What is the difference between an electricity seller and a network company?
The electricity seller and the network company handle two different parts of electricity delivery, with different tasks, pricing and freedom of choice for the consumer. Here is how the two roles differ.
Electricity seller
An electricity seller is a company that sells electricity to consumers and businesses. It buys electricity from the wholesale market and resells it to its customers. The tasks of the electricity seller include, among other things:
- Purchasing electricity from the wholesale market
- Making electricity contracts with customers
- Determining the price of electricity and invoicing
- Customer service and advice
The electricity seller can offer different types of contracts, such as fixed-term contracts, open-ended contracts or exchange-traded (spot price) electricity contracts, where the price varies according to market prices. The selling price consists of the wholesale market price of electricity, the seller’s margin and possible additional services, and it can vary greatly between different companies and contract types. Consumers have the freedom to choose their electricity seller and can compare offers to find the cheapest option for themselves.
Network company
The network company, i.e. the electricity network company, is responsible for the transmission and distribution of electricity to consumers. It owns and maintains the electricity network, which consists of, among other things, power lines, transformers and distribution stations. The tasks of the network company include:
- Electrical grid construction and maintenance
- Transmission and distribution of electricity to customers
- Invoicing for network services
- Fault repair and power outage management
The network company operates in a certain geographical area, and consumers cannot choose their network company the way they choose their electricity seller – it is determined by where they live. A transfer fee is charged for the network company’s services, shown as a separate item on the electricity bill, and it is based, among other things, on the amount of electricity consumed and the maintenance costs of the network. The activity is also heavily regulated: in Finland, network companies are supervised by the Finnish Energy Authority (Energiavirasto).
Summary
The electricity seller and the network company are two separate actors: the seller is responsible for acquiring and selling electricity, while the network company is responsible for its transmission and distribution. Consumers can choose and compete their electricity seller freely, but the network company is always determined by where they live.
You can read more on the subject, for example, at Energiavirasto’s website or the electricity price website.
