One of the biggest sources of confusion I come across when helping people compare electricity prices is that they don’t actually know where exactly their power comes from, beyond the socket at any rate! This doesn’t make them ignorant because in and of itself it isn’t all that useful to know, except when you are trying to compare prices of electricity for multiple companies, which is when I usually encounter them.

In an effort to demystify the whole electricity price comparison thing, I think it is worth explaining the difference between where your power comes from and who sends you the bill. A good way I find can be to compare electricity with petrol; there are companies that produce it, companies that transport it and companies that sell it to the end user, you. For petrol, it would be an oil company drilling it, a tanker ship transporting it, and your local service station. The electricity comparison has generators, be they coal, hydro, or solar, high voltage power lines transporting it to the cities, and the actual connection to the street. Now, there are some companies that do all three in both cases, not many but a few do exist, but you don’t always benefit from going with them, and there is no actual difference in the end product, only that one of them is cheaper, which is the point of the entire exercise!

So in essence, if you had two service stations side by side and one of them was cheaper, in all likelihood you would end up at the cheaper one. Why? They both sell the same thing in the same way and for all it matters, the same truck might well have filled up both of them! The comparison of electricity prices works exactly the same way: the only difference is how much you pay for it and who ends up with it.