What Is a Retail Electric Provider and How Does One Work?

When the power goes out, call the delivery utility, not your provider. When you want a different price or plan, call a provider, not the delivery utility.

A bill shows an energy charge from the provider and a delivery charge from the utility. In Texas, the delivery companies reported average delivery prices from 5.41 to 7.09 cents per kWh in 2025, which is the part of the bill a provider does not set. A provider's energy price and fees make up the rest.

Source: U.S. Energy Information Administration, Form EIA-861 (final 2025 data), delivery-only residential service by Oncor, CenterPoint, AEP Texas Central and Texas-New Mexico Power.

The idea is the same everywhere: a licensed company that sells the energy while the local utility delivers it.

Say a household uses 1,000 kWh in a month. Its provider charges 9.00 cents per kWh and a $5 base charge. The delivery company charges 5.60 cents per kWh. The two parts add up like this:

You can shop only for the first line. The second is the same for every household in that delivery area, whichever provider you pick. These numbers are invented, apart from the fact that the delivery price in the example sits in the range of real Texas delivery averages.

A provider buys power on the wholesale market or through contracts, adds its costs for billing, customer service and risk, and sells the energy to customers at a retail price. The difference is its margin. Providers that sell fixed prices take on the risk that wholesale prices rise during the term, which is part of why fixed prices are not always the lowest. This is also why you should read the contract about what happens when a term ends.

• What is the total price at my usage, including every fee?
• What happens when the term ends, and when will you tell me?
• What is the early termination fee, and when does it not apply?
• How do I reach customer service, and how are billing disputes handled?

Providers sometimes exit. In choice states the rules are written so that your power stays on, and customers of a provider that leaves are moved to a default provider or the utility's default service until they choose again. Watch for notices from your regulator or your utility, and compare offers soon after a move so you are not left on a default rate longer than you need.

If you do not pick a provider, you receive default service. In Texas the default provider is called the provider of last resort, and elsewhere it may be the utility's standard offer or basic service. Default service has its own price rules, so compare any offer with it.

• Outages, repairs and the condition of the lines.
• The delivery charge, which comes from the delivery utility's regulated rates.
• Whether your area has choice at all. Municipal utilities and many cooperatives sit outside it.

• U.S. Energy Information Administration, Form EIA-861 (final 2025 data)