Supply vs Delivery Charges: What You Control on Your Bill

If you live in Ohio, Pennsylvania, or Massachusetts, your electric bill splits into two parts. Supply charges pay for generating the electricity. Delivery charges pay for moving it from power plants to your house.

This split exists because of how deregulation works. Generation was opened to competition, so multiple suppliers can compete for your business. But the transmission and distribution infrastructure stayed as regulated monopolies. There's only one set of power lines to your house, and your utility runs them.

Here's what this means for you: when you switch electricity suppliers, you're only changing the supply portion. The delivery charges stay exactly the same no matter who generates your power. Your utility collects the same delivery fees whether you use their default rate or a competitive supplier.

A lot of people expect their whole bill to drop when they switch. That's not quite how it works. You're only shopping for part of the bill. Understanding that helps set realistic expectations about what switching can save you.

Supply charges, sometimes called generation or energy charges, are what you pay for producing the electricity itself. This covers the fuel costs - natural gas, coal, nuclear fuel, wind, solar - along with power plant operations, maintenance, and the supplier's overhead and profit.

On your bill, supply shows up as a rate per kilowatt-hour multiplied by your usage. This is the part you can shop for in deregulated states.

You'll typically have two choices: fixed rates that lock in your price for the contract term, or variable rates that change every month based on market conditions. Each has pros and cons depending on your situation and risk tolerance.

Supply usually makes up about 40 to 60 percent of your total electric bill. The exact percentage depends on where you live and what rates look like right now. That means if supply is half your bill, a 1 cent per kWh savings on supply works out to about half a cent per kWh on your total bill.

Delivery charges pay for the infrastructure that gets electricity from power plants to your house. Think of it as paying rent for using the utility's equipment.

This includes the high-voltage transmission lines that carry power across long distances, the substations that step voltage down for neighborhood distribution, local distribution lines and transformers, the electric meter at your home, utility customer service operations, and all the ongoing infrastructure maintenance and upgrades.

Your utility company - whether that's AEP Ohio, PECO, Eversource, National Grid, or whoever serves your area - handles all delivery regardless of which supplier you choose for your electricity generation.

Here's the important part: delivery charges are regulated by state commissions like PUCO in Ohio, PA PUC in Pennsylvania, and MA DPU in Massachusetts. They don't change when you switch suppliers. That's not something you can shop around for.

Understanding the difference between supply and delivery matters more than most people realize.

First, you need to know what you're shopping for. Only supply rates vary among competitive suppliers. When you're comparing offers on ElectricRates.org, you're comparing supply rates only. A supplier offering 6 cents per kWh can't do anything about your 8 cents per kWh delivery charges. Those are locked in by your utility.

Second, it helps you set realistic expectations about savings. If supply makes up 50 percent of your bill, a 1 cent per kWh savings on supply translates to about half a cent per kWh reduction on your total bill. Focus on the supply portion because that's what you can control.

Third, this understanding eliminates worries about service quality. Delivery stays constant regardless of who supplies your electricity. Same wires, same utility crews, same reliability. Your utility provides identical delivery service whether you use their default generation or switch to a competitive supplier. Nobody's digging up your street or changing your power lines.

Finding supply charges on your bill takes a little detective work, but it's not hard once you know what to look for.

Look for terms like "Generation," "Supply," or "Energy Charges." If you haven't switched suppliers, you'll see the default rate labels. In Ohio that's "Standard Service Offer" or SSO. Pennsylvania calls it "Price to Compare" or PTC. Massachusetts uses "Basic Service." If you have a competitive supplier, their company name shows up on the supply portion instead.

The supply section should show you your rate per kilowatt-hour, your total supply charges for the billing period, and any monthly service fees listed separately.

To figure out your effective supply rate, add up your total supply charges plus any fees, then divide by your kWh usage for that period. That gives you your actual cost per kilowatt-hour for supply. Then you can compare that number against offers on ElectricRates.org to see if you could do better.

Delivery charges show up on your bill under labels like "Delivery," "Distribution," or "Transmission." You'll also see your utility's name prominently displayed on this section.

The delivery portion typically includes several components. There's usually a customer charge, which is a flat monthly fee you pay regardless of how much electricity you use. Then there are distribution charges based on your actual kWh usage, transmission charges for moving power to your area, and various riders and adjustments for things like renewable energy requirements and low-income assistance programs.

One key difference from supply: delivery has both fixed and variable components. Your total delivery cost depends on how much electricity you use, but the rates themselves are set by regulators and identical for all customers in your utility territory.

Some utilities break delivery into many separate line items while others consolidate everything into just a few charges. Either way, the total is the same - it just looks different on paper.

To accurately calculate savings, focus exclusively on supply charges. Delivery isn't changing, so ignore it for comparison purposes.

Here's how to do the math. First, find your current supply rate by dividing your supply charges by your kWh usage. Then compare that to competitive offers on ElectricRates.org. Calculate the difference between your current rate and the new rate - that's your savings per kilowatt-hour. Finally, multiply that savings by your annual usage to see your yearly savings.

Let's walk through a real example. Say your current supply rate is 7 cents per kWh and you find a competitive supplier offering 5.5 cents. That's a difference of 1.5 cents per kWh. If you use about 12,000 kWh per year, that works out to roughly $180 in annual savings.

Don't forget to factor in monthly service fees that some suppliers charge. A low per-kWh rate with a $10 monthly fee might cost more than a slightly higher rate with no fee. ElectricRates.org displays all fees clearly so you can compare total costs, not just the advertised headline rates.

There are several misconceptions about supply and delivery that trip people up. Let's clear them up.

Some folks think switching suppliers changes their service quality. It doesn't. Delivery remains identical regardless of supplier - same wires, same utility crews, same response time when the power goes out.

Others assume the lowest supply rate automatically means the lowest total bill. Not quite. You need to compare supply rates to each other, not to your total bill. Delivery stays the same no matter what, so it's not part of the shopping equation.

There's also confusion about delivery charges decreasing when you get a lower supply rate. Nope. Delivery is completely separate and regulated independently. Your supply choice has zero effect on what you pay for delivery.

And finally, some people think their new supplier maintains the power lines. They don't. Your utility handles all infrastructure regardless of who you choose to generate your electricity. The only thing that changes is where your generation comes from and what you pay for it.

Manually comparing supply rates is time-consuming and kind of annoying. Rates change frequently, contract terms vary all over the place, and hidden fees make it hard to do real comparisons.

ElectricRates.org simplifies everything. It aggregates all licensed supplier offers in one place, shows supply rates only since delivery is fixed anyway, and makes true apples-to-apples comparisons possible.

Using it is simple. Enter your ZIP code and you instantly see available supply rates from every supplier in your utility territory. You can compare total costs including all fees, so nothing sneaks up on you later.

The service also continuously monitors rates and alerts you when better supply options become available. That way you don't have to remember to check back periodically.

Customers in Texas, Ohio, Pennsylvania, and Massachusetts use it to find competitive rates on supply charges. And it's free for consumers - suppliers pay a commission when customers enroll through the site.

Your total electric bill combines several components: supply charges that you can shop for, delivery charges fixed by your utility, taxes, and various regulatory fees.

In Texas, Ohio, Pennsylvania, and Massachusetts, supply typically accounts for about 40 to 60 percent of your total bill. The remaining 40 to 60 percent goes to delivery, taxes, and fees. Total residential costs usually average somewhere between 12 and 18 cents per kWh when you combine everything together.

Here's the important context to keep in mind. When a supplier quotes you 6 cents per kWh, that's only the supply portion. Your total effective rate will be higher once delivery and fees are added on top. That's not the supplier trying to trick you - it's just how the split works.

Focus your shopping efforts on comparing supply rates since that's the portion you can control. ElectricRates.org helps you understand the supply portion and find the best rate for your specific situation.