Electricity Retailing

Electricity retailing is the final process in the delivery of electricity from generation to the consumer. The other main processes are transmission and distribution.

Electricity retailing began at the end of the 19th century when the bodies who generated electricity for their own use made supply available to third parties. In the beginning, electricity was primarily used for street lighting and trams. The provision of these services was generally the responsibility of municipal authorities who either set up their own departments or contracted the services from private entrepreneurs. Residential, commercial and industrial use of electricity was confined, initially, to lighting but this changed dramatically with the development of electric motors, heaters and communication devices.

The basic principle of supply has not changed much over time. The amount of energy used by the domestic consumer, and thus the amount charged for, is measured through an electricity meter that is usually placed near the input of a home to provide easy access to the meter reader.

Customers are usually charged a monthly service fee and additional charges based on the electrical energy (in kWh) consumed by the household or business during the month. Commercial and industrial consumers normally have more complex pricing schemes. These require meters that measure the energy usage in time intervals (such as a half hour) to impose charges based on both the amount of energy consumed and the maximum rate of consumption, i.e. the maximum demand, which is measured in kW.

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