Electric utility - AbsoluteAstronomy.com

An electric utility is a company (often a public utility

Public utility

A public utility is an organization that maintains the infrastructure for a public service . Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state-wide government monopolies...

) that engages in the generation

Electricity generation

Electricity generation is the process of generating electric energy from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...

, transmission

Electricity distribution

File:Electricity grid simple- North America.svg|thumb|380px|right|Simplified diagram of AC electricity distribution from generation stations to consumers...

, and distribution of electricity

Electricity retailing

Electricity retailing is the final process in the delivery of electricity from generation to the consumer. The other main processes are transmission and distribution.- Beginnings :...

for sale generally in a regulated market

Regulated market

A regulated market or controlled market, is the provision of goods or services that is regulated by a government appointed body. The regulation may cover the terms and conditions of supplying the goods and services and in particular the price allowed to be charged and/or to whom they are distributed...

. The electrical utility industry is a major provider of energy

Energy

In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...

in most countries. It is indispensable to factories, commercial establishments, homes, and even most recreational facilities. Lack of electricity causes not only inconvenience, but also economic loss due to reduced industrial production.

Electric utilities include investor owned

Investor-owned utility

An investor-owned utility or IOU is a business organization, providing a product or service regarded as a utility , and managed as private enterprise rather than a function of government or a utility cooperative...

, publicly owned, cooperatives, and nationalized entities. They may be engaged in all or only some aspects of the industry. Electricity market

Electricity market

In economic terms, electricity is a commodity capable of being bought, sold and traded. An electricity market is a system for effecting purchases, through bids to buy; sales, through offers to sell; and short-term trades, generally in the form of financial or obligation swaps. Bids and offers use...

s are also considered electric utilities--these entities buy and sell electricity, acting as brokers, but usually do not own or operate generation, transmission, or distribution facilities. Utilities are regulated by local and national authorities.

Electric utilities are facing increasing demands according to Black & Veatch's annual utility survey, based on input from 700 utility participants, for 2011 the top-three concerns were aging infrastructure, reliability (no. 1 in 2010) and regulation (no.2 in 2010).

Organization

Utility service territories are typically geographically distinct from one another. These territories may be set by regulation or by economics as the capital cost of reproducing infrastructure is usually prohibitive. Each territory is composed of different types of consumers, usually broadly described as either commercial, residential or industrial.

Tariff structure

Electricity consumers are divided into classes of service or sectors (residential, commercial, industrial, and other) based on the type of service they receive. Sectoral classification of consumers is determined by each utility and is based on various criteria such as:

demand levels
rate schedules
distribution voltage
accounting methods
end-use applications
other social and economic characteristics

Utilities typically employ a number of tariffs. The alternative tariffs reflect consumers' varying consumption levels and patterns and the associated impact on the utility's costs of providing the service.

Power transactions

An electric power system is a group of generation, transmission, distribution, communication, and other facilities that are physically connected. The flow of electricity with the system is maintained and controlled by dispatch centers. It is the responsibility of the dispatch center to match the supply of electricity with the demand. In order to carry out its responsibilities, the dispatch center is authorized to buy and sell electricity based on system requirements. The interconnected utilities within each power grid coordinate operations and may buy and sell power among themselves. The bulk power system makes it possible for utilities to engage in wholesale (for resale) electric power trade. Wholesale trade has historically played an important role, allowing utilities to reduce power costs, increase power supply options, and improve reliability. Authority for those transactions has been pre-approved under interconnection agreements signed by all the electric utilities physically interconnected or with coordination agreements among utilities that are not connected.

Organization

Tariff structure

Power transactions

See also