Retail Electricity 101: What’s the Difference Between Supply and Transmission?
Once you dive deeper into your energy bill, you start understanding the process that goes into your energy expenses. The primary items on your bill are supply rates and transmission (also: distribution) rates. These two charges are a breakdown of generating and delivering energy to your business.
What Is the Supply Rate?
A supply rate is measured as your cost of operation in kilowatt-hours (kWh). How much energy does it take to generate the electricity you need to run your facility? Farm? Hospital? For commercial and industrial end-users, the charges could fluctuate regularly and be exceedingly high. Your supply charge is calculated as the amount of electricity your business consumes and the price per kWh.
The price of your supply is also determined by the energy market, your retail electricity contract, and tariff rates. Depending on the type of contract you sign, i.e., fixed rate or variable rate, and the market you’re in (deregulated or not), you may be able to shop around for a supplier that will give your business a more competitive rate, like Catalyst Power.
What Does Transmission and Distribution Mean?
It’s said the most important utility rate on your bill is transmission and distribution. Here’s why: transmission, also known as the delivery fee, is how the energy you pay for is delivered to your business. It travels through miles of wiring from the facility to the distribution center, and depending on the quality of the infrastructure, which state you’re in, and the utility company you use, this can impact surcharges and other miscellaneous fees. Distribution is the fee that covers the reliable delivery of electricity to your business from the local power lines. Unlike switching suppliers, you can’t change your actual delivery fee.
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