# How are there multiple electricity companies if the power comes from one line?

1.40K views

I don’t understand how there can be multiple electricity companies if the power comes from the same power line.

What I mean is, how is the power I’m getting different from the power my neighbors are getting? It’s the same power, so how can so many different
companies charge different amounts for it?

In: Economics

The companies selling the electricity either own the power lines, or are renting their usage from the company that does.

The company that supplies you your power adds power to the system from its energy producing machines such as turbines. This energy is measured, and then an amount of power up to that amount can be used by your supplier’s customers, aka you. If they need more, they buy it from another supplier.

There are two kinds of companies: power generators and power distributors. Power distributors are the people with the wires that run to your house. This is a super-highly regulated monopoly, and so these companies make very small profits for very long periods of time.

However, there is much more money to be made generating power. There are many possible fuels, and all sorts of environmental factors to price in. These companies produce the power and feed it into the network.

The distribution companies send control signals, called demand signals, to the power generators telling them how much to make. There is a lot of complexity here, as some power plants can change output quickly and others can’t.

Your money gets allocated to the company that made power corresponding to your usage. Of course those probably weren’t the actual electrons you used, but if you take 100 out and your company put 100 in, that’s good enough to say “you paid for your power”.

It all gets added to the grid and there’s no real way to tell which electricity is which. When you buy electricity they just “say” that the electricity you pulled from the grid came from your provider. And your provider inputs energy into the grid or buys energy that another provider input into the grid, so they just “say” that they input x amount into the grid at the time. It’s all about checks and balances. When you choose solar energy from your provider you aren’t necessary getting electrons generated by solar you are probably getting electrons originating from a coal generator, but your provider makes sure that they buy enough actual solar energy into the grid to cover the amount you use

energy deregulation.