8 Lessons Learned:
Your Electric Company Is Your Electricity Provider
Electricity is the energy that powers our lives, from lights to appliances. It is produced, delivered and regulated by companies who sell it to you. Your electricity provider is either a local utility, a power marketer or an independent power producer.
Your utility generates, buys, distributes and sells power to you through a network of transmission lines, substations, and metering equipment. It is also responsible for the reliability of the system and for operating it in a safe and secure manner.
The electric industry in the United States grew from a handful of large power plants built during the early part of the 20th century to a national grid that serves billions of people. It is now a complicated, specialized and regulated business that is threatened by the introduction of more renewable resources like wind and solar power and by the rapid decline of coal-fired generation.
In the United States, most electricity is sold to consumers through private, for-profit utilities, often called investor-owned utility companies. They operate in a regulatory environment in which they are insulated from competition and are subject to government approval to set prices.
Utilities sell electricity to residential, commercial and industrial customers. Retail customers pay the company for the electricity they receive and are charged a fee for service. In deregulated states, consumers can choose an alternative supplier for their energy service and can lower their bills.
A typical home or business uses about 400 kilowatts of electricity per month, and an average utility bill includes two different costs: the cost to generate the energy and the cost to deliver it. The first cost is the wholesale price of electricity that your utility must pay to producers for the energy it sells to you.
Most of the countrys major power plants are located in the Midwest and Southern States, with some in the Northeast and Pacific Northwest. These are typically owned by large electricity companies, such as Consolidated Edison and DTE Energy.
There are other types of utilities that supply energy to residential, commercial and industrial customers. Some of these are municipally owned, cooperatives or federally owned. Others are private, for-profit.
These include the regulated municipal utilities that serve the urban cores and suburbs of each state, and the not-for-profit co-ops and public utility holding companies that provide service to rural and suburban areas.
Some of these utilities also own gas distribution and pipeline companies. In a recent investigation by the Washington Post, it was discovered that some of these entities have been profiting from ripping off rural electric cooperatives.
It is also important to understand how these companies are regulated by state and federal governments. They must be organized and governed in a way that protects the public, prevents monopoly and ensures that their customers get the highest quality of service at a fair price.
The electric industry is dominated by the seven investor-owned utilities, with some smaller players such as power marketers and independent power producers. The Power Pool, the regional transmission reliability organization created by the State Department of Environmental Conservation, is also a significant participant in the industry.