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What is the difference between a utility and REP?

May 2, 2013

Retail Energy Providers (REPs) and utilities are often thought to be the same, but actually, they are quite different. A REP sells electricity to an end-user customer such as a home or business owner. The REP buys the electricity wholesale from a utility company. The utility, also called a Transmission and Distribution Service Provider (TDSP), generates the electricity though solar, wind, coal, nuclear or other means. They are also responsible for operating and maintaining the power lines, electrical substations, and transformers over which electricity is transmitted.

Utilities are part of both regulated and deregulated market, and you cannot choose who your utility provider is. However, you can choose your REP based on price, customer satisfaction, and other factors. Most REPs offer competitive pricing and forge strong bonds with their customers in order to continually supply them with electricity.

If you reside in Texas, there are five utility providers that generate and transmit electricity based on the city you live in: AEP Central, Center Point, Oncor, AEP North and Texas-New Mexico Power. Under those five utilities, there are over 30 different REPs that one can purchase the electricity from. The REP is responsible for all customer interaction for billing and providing electricity, but the utility is responsible for generation and transmission of that electricity. In the event of a power outage or blackout, the utility is liable for getting the power restored. In the event of a power outage due to an unpaid bill, your REP will handle the restoring electricity to your home or business.

Now when you look at your bill, you will understand why there are two providers listed. The utility or TDSP charges you for the generation and distribution of electricity, while the REP offers the electricity for affordable rates.

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