Introduction

The transition of the U.S. electric power industry from a regulated monopoly to a deregulated industry where generators of electricity compete for customers is in full swing. Consequently, many aspects of the industry are changing, including its infrastructure. This chapter explains the functions and components (or participants) contained in the infrastructure and uses data collected by the Energy Information Administration (EIA) to reflect the changes that have taken place in the past decade or so. Shifts in the number and ownership of power production facilities, the volume of power generation and capacity, and other areas are also explained.

Figure 2. Electric Power Supply Functions

The fundamental structure of the industry has been based on the vertical integration of utilities, i.e., their involvement in the three functions of power supply. Those functions are generation, transmission, and distribution of electricity (Figure 2) . Generation is defined as the production of electric energy from other energy sources. Transmission is the delivery of electric energy over high-voltage lines from the power plants to the distribution areas. Distribution includes the local system of lower voltage lines, substations, and transformers which are used to deliver the electricity to end-use consumers. Prior to detailing the components of power supply along with their characteristics, this chapter will outline the three functions of power supply.

Generation

Generation facilities are currently owned and operated by two categories of companies--utilities and nonutilities.⁽¹⁾ Electric power generators use a variety of prime movers and energy sources to generate electric energy. Prime movers are the engine, turbine, water wheel, or similar machines that drive an electric generator. Energy sources include combustion of fossil fuels, nuclear fission, kinetic energy in water or wind, chemical energy in a fuel cell, and sunlight. Wind, water, sunlight, geothermal energy, biomass, and waste products are renewable energy sources that are considered inexhaustible.

Generating units vary in size. Nuclear and fossil-fuel steam-electric units typically have large capacities with many over 1,000 megawatts (MW), while hydroelectric dams range from less than 1MW to thousands of MW at some of the large Federal dams. Gas turbines, combustion turbines, and combined-cycle units are typically less than 200 MW, but some are larger. Wind and solar plants are relatively small. Distributed generation, which can be installed at or near the customer's site can be quite small, such as rooftop photovoltaic arrays or fuel cells ranging from several to a few hundred kilowatts.

The generating units operated by an electric utility vary by intended usage, that is, by the three major types of load (generally categorized as base, intermediate, and peak) requirements the utility must meet.⁽²⁾ A base-load generating unit is normally used to satisfy all or part of the minimum or base load of the system and, as a consequence, produces electricity at an essentially constant rate and runs continuously. Base-load units are generally the largest of the three types of units, but they cannot be brought on line or taken off line quickly. Peak-load generating units can be brought on line quickly and are used to meet requirements during the periods of greatest or peak load on the system. They are normally smaller plants using gas and combustion turbines. Intermediate-load generating units meet system requirements that are greater than base-load but less than peak load. Intermediate-load units are used during the transition between base-load and peak-load requirements.

Types of Generators
Steam Units: Steam-electric (thermal) generating units are typically the large baseload plants. Steam produced in a boiler turns a turbine to drive an electric generator (Figure 3a). Fossil fuels (coal, petroleum and petroleum products, natural gas or other gaseous fuels) and other combustible fuels, such as biomass and waste products, are burned in a boiler to produce the steam. Nuclear plants use nuclear fission as the heat source to make steam. Geothermal or solar thermal energy also produce steam. The thermal efficiency⁽³⁾ of fossil-fueled steam-electric plants is about 33 to 35 percent. The waste heat is emitted from the plant either directly into the atmosphere, through a cooling tower, or sent to a lake for cooling. A water pump brings the residual water from the condenser back to the boiler.

Gas Units: Gas turbines and combustion engines use the hot gas from burning fossil fuels, rather than steam, to turn a turbine that drives the generator. These plants can be brought up quickly, and so are used as peaking plants. The number of gas turbines is growing as technological advances in gas turbine design and declining gas prices have made the gas turbine competitive with the large steam-electric plants. However, thermal efficiency is slightly less than that of the large steam-electric plants (Figure 3b). The gas wastes are disposed of through an exhaust stack.

Combined-Cycle Units: Combined cycle plants first use gas turbines to generate power and then use the waste heat in a steam-electric generator to produce more electricity. Thus, combined-cycle plants make more efficient use of the heat energy in fossil fuels. New technology is improving the thermal efficiency of combined-cycle plants, with some reports of 50 to 60 percent thermal efficiency (Figure 3c).

Cogenerating Units: Cogenerators, also known as combined heat and power generators, are facilities that utilize heat for electricity generation and for another form of useful thermal energy (steam or hot water), for manufacturing processes or central heating. There are two types of cogeneration systems: bottom-cycling and top-cycling. In a bottom-cycling configuration, a manufacturing process uses high temperature steam first and a waste-heat recovery boiler recaptures the unused energy and uses it to drive a steam turbine generator to produce electricity. In one of two top-cycling configurations, a boiler produces steam to drive a turbine-generator to produce electricity, and steam leaving the turbine is used in thermal applications such as space heating or food preparation. In another top-cycling configuration, a combustion turbine or diesel engine burns fuel to spin a shaft connected to a generator to produce electricity, and the waste heat from the burning fuel is recaptured in a waste-heat recovery boiler for use in direct heating or producing steam for thermal applications (Figure 3d).

Figure 3a. Schematic of generic thermal generator

Figure 3b. Schematic of gas turbine

Figure 3c. Schematic of combined cycle

Figure 3d. Cogeneration Schematic

Other Units: The kinetic energy in moving water and wind is used to turn turbines at hydroelectric plants and wind facilities to produce electricity. Other types of energy conversion include photovoltaic (solar) panels that convert light energy directly to electrical energy, and fuel cells that convert chemical energy directly to electrical energy.

Energy Sources
Coal: Coal is the Nation's primary fuel for electricity generation, representing 40 percent of the capability,⁽⁴⁾ and producing over half (52 percent) of the generation (Figure 4) because coal is used as a baseload fuel.

Figure 4. Electric Power Industry Capability and Generation by Energy Source, 1998

Gas and Petroleum: Gas and petroleum units, which are typically used for peak demand, make up 23 percent and 8 percent, respectively, of generating capability. In 1998, petroleum-fired generation provided 4 percent of our electricity, while gas-fired units provided 15 percent.

Coal, petroleum, and gas are considered fossil-fuels and collectively produced 71 percent of the Nation's electricity in 1998. When fossil fuels are burned in the production of electricity, a variety of gases and particulates are formed. If these gases and particulates are not captured by some pollution control equipment, they are released into the atmosphere. Among the gases emitted during the burning of fossil fuels are sulfur dioxide (SO₂), nitrogen oxides (NO_x), and carbon dioxide (CO₂). Coal-fired generating units produce more SO₂, NO_x, and CO₂ than other fossil-fuel units for two reasons. First, because coal generally contains more sulfur than other fossil fuels, it creates more SO₂ when burned. Second, there are more emissions from coal-fired plants because more coal-fired capacity than other fossil-fueled capacity is in use.

Nuclear: Nuclear power plants, which also are used as baseload plants, represented 13 percent of the generating capability, and generated 19 percent of electricity in 1998. Nuclear plants have increased their capacity factors (the ratio of electricity actually produced to potential production if the unit runs at full power) steadily in recent years, reaching a record high of 86 percent in 1999.

Hydroelectric: Hydroelectric capability⁽⁵⁾ accounts for 13 percent of the Nation's generating capability. Precipitation patterns affect the availability of hydroelectric power, which contributed 9 percent of net generation in 1998, a relatively dry year.

Renewables: Renewable generating units use energy sources that are judged to be inexhaustible including solar, wind, geothermal, municipal solid waste, and biomass fuels such as landfill methane gas, wood byproducts, and waste. (Hydroelectric power is also considered a renewable resource.) Many wind and solar plants are intermittent in nature, depending on the availability of their energy source. In 1998, renewables other than hydropower represented 3 percent of capacity and 1 percent of generation, as they are typically used only intermittently.

Regional Variation

Figure 5. Energy Sources for Electricity Generation by Region

California's tight restrictions on air emissions discourage coal-fired generation. Natural gas, which burns more cleanly than coal, is used by many California plants for electricity generation. However, California utilities purchase electricity from outside of the State, some of which is generated from coal as the main fuel source. The energy source available for electricity generation is a factor in the disparity of retail prices across the Nation. For example, the Northwest enjoys the low cost of hydropower, while some Northeast States depend heavily on petroleum and nuclear power.

Regulation of Generation
The foundation for strong Federal involvement in the electricity industry was established in the early 1900s. The electric power industry became recognized as a natural monopoly due to its production of a product most efficiently provided in a specific location by one supplier. Because monopolies in the United States were outlawed by the Sherman Antitrust Act, regulation of the utilities was a necessity. Interstate wholesale markets and transmission became regulated by the Federal Power Commission. In 1997, regulatory authority was given to the Federal Energy Regulatory Commission (FERC). Today, FERC has jurisdiction over interstate movement of electricity by private utilities (investor-owned utilities), power marketers, power pools, power exchanges, and independent system operators (ISOs). FERC approves rates for wholesale sales of electricity and reviews rates set by the Federal Power Marketing Administrations (PMAs). FERC also confers Exempt Wholesale Generator status (a classification of generator created by the Energy Policy Act of 1992 (EPACT)) and certifies qualifying small power producers and cogeneration facilities under provisions of PURPA. An additional responsibility of FERC is licensing the construction and operation of hydroelectric power projects and enforcing the provisions of the licenses.

The State Public Utility Commissions (PUCs) have jurisdiction over intrastate trade of electricity. The PUCs regulate retail rates for customers, approve sites for generation facilities, and issue State environmental regulations.

The Environmental Protection Agency (EPA) is charged with implementing the provisions of Title IV of the Clean Air Act. The EPA establishes rules requiring fossil-fueled power plants to reduce the air emissions and pollutants that are a primary cause of acid rain, sulfur dioxide, and nitrogen oxides. Carbon dioxide (CO₂) emissions are tracked, but no regulations exist at this time for CO₂ emissions.

The Nuclear Regulatory Commission licenses the construction and operation of nuclear power plants and fuel cycle facilities, inspects licensed nuclear facilities and oversees decommissioning, and enforces the provisions of nuclear licenses.

Transmission

Electric power transmission is the transportation of large blocks of power over relatively long distances from a central generating station to main substations close to major load centers or from one central station to another for load sharing. The transmission grid consists of high voltage (between 138 and 765 kilovolts) overhead and underground conducting lines made of either copper or aluminum. High-voltage transmission lines are used because they require less surface area for a given carrying power capacity, and result in less line loss. Because of resistance in the conductors, some power is "lost" as dissipated heat during transmission. At the generating station, the voltage of the three-phase alternating current output from the generator is increased to the required transmission voltage by a step-up transformer. The high-voltage alternating current is then transmitted through the transmission grid to the load center where it is again transformed (stepped down) to lower voltages required by distribution lines.

In the United States, investor-owned utilities (IOUs) own 73 percent of the transmission lines, Federally owned utilities own 13 percent, and public utilities and cooperative utilities own 14 percent (Figure 6).⁽⁶⁾ Not all utilities own transmission lines (i.e., they are not vertically integrated), and no independent power producers or power marketers own transmission lines. Over the years, these transmission lines have evolved into three major networks (power grids), which also include smaller groupings or power pools. The major networks consist of extra-high-voltage connections between individual utilities designed to permit the transfer of electrical energy from one part of the network to another. These transfers are restricted, on occasion, because of a lack of contractual arrangements or because of inadequate transmission capability. The three networks are the Eastern Interconnect, the Western Interconnect, and the Texas Interconnect (Figure 7). The Texas Interconnect is not interconnected with the other two networks (except by certain direct current lines). The other two networks have limited interconnections to each other. Both the Western and the Texas Interconnect are linked with different parts of Mexico. The Eastern and Western Interconnects are completely integrated with most of Canada or have links to the Quebec Province power grid. Virtually all U.S. utilities are interconnected with at least one other utility by these three major grids. The exceptions are utilities in Alaska and Hawaii. The interconnected utilities within each power grid coordinate operations and buy and sell power among themselves.

Figure 6. Transmission Ownership in the United States

Figure 7. The Main Interconnections of the U.S. Electric Power Grid and the 10 North American Electric Reliability Council Regions

Regulation of Transmission
Under authority of the Federal Power Act of 1935, as amended, FERC exercises principal regulatory authority over the transmission system. Under this authority, FERC:

• regulates wholesale electricity rates and services for wholesale transactions
• approves sale or leasing of transmission facilities
• approves mergers and acquisitions between IOUs, and
• exercises jurisdiction over the interstate commerce of electricity.

FERC's authority covers about 73 percent of the power transmission system in the United States, while the remaining 27 percent is Federally owned, municipally owned, or owned by cooperative utilities, and is not under FERC's jurisdiction.

In 1965, a major blackout in the Northeastern United States precipitated the voluntary formation of the North American Electric Reliability Council (NERC). NERC is responsible for overall reliability, planning, and coordination of the electricity supply in North America. The membership of NERC is unique--as a not-for-profit corporation, NERC's owners comprise 10 Regional Councils (Figure 7). The members of these Regional Councils come from all segments of the electric industry-utilities, independent power producers, power marketers, and electricity customers. The councils cover the 48 contiguous States, part of Alaska, and portions of Canada and Mexico. The councils are responsible for overall coordination of bulk power policies that affect the reliability and adequacy of service in their areas. They also regularly exchange operating and planning information among their member utilities. However, participation in NERC is voluntary and participants in the industry are neither required to be a member nor to follow the directions of NERC. The boundaries of the NERC regions follow the service areas of the electric utilities in the region, many of which do not follow States boundaries.

Figure 8. Electric Control Area Operators – Continental United States, 1998

Because electric energy is instantaneously generated and consumed, the operation of an electric power system requires a coordinated balancing of generation and consumption of power. Control Area Operators (CAOs) perform this function, as well as other important tasks, that allow the interconnected electric power systems and their components to operate together both reliably and efficiently. There are approximately 150 Control Areas in the Nation (Figure 8). Most are run by the dominant large investor-owned utility in a geographic area defined by an interconnected transmission grid and power plant system. The CAOs dispatch generators from a central control center with computerized systems in such a way as to balance supply and demand and maintain the transmission system safely and reliably.

Chapter 3 continued

• Table of Contents
• Chapter 2
• Chapter 4

Endnotes

1. Electric utilities are defined as either privately owned companies or publicly owned agencies that engage in the supply (including generation, transmission, and/or distribution) of electric power. Nonutilities are privately owned companies that generate power for their own use and/or for sale to utilities and others. The next section of this chapter delineates the types and characteristics of utilities and nonutilities as well as their changing roles in the supply of the Nation's electricity.

2. The demand for power varies over the day, with about 16 hours of "on-peak" time in the day and about 8 hours of "off-peak" time during the night. Demand for electric power typically reaches its highest peak on very hot or very cold days. At those times, many of the available plants in a region may need to be brought online to meet the high demand.

3. Thermal efficiency is a measure generally expressed in Btu per kilowatthour which is computed by dividing the total Btu content of the fuel burned for electric generation by the resulting net kilowatthour generation.

4. Capability is the maximum load that a generating unit, generating station, or other electrical apparatus can carry under specified conditions for a given period of time without exceeding approved limits of temperature and stress.

5. Hydroelectric power includes pumped storage which is the generation of electric energy during peak-load periods by using water previously pumped into an elevated storage reservoir during off-peak periods when excess generating capacity is available to do so. When additional generating capacity is needed, the water can be released from the reservoir through a conduit to turbine generators located in a power plant at a lower level.

6. Refer to Table 2 for a definition of the types of utilities and other entities involved in electricity supply.