How does it work in relation to the person you replied to? Genuinely asking.

Power companies in almost all cases don't supply power directly to homes. They supply it to the grid, and the grid supplies to homes. In states that are de-regulated, you pick your power company, you don't pick the servicer, and both charge you a fee. You pay one fee to the generator, one to the grid operator. (It may be rolled into one bill, but it could be going two separate places). The generator must sell to the grid power equal to what it sells.

I'd guess what happened is this small town generated power and let its people buy it at a reduced rate. GP just didn't get into that level of detail.

Excellent explanation of all this:

https://youtu.be/sH1PVVJuBtE?si=EK4-rmq4CUxw0ttU