Generating Power and Getting to Know the Consumer

Delivering electricity to America’s consumers is a complex task. Behind it lies a series of highly technical functions such as the generation of power, its transmission, and its final distribution to the consumer. Because of the physical nature of electricity, the entities performing these functions are not isolated. To a degree, all power suppliers and delivery systems are interconnected; thus, the decisions they make affecting the generation, transmission, and distribution of power have widespread effects on all consumers. Consequently, communication and cooperation among all power suppliers and delivery systems are essential to the smooth working of this industry.

Electric Companies Use a Broad Mix of Fuel Sources to Generate Electricity

Many energy sources provide the fuel necessary to generate electricity. The combination of energy sources used is referred to as the generation or fuel mix. More than half of the nation’s electricity supply is generated from coal. Nuclear fuel produces almost 20 percent of the supply. Natural gas supplies nearly 16 percent. Hydropower and, to a lesser extent, other renewable resources — such as wind, solar, geothermal, and biomass — provide nearly 11 percent of the electricity supply. Fuel oil provides almost 3 percent of the generation mix.

Electric Companies Consider Numerous Factors to Determine Their Fuel Mix

Several factors influence a utility ’s decision to use particular fuels to generate electricity. Chief among them are price, availability, and reliability of supply. Historically, government policies also have influenced fuel choice, and the mix of fuels used to generate electricity in the United States has shifted over the past twenty years. For example, in the late 1970s — the midst of an energy crisis — new utility power plants were prohibited from burning natural gas or petroleum products to generate electricity by the Powerplant and Industrial Fuel Use Act (repealed in 1987). Instead, decisions were made to build more coal-based power plants. Today, natural gas is re-emerging as the fuel of choice for new electric generation.

The fuel choice also depends on whether the unit will be used continuously or only during peak usage times, its environmental impact, and necessary environmental controls.

Most utilities rely on a variety of fuels to generate electricity. A varied fuel mix protects the electric company and its customers from contingencies such as fuel unavailability, price fluctuations, and changes in regulatory practices. It also helps ensure stability and reliability in electricity supply, and strengthens national security.

Electricity is measured in units of power called watts. One watt is such a small amount of power, however, that the more commonly used measurement is the kilowatt, representing 1,000 watts. The higher the watt or kilowatt rating of a particular electrical device, the more electricity it requires.

The amount of electricity a power plant generates or a customer uses over a period of time is measured in kilowatt-hours (kWh). Kilowatt-hours are determined by multiplying the number of kilowatts required by the number of hours of use, and then dividing by 1,000. For example, if you use a 60-watt light bulb 5 hours a day for 30 days, you have used 60 watts of power for 150 hours, or 9 kilowatt- hours of electrical energy. Although electricity use varies widely depending on the season and the region of the country, a typical household uses about 866 kilowatt-hours of electricity a month.

Electric Power Is Produced Around the Clock by Generators in Power Plants

Electricity is produced in a generating plant. The simplest type of generator has two main components: a rotating magnet called the “rotor” which turns inside stationary coils of copper wire called the “stator.” When the rotor rotates through the magnetic field, it generates a flow of current through the copper coils of the stator. Generating plants must use some form of energy or fuel to turn the rotor.

Most electricity is produced by burning fossil fuels — coal, oil, or natural gas. These fuels are burned in a boiler to turn water into steam. Under high pressure, the steam turns the blades of a turbine that spins a generator, producing electricity. In a nuclear plant, steam is produced by the controlled splitting of uranium atoms in a process known as nuclear fission. In a hydroelectric power plant, moving water provides the energy to turn the turbine blades.

Unlike oil or gas in a pipeline, electricity cannot easily be stored. It must be generated and delivered at the precise moment it is needed. To reach consumers, electricity must travel from the power plant through miles of transmission and distribution lines until it reaches its final destination where it will be used.

Electricity travels through the path of least resistance. This path must be made of a material — such as metal — that electrons can easily travel through. Unlike telecommunications, electricity cannot be routed from one destination to another. Electricity will travel down whatever paths are made available to it but cannot be directed to go to a particular destination. Utilities have interconnected their transmission systems so that they may buy and sell power from each other and from other power suppliers, and to ensure reliability of service.

Electricity Must Travel from the Power Plant Through a Vast Network of Overhead Lines and Underground Cables to Reach Consumers.

Electricity moves through a complex transmission system. Transformers are located in substations near the electric generating plant. In much the same way that a pump builds up the pressure of water in a hose, transformers step up the electricity voltage to levels ranging from 69,000 to 765,000 volts. The voltage levels depend on the distance the electricity must travel and the amount desired. From the transformers, electricity enters the transmission system. Large lines on towers carry electricity in much the same way that long hoses carry water under great pressure. The transmission lines, which consist of heavy cables strung between tall towers, carry power to the point where it is needed. Electricity travels at nearly the speed of light, arriving at a destination at almost the same moment it is produced.

Step-down transformers located in distribution substations reduce the voltage of the electricity to lower levels so it can be carried on smaller cables or distribution lines. Smaller transformers on poles or underground further reduce the voltage so that it can be used by residential customers. Homes and farms require 120 or 240 volt service. Industrial customers using large amounts of power ordinarily require higher service voltages.

When electricity leaves a power plant (1), its voltage is increased at a “step-up” substation (2). Next, the
energy travels along a transmission line to the area where the power is needed (3). Once there, the voltage is
decreased or “stepped-down,” at another substation (4), and a distribution power line (5) carries the
electricity until it reaches a home or business (6).

Electric Companies Meet Peak Consumer Demand by Keeping Additional Generating Capacity Available

Power must be produced when the customers need it. Because electric power cannot be stored easily or economically, utilities and other electricity suppliers must have enough generation facilities available to meet the maximum demand on their systems, whenever that occurs.

The electric load that utilities and other electricity providers must supply is the sum of all customers’ demands. Because customer needs vary constantly, demand varies constantly, too. Heaviest demand usually occurs during the day from all sectors — industrial, commercial, residential, and transportation — and lowest demand during the night. Demand also varies with the seasons and with changes in the weather.

To ensure that there is enough electricity available to meet customer demand, some plants work around the clock, allowing utilities and other power providers to generate a steady supply of electricity equal to the demand of their customers. Typically, companies use coal-based, hydro, or nuclear plants to provide this continuous service because they are cheaper to run for prolonged periods.

Pumped storage hydro, gas- or oil-based, and renewable (wind and solar) units are usually the units of choice for providing service for the hours of the day when demand hits its highest levels or 25 peak. These units may be started and stopped quickly, unlike coal and nuclear-based plants. When used to meet peak demand, higher fuel costs do not have such a great impact because the plants are used only for a few hours at a time.

Reliable Service Is the Result of Cooperation and Communication among Electric Companies

The North American electric system is comprised of an interconnected network of generating plants, transmission lines, and distribution facilities. Transmission lines link the generators of electricity to the distributors, transporting power to local companies which in turn deliver it to consumers.

These transmission lines are divided into three regional grids: one in the East which connects the Eastern seaboard and the Plains states and Canadian provinces; another in the West which connects the Pacific coast and the Mountain states and provinces; and another that operates in Texas. These networks provide electric utilities with alternative power paths in emergencies and allow them to buy and sell power from each other and from other power suppliers.

The structure of the grid makes reliability possible, but what makes it a reality is the coordination in operations of the electric companies that make up this network. For the electric power grid to work smoothly and without disruption, a transmission operator must be aware not only of the power flowing over its own system created by its own generators and the electricity demand of its customers, but it must also be aware of the transfers of power between other systems and how those transfers might flow through its own system.

To coordinate power flow, control areas have been formed. Control areas consisting of one or several transmission operators ensure that there is always a balance between electricity generation and the amount of electricity needed at any given moment to meet demand. A margin of capacity beyond the actual load is needed to ensure reliability at times of peak demand and provide for maintenance down times. Operators use computerized systems to exercise minute-by-minute control over the network and ensure that power transfers occur during specified times in pre-arranged amounts.

Providing oversight over these transfers are ten regional groups that form the North American Electric Reliability Council (NERC) whose members include electric utilities and market participants from all segments of the industry across the U.S., Canada, and the northern portion of Mexico. NERC helps utilities work together to comply with set standards and guidelines for system wide reliability.

As the electric power industry restructures, NERC is evolving to meet the needs of a competitive market. In 2000, NERC endorsed a consensus proposal to authorize the creation of an independent, self-regulating industry reliability group. This group would develop and enforce mandatory reliability standards. The Federal Energy Regulatory Commission would provide oversight to the industry group.