What Is an ESCO (Third-Party Energy Supplier)?
An ESCO (energy service company) is a competitive, non-utility supplier that sells you the actual electricity or gas at its own contracted rate, while your utility still delivers it and handles the wires — available only in states with deregulated retail energy markets.
What an ESCO actually does
In a deregulated market, the "supply" and "delivery" of energy are legally separated. Your utility always remains responsible for delivery — the wires, poles, and infrastructure — regardless of who supplies the energy. An ESCO is a licensed, competitive company that sells you the supply portion instead of you defaulting to the utility’s own supply rate, usually at a contracted fixed or variable rate you agree to for a set term.
Why someone would switch to an ESCO
- A lower or more predictable rate than the current utility default supply rate.
- Access to a green or renewable energy supply option, which some ESCOs offer.
- A longer-term rate lock for budget certainty.
What to watch out for
The energy brokering industry has a real history of aggressive door-to-door and phone sales tactics, and some contracts include low introductory "teaser" rates that jump sharply after a few months. Before signing anything, get the exact rate, contract length, and any early termination fee in writing, and compare it directly against your current utility’s default supply rate — not against a hypothetical worst case.
Frequently asked questions
Does switching to an ESCO change my utility?
No — your utility still delivers your electricity or gas and remains who you contact for outages or delivery issues. Only the supply portion of your bill and rate changes.
Is my bill still one bill if I use an ESCO?
Usually yes — most utilities still send a single consolidated bill that includes both the ESCO’s supply charge and the utility’s delivery charge, though this varies by state and utility.
Can I switch back to my utility from an ESCO?
In most deregulated markets, yes — you can typically return to utility default supply at any time, though check your specific contract for any fees or notice requirements.
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