Term: Electricity Supplier License

Electricity Supplier License

Electricity suppliers are also known as energy providers. They purchase electricity at wholesale prices and then supply the energy to their customers at competitive rates that often are less than the local utility. To become an electricity supplier one needs to obtain a license in every state they intend to do business.

Common Requirements

In order to apply for a license one needs to contact the state’s Public Utility Commission. The application process varies by state, however, there are some common requirements when applying for an electricity supplier license. They are as follows:

  1. Basic information about the suppliers business
  2. Articles of incorporation, also known as certification of formation, to legally document the creation of a new business
  3. A list of all officers and the names of all owners of the business
  4. Financial statements related to the business
  5. Submission of a surety bond to protect, indemnify, or provide a financial guarantee to third parties such as customers
  6. Proof of relevant experience for principals of the business
  7. Disciplinary and criminal history for key personnel
  8. Customer service contact information
  9. Intended service area(s) where services will be provided
  10. Marketing material the business will be using
  11. List of other states where the business is licensed to operate

Other Steps Needed

In addition to filling out an application, suppliers are also required to register with the electric utility that serves the suppliers intended area of service. If the supplier will be working in several utilities, each one will need to be notified.

In addition, electricity providers must file tax registrations with the Department of Revenue in each state they will be doing business.

On-going Requirements

Once a license is issued the energy supplier will need to follow strict state requirements or face the possibility of being fined or shut down. The supplier must renew their license each year in every state where they work. Additionally, they are required to file detailed reports related to distribution volumes, revenue, renewable energy usage, and bonding requirements. 

Keeping abreast of each state’s requirements, tracking every customer to provide renewal information, and submitting paperwork on time can be daunting tasks. The use of compliance services and software systems can be advantageous and will help suppliers avoid penalties or closure.

Related Articles