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Reseller companies, distribution companies and electricity markets

Understanding all the concepts of the electricity contract is essential to make it more accessible and to be able to benefit from the advantages offered by each system.

What are the differences between an energy reseller company and a power distribution company? And what about between having an electricity contract in a regulated or deregulated market? How does it affect your bill? Can you choose which company supplies your electricity? And the market?

The energy sector and electricity bills often generate many questions. Therefore, we want to answer all those queries and make your electricity contract more accessible and easier to understand.

The first step to deciphering your electricity bill is understanding the difference between the reseller company and the distribution company responsible for providing your home with electricity. On the one hand, the distribution company is responsible for the power grid that transports the electricity to our homes. It is in charge of maintaining the power supply grid, reading the meters and ensuring the quality of the service. Therefore, the company responsible for the grid that transports the power to your home will depend on the area in which you live, so you will not able to choose distribution company. And this is reflected in your bill: the access toll or access tariff, which serves to pay the costs of maintaining the electricity grid and ensuring that power reaches your home. The Government establishes the price of this tariff and it is the same for everyone, regardless of the area or the company.

On the other hand, the electricity reseller company is with whom we have our energy supply contract. This company purchases electricity from the company that generates it and bills us. In this case you may choose the company you wish to supply your electricity and change at any point without the service being interrupted.

As Joan Agrelo, Head of Implementation and Energy Marketing Improvements at Endesa explains, “the reseller company is the company that purchases the energy and sends you your bills”, while the “distribution company is the company that provides the means for that energy to reach your supply”.

And what is the difference between the regulated and deregulated electricity market? The key is in the price of the kWh. In the regulated market (the normal tariff of which is the VPSC, Voluntary Price for Small Consumers), prices vary constantly depending on energy supply and demand. In the deregulated market, as with telephone companies, the company offers different types of tariffs, although normally the kWh price is fixed, so you will always know how much the energy you use is going to cost.

In short, "in the regulated market, the supply is regulated by the Government and those signed up to the VPSC have the same conditions, regardless of the company used. In the deregulated market, “you can look for the offer you want with any company”, points out Agrelo.

So, can I choose? Yes! You are free to change reseller company and your regulated or deregulated contract. Now you decide.

If you still have any queries or would like more information, you can visit the website endesaclientes.com, where we will explain more about the market deregulation and the difference with the regulated market.