Utilities and ESPs

While IOCs and Independents work towards producing and refining oil and gas, there is a different category of energy company whose job is to just sell the finished product to the end-user. These companies are called Utilities or Energy Service Providers (ESPs).

Utilities are companies that offer services to the public, such as water, gas, electricity and telephone services. ESPs help consumers manage their energy requirements by providing reliable supplies and innovative pricing solutions for natural gas and electricity that aggressively compete against prices set by the utilities.

ESPs first appeared during the 1980s when state monopolies like telephone companies were being deregulated and opened up to competition. With this backdrop of rising energy costs, energy companies in the US proposed that customers should be able to choose their energy suppliers. They felt that the energy industry should be deregulated, much like the telephone industry, where customers could choose their long distance plans based on their needs. After years of gradual deregulation, legislation in most states now requires natural gas and electricity distribution companies to offer supplier choice alternatives to their customers. Instead of having only one price -- what the utility offers -- clients can select from various pricing options.

The structure of ESPs can be compared to a telephone service, with multiple suppliers offering multiple plans. Customers can pick the ESP and plan that is most suitable to them. And, like telephone services, customers do not have to change any equipment to take advantage of ESPs. The utility will still deliver their natural gas or electricity, just as before. The only difference they will see is in their bill.