News & Events

03
Feb

Understanding Price-to-Compare in Retail Energy Markets

In today’s evolving energy landscape, consumers have more choices than ever when selecting their energy supplier. But with increased options sometimes comes confusion. One tool that can help consumers make informed decisions in competitive retail energy markets is the price-to-compare (PTC).

The PTC serves as a benchmark, offering consumers a way to evaluate offers from competitive retail energy suppliers against the standard rate charged by the local utility. Understanding this metric empowers consumers to make informed choices and maximize their potential savings. Here’s a closer look at how the PTC works and why it matters.

What Is Price-to-Compare (PTC)?

Utilities provide a default service rate in monopoly energy markets for customers who do not select a competitive retail energy supplier. The PTC is essentially this default rate, expressed as cents per kilowatt-hour (kWh) for electricity or per therm for natural gas. It is the rate utilities charge for the energy supply portion of a customer’s bill and does not include delivery charges or other fees.

The PTC provides a simple way for consumers to compare competitive offers. Customers may save money by switching if a retail supplier offers a rate below the PTC. Conversely, customers may stay with the default service if the rate is above the PTC.

The Role of Competitive Retail Energy Suppliers

Retail energy suppliers bring innovation, choice and value to the market. Unlike utilities that provide basic service, competitive suppliers offer customized plans tailored to a consumer’s specific needs. These plans may include fixed rates, renewable energy options, or perks like loyalty rewards or other products.

When consumers understand the PTC, they are able to take advantage of these offerings. For example, a retail energy supplier might offer a fixed-rate plan that protects against future price volatility. While this rate may be slightly above the PTC at the time of enrollment, it could result in significant savings if market prices rise. By using the PTC as a reference point, consumers can weigh the value of these benefits against potential cost differences.

Challenges and Misconceptions

One common misconception is that the PTC reflects the total cost of energy. It’s important consumers recognize that the PTC only covers the supply portion of the bill. Delivery charges, taxes and other fees are separate and remain consistent regardless of whether a customer stays with the utility or switches to a retail supplier.

Additionally, the PTC can fluctuate based on market conditions and regulatory changes. This variability underscores the importance of regularly reviewing energy options to ensure they align with current needs and budgets.

How RESA Supports Informed Choices

The Retail Energy Supply Association (RESA) is committed to fostering transparent and competitive energy markets. By educating consumers about tools like the PTC, RESA helps empower them to make informed decisions. We believe that competition drives innovation and enhances customer value.

Consumers in restructured markets should take the time to explore their options, compare rates and plans, and select the supplier that best fits their needs. The PTC is a powerful starting point in this process.

By leveraging the PTC and understanding its role, consumers and businesses can unlock the full benefits of retail energy competition. For more information on making the most of your energy choices, visit RESA’s website and explore our resources today.