track, 211 price by hour and 196 by quantity, and the gap between the cheapest and dearest plan at a single utility for the same house runs to hundreds of dollars a year at the larger utilities.

Plan choice also survives supplier choice. In a retail-choice state you can be on a time-of-use delivery tariff and a third-party supplier at the same time; the supply price is simply added on top of whichever hourly delivery price applies. Some suppliers offer time-of-use supply as well, which stacks the two.

Which one to look at first

• Everywhere: your utility’s plans. It is free to switch, usually reversible, and the outcome can be computed rather than guessed. Every utility page here prices all of that utility’s plans against the same three households.
• In a retail-choice state, additionally: compare the supplier offer against the utility’s default price for the whole term, including what happens when the term ends. State regulators run official comparison sites for exactly this; use those, not the door-to-door pitch.
• Never: switch supplier to a variable rate without a price cap, or sign up at the door. Both are the source of nearly every complaint on file.

How this affects the numbers on this site

In retail-choice states, the tariff a utility files for delivery often prices only the delivery half, because the supply half is whatever your supplier charges. We label those plans as covering only part of the bill and keep them out of whole-bill comparisons — 0 of our plans are in that category. Where a utility files a bundled tariff with its default supply included, we price that, and note that the supply component moves with the market.