These terms all refer to the act or process of separating a vertically integrated utility into its functional component parts. This separation is accomplished either by the sale of divisions of a company or by restructuring these divisions into independent commercial entities. This process may also be referred to as delamination or disintegration.

A vertically integrated utility is one that provides more than one component service involved in provision of energy to end users. These component services include, but are not limited to, generation of energy, transmission, distribution, billing and maintenance. Prior to industry deregulation in the US, most utilities had to operate as integrated utilities under regulations which insured that their complete control over the supply chain wouldn't cause hardships for customers. Deregulation has forced many utilities to disaggregate their services in order to stay within new competition guidelines.

Disaggregation results in a division of required services between two or more firms, leaving the supply chain structure under the control of multiple firms, each managing their own billing, marketing and other essential services. A disaggregated supply chain structure is said to be unbundled, but customers may still be able to obtain bundled service from a structurally unbundled if a local utility chooses to handle acquisition of all needed services on the customer's behalf.

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