Electricity

Since 1879, when Thomas Alva Edison (1847–1931) flipped the first switch to light Menlo Park, New Jersey, the use of electrical power has become nearly universal in the United States.

What is Electricity?

Electricity is a form of energy resulting from the movement of charged particles, such as electrons (negatively charged subatomic particles) and protons (positively charged subatomic particles). For example, static electricity is caused by friction: when one material rubs against another, it transfers charged particles. The zap you might feel and the spark you might see when you drag your feet along the carpet and then touch a metal doorknob demonstrate static electricity—electrons being transferred between you and the doorknob.

Electric current is the flow of electric charge; it is measured in amperes (amps). Electrical power is the rate at which energy is transferred by electric current. A watt is the standard measure of electrical power, named after the Scottish engineer James Watt (1736–1819). The term wattage refers to the amount of electrical power required to operate a particular appliance or device. A kilowatt (kW) is a unit of electrical power equal to 1,000 watts, and a kilowatt-hour (kWh) is a unit of electrical work equal to that done by 1 kW acting for one hour.

Electrical Capacity

The generating capacity of an electrical power plant, which is measured in watts, indicates its ability to produce electrical power. A 1,000-kW generator running at full capacity for one hour supplies 1,000 kWh of power. That generator operating continuously for an entire year will produce nearly 8.8 million kWh of electricity (1,000 kW C2 24 hours per day C2 365 days per year). However, no generator can operate at 100% capacity during an entire year because of legal restrictions and downtime for routine maintenance and outages. On average, about one-fourth of the generating capacity of an electrical plant is not available at any given time.

Electricity demands vary daily and seasonally, so the continuous operation of electrical generators is usually not necessary. Utilities depend on steam, nuclear energy, and large hydroelectric plants to meet routine demand. Auxiliary gas, turbine, internal combustion, and smaller hydroelectric plants are used during short periods of high demand.

An Electric Power System

An electric power system has several components. Figure 8.1 illustrates a simple electric system. Generating units (power plants) produce electricity, transmission lines carry electricity over long distances, and distribution lines deliver the electricity to customers. Substations connect the pieces of the system together, and energy control centers coordinate the operation of all the components.

U.S. Electricity Usage

In 2007 net generation of electricity totaled nearly 4.2 trillion kWh. Table 8.1 shows that electricity use in the United States—measured by the retail sales of utility companies—has increased nearly every year since 1949. In the thirty years between 1977 and 2007, retail sales of electricity nearly doubled, from 1.9 trillion kWh to 3.7 trillion kWh.

According to the Energy Information Administration (EIA), in Annual Energy Review 2007 (June 2008, http://www.eia.doe.gov/aer/pdf/aer.pdf), coal has been and continues to be the most-used raw source for electricity production in the United States. It accounted for approximately 2 trillion kWh of electricity in 2007, supplying 49% of the net amount of 4.2 trillion kWh of electricity generated. (See Figure 8.2.) Natural gas was the second-largest source of net generation of electricity (893 billion kWh, or 21%), followed by nuclear power (807 billion kWh, or 19% of the total) and hydroelectric power, a renewable energy source (248 billion kWh, or 6%). Very little electricity (103 billion kWh, 2.5%) was generated by all other renewable sources combined, such as geothermal, solar, and wind power.

From 1949 to the early 1990s the industrial sector was the largest consumer of electricity in the United States. (See Table 8.2.) Since then sales to the residential sector have been higher. Beginning in 1998 sales in the commercial sector became higher than sales in the industrial sector. In 2007 about 1.4 trillion kWh went to residential users, 1.3 trillion kWh to commercial customers, and 1 trillion kWh to industrial users.

The consumption of electricity in general is growing because electricity is being used increasingly to perform tasks that were once done with coal, natural gas, or human muscle: manufacturing steel, assembling cars, and milking cows. Electricity is used extensively in technology fields, such as the computer industry, and residential and commercial customers need electricity to run appliances and machinery, such as air conditioners.

The Electric Bill

The cost of electricity is affected by the amount of energy used to create the electricity and move it to the consumer. In 2007, for example, about 42.1 quadrillion British thermal units (Btu) of energy were consumed by U.S. utilities to generate 14.9 quadrillion Btu of electricity. (See Figure 8.3.) After accounting for energy used by the power plants themselves, only 14.2 quadrillion Btu were net generation—the amount available for transmission to customers. Almost 27.2 quadrillion Btu were lost when fuel was converted, and about 1.3 quadrillion Btu were lost during transmission and distribution (labeled “T & D losses” in Figure 8.3). In the end, for every three units of energy that were converted to create electricity in 2007, slightly less than one unit actually reached the end user.

Between 1960 and 1970 the price of electricity declined, but it began to increase during the 1970s because of an oil embargo by the Organization of the Petroleum Exporting Countries. (See Figure 8.4.) From the mid-1980s to 2002 the price of electricity dropped because prices of energy resources declined. After that time, electricity prices began to climb, and prices often varied by location. As Figure 8.5 shows, in 2006 electricity was the most expensive in Hawaii, Massachusetts, New York, Connecticut, Rhode Island, New Hampshire, Alaska, and California, respectively. According to the EIA, in Electric Power Annual 2006 (November 2007, http://www.eia.doe.gov/cneaf/electricity/epa/epa.pdf), the average price of electricity sold to the residential sector was 10.4 cents per kWh in 2006, whereas the commercial sector paid 9.4 cents per kWh. Industrial users paid only 6.1 cents per kWh because the huge amounts of electricity they use allowed them to receive volume discounts. The average price for all sectors across the United States in 2006 was 8.9 cents per kWh.

Deregulation of Electric Utilities

Regulated by the government for decades, electric utilities in some states have passed through a controversial shift toward unregulated markets and increased competition. In 1978 Congress passed the Public Utilities Regulatory Policies Act, which required utilities to buy electricity from private companies when that would be cheaper than building their own power plants. The Energy Policy Act of 1992 gave other electricity generators greater access to the market, resulting in widespread debates about regulatory, economic, energy, and environmental policies. State public utility commissions conducted proceedings and crafted rules related to competition.

California was a leader in deregulation. In the summer of 2000, however, the state experienced rolling electrical blackouts, and electricity bills doubled for many customers. Fearful of similar blackouts and price spikes, most other states had slowed or stopped their efforts to deregulate their electricity markets by the spring of 2001. At that time, twenty-four states and the District of Columbia had begun deregulation. Then, during an investigation of Enron Corporation, documents were found that showed how Enron’s electricity traders had boosted profits with strategies that added to electricity costs and congestion on transmission lines. As a result, public confidence in power companies, in general, and deregulation,

in particular, eroded. As of February 2003, only seventeen states plus the District of Columbia were actively engaged in restructuring their utilities. (See Figure 8.6.) In addition, five states had delayed deregulation, and California had suspended its restructuring activities. Restructuring was not active in twenty-seven states.

By the last half of the first decade of the 2000s it was becoming widely known that the deregulation of electric utilities, which had occurred in some states as indicated in Figure 8.6, had done little to bring electric prices down. A comparison of Figure 8.5 and Figure 8.6 shows that many of the states in which restructuring and deregulation activity was active in 2003 were states in which electricity prices were the highest in 2006. John Funk reports in “Electric Deregulation: A Legacy of Problems; Consumers Never Got Expected Benefits” (Plain Dealer [Cleveland, Ohio], December 8, 2007) that by late 2007 only eleven states were still deregulated.

International Electricity Usage

World Production

The EIA notes in Annual Energy Review 2007 that in 2005 approximately 17.3 trillion kWh of electricity were generated around the world: 11.5 trillion kWh from fossil fuels, 2.9 trillion kWh from hydroelectric power, 2.6 trillion kWh from nuclear power sources, and 0.4 trillion kWh from wood, waste, wind, and other sources. (See Figure 8.7.) The United States accounted for nearly 4.1 trillion kWh (23%); China, 2.4 trillion kWh (14%); Japan, 1 trillion kWh (6%); and Russia, 904 billion kWh (5%). Figure 8.8 shows net generation of electricity by the type of fuel used and by regions of the world.

World Consumption

In International Energy Annual 2005 (October 2007, http://www.eia.doe.gov/iea/elec.html), the EIA explains that total world electricity consumption increased from 7.3 trillion kWh in 1980 to 15.7 trillion kWh in 2005. Asia and Oceania used 5.1 trillion kWh (32%) in 2005; North America, 4.5 trillion kWh (29%); Europe, 3.2 trillion (21%); and Eurasia, 1.1 trillion (7%). Central and South America used about 4% of the world’s electricity, and the Middle East and Africa each consumed about 3%.

Trends in the U.S. Electrical Power Industry

In Annual Energy Outlook 2008 (June 2008, http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf), the EIA predicts that from 2006 to 2030 total electricity consumption will grow at a rate of 1.1% annually. Even though demand will be high for products that use electricity, the efficiency of those products will be high, thereby tempering the demand. Population shifts to warmer climates are expected to increase the use of electricity for cooling.

The demand for electricity in the United States has always been related to economic growth. However, electricity use is expected to grow more slowly than the gross domestic product (a measure of economic growth). Figure 8.9 shows how electricity sales are related more to economic growth than to population growth. Note that the phrase “five-year moving average” means that each point on the graph is an average for that year’s data plus the previous four years’ data. This type of averaging is used to determine long-term averages without the weight of cyclical influences such as the weather.

The rate of growth of consumption carries financial risks for electric companies. If the industry underestimates future needs for electricity, consumers may experience power shortages or losses. By contrast, excessive projections of the nation’s needs may mean billions of dollars spent on unneeded equipment.

The EIA estimates that the United States will need 263 gigawatts (GW) of new generating capacity from 2007 to 2030 to meet growing demand for electricity and to replace aging power plants, most of it after 2015. From 2007 to 2030, 45 GW of capacity are expected to be taken out of production, mainly old fossil-fired plants that are not competitive with newer types of fossil-fired plants.

According to the EIA, the high cost of natural gas, petroleum, and coal as well as increasing prices for new electricity generating capacity led to a jump in electricity prices from 2000 through 2006. Furthermore, electricity prices are forecast to continue increasing through 2009. In 2009 electricity prices are expected to be at an annual average of 9.3 cents per kWh (in 2006 dollars). By 2015, however, as new sources of natural gas and coal are brought on line, electricity prices should fall to 8.5 cents per kWh. After 2015 natural gas and petroleum prices will rise, but electricity producers will rely more on coal and renewables for power generation. The result will be a slow rise in electricity prices to 8.8 cents per kWh in 2030.

Continued concerns about pollution and global warming could result in tightened environmental emission standards, which could, in turn, affect electrical utility expansion, supply, and prices. Advances in solar and wind turbine technology could make renewable sources of electrical power more economical. Some energy experts and environmentalists claim that increased efficiency and conservation efforts are the most sensible alternatives to new construction or to the burning of more fossil fuels in existing plants. Using this idea to its fullest, the former vice president and Nobel Peace Prize winner Al Gore Jr. (1948–) challenges the nation in “A Generational Challenge to Repower America” (July 17, 2008, http://blog.algore.com/2008/07/) to generate all electricity in the United States using only non carbon based renewable resources such as wind, solar, and geothermal power by 2018.