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Electricity Primer - The Basics of Power and Competitive Markets

Electricity 101

How It's Generated

As we learned at a young age, electricity is generated when a turbine is spun thus creating an electric current. There are a number of ways to fuel this process, be it from burning coal, natural gas, harnessing the wind to rotate a windmill's blades, nuclear power, or capturing heat from the earth itself (geothermal energy). Regardless of how this process begins, once electricity is generated it must be transported. Competitive suppliers use all these fuels and others in providing reliable service to millions of consumers.

How It's Transmitted

Electricity must be generated and consumed at nearly the same time. To maintain a reliable and secure electricity transmission grid, an intricate physical balance must constantly be maintained between the amount of power that is generated and the amount that is consumed since storage of electricity - like other commodities such as airline seats and hotel rooms - is not a practical reality at this time. The conveyance of electricity from a generating station to end-use customers relies on complex transmission and distribution networks.

Transmission lines are generally of a higher voltage to carry more power across longer distances. They can be thought of as a highway system for electricity. As a matter of fact, transmission line towers often track along side actual highways. Distribution lines are those often seen above or below city streets, and carry power to individual consumers. Both sets of networks are critical to delivery of power to consumers.

Where It's Transmitted

The continental United States is divided into three almost entirely separate electricity "interconnections." These interconnections function on different frequencies making transfers of power between them difficult. The Eastern Interconnection generally includes everything east of the Rocky Mountains. The Western Interconnection includes everything from the inter-mountain states to the Pacific. The Electric Reliability Council of Texas (ERCOT) includes most of Texas.

Within these three interconnections differing regulatory and market structures exist (discussed further below). The physics of generating electricity, however, remains the same in all regions.

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