Many homeowners and small business owners know they receive energy from a utility company, but few understand how energy suppliers fit into the process. In deregulated energy markets like New York and Pennsylvania, retail energy suppliers buy natural gas and electricity at the wholesale level and then provide supply plans to customers.
As a retail energy supplier serving homes and businesses in NY and PA, Agway Energy Services® sources natural gas and electricity and delivers it through a set of plans designed for residential and commercial customers. In this guide, we’ll explain how this process works.
Understanding the Natural Gas and Electricity Markets
Natural gas and electricity markets operate differently from many other consumer products. Energy must constantly be produced, transported, and balanced to meet demand.
How the Natural Gas Market Works
Natural gas is harvested from underground reserves and transported through large pipeline systems across the country. Suppliers purchase natural gas through wholesale markets before it’s delivered to homes and businesses by local utilities.
Because natural gas can be stored more easily than electricity, pricing is impacted by factors like storage levels, seasonal demand, weather forecasts, and pipeline availability.
How the Electricity Market Works
Electricity markets work differently because electricity must be generated and used almost immediately. Power plants generate electricity, which flows through transmission and distribution systems operated by utilities and regional grid operators.
Electricity supply and demand must remain balanced at all times. When demand increases suddenly, such as during extreme weather, electricity prices can rise due to increased strain on the grid.
What Is the Wholesale Energy Market?
The wholesale energy market is where large quantities of natural gas and electricity are bought and sold before reaching residential or commercial customers.
How Wholesale Natural Gas Is Bought and Sold
Natural gas suppliers purchase fuel through wholesale trading markets months in advance. Pricing of natural gas can fluctuate based on:
- Weather conditions
- Seasonal heating demand
- Pipeline constraints
- Storage inventory levels
- Global energy market conditions
For homeowners in NY and PA, cold winters can significantly increase natural gas demand, which can impact wholesale pricing.
How Wholesale Electricity Is Bought and Sold
Electricity is bought and sold through regional energy markets managed by grid operators. Electricity prices can change rapidly due to factors such as:
- Peak electricity demand
- Weather conditions
- Fuel costs for power generation
- Grid reliability needs
- Available generation capacity
Because electricity can’t be stored at a large scale, prices tend to be more sensitive to sudden changes in demand.
The Role of Retail Energy Suppliers Like Agway®
Retail energy suppliers like Agway purchase energy from wholesale markets and supply it to consumers through service plans for eligible homes and businesses. Your utilities deliver the energy and maintain the infrastructure required to transmit electricity.
How Suppliers Procure Energy on Your Behalf
Retail suppliers monitor wholesale market conditions and purchase energy in “bulk” to serve customer demand. Depending on the supplier and plan type, energy may be purchased short-term, long-term, at fixed prices, or at market-based prices.
The procurement process helps suppliers build plans that align with different customer preferences and market conditions. Then, your supplier works with your utility to deliver the electricity to your home or business.
How Your Rate Type Connects to Market Conditions
Your energy plan structure can impact how market changes affect your bill.
- Fixed-rate plans: Your energy rate stays the same for a contractual period, providing more stable pricing during the contract period.
- Variable-rate plans: Your energy rate fluctuates each month based on market conditions and wholesale energy costs.
Some customers prefer fixed pricing for predictability, while others prefer variable structures so they can take advantage of price drops.
Manage Your Energy Supply With Agway
Understanding how natural gas and electricity move through wholesale and retail markets can make it easier to understand your energy bill and compare supply plans. Because wholesale pricing shifts affect supply trends, many customers also look for added value and protection beyond basic energy delivery.
Agway provides electricity and natural gas supply for customers throughout New York and Pennsylvania, along with access to Agway EnergyGuard®, a value added program that may help cover eligible repairs for wear and tear on qualifying heating, cooling, or electrical systems*.
Contact Agway today to learn more about available electricity plans and protection options designed to keep your home or business powered dependably year-round.
*Coverage depends on commodity purchased.
Frequently Asked Questions
What is the difference between a utility and an energy supplier?
Your utility delivers electricity or natural gas to your home and maintains the infrastructure, including poles, wires, and pipelines. Your energy supplier provides the electricity itself, as well as value-added services that help reduce energy-related expenses.
Why do energy prices fluctuate?
Energy prices fluctuate because they’re impacted by weather, fuel supply, seasonal demand, infrastructure constraints, and wholesale market conditions. Sudden increases in heating or cooling demand can also place additional pressure on energy markets and affect pricing.
Why does my energy bill change even on a fixed-rate plan?
Even with a fixed-rate plan, your total energy bill can still change if you increase your energy use. Utility delivery charges, taxes, and seasonal usage patterns can also impact your monthly total.
Does switching to Agway mean my utility stops delivering energy?
No, switching to Agway doesn’t mean your utility stops delivering energy. Your local utility will continue to deliver your electricity or natural gas and remains responsible for power outages and infrastructure maintenance. Switching suppliers only changes the supply portion of your bill.
How do I switch to Agway?
Eligible customers in PA and NY can contact Agway to review available plans and complete enrollment. The switch is typically completed through your utility without interrupting service to your home or business.
