ELECTRICITY
Our society runs on electricity. Without it, the world as we know it would be a very
different place. Imagine waking up tomorrow on a planet without electricity. None of the lights
in your house or apartment would turn on because they run on electricity. Your TV would not
turn on because it runs on electricity. You could not charge your laptop or cell phone because
they run on electricity. You could not access the internet because your modem and router
depend on electrical power. You could not cook because your oven, microwave and refrigerator
all run on electricity. You could not go to school because it could not operate without electric
power. Similarly, you could not go to work because it could not operate without electrical
power. You could not go to the grocery store, or any other business, because they all run on
electricity. It would not be practical to drive your car because the stoplights run on electricity.
And when the sun goes down, there would be no streetlights because they also run on electricity.
After sunset, the world
would go dark.
The image to your
right is New York City
during a “blackout” in
August 2003.
It is a
snapshot of a world without
electricity (except for the
car electronics, of course).
In 2003, Toronto, Columbus
and Detroit all experienced
similar blackouts. And if
you still think the preceding
paragraph is over the top,
draw your attention to a January 26, 2012 Reuters’ article entitled: “Spike in deaths blamed on
2003 Power Outage.” In the article, Brooke Anderson, a researcher at Johns Hopkins University,
states her findings concisely: “Our results from this study indicate that power outages can
immediately and severely harm human health.”
You get the picture. Our lives and electricity are inseparable. But what is electricity?
To answer this question, you need to understand a few basics about atoms and their
structure. All matter is made up of atoms. And all atoms are made up of three particles:
protons, neutrons and electrons. Protons have a positive charge and electrons have a negative
charge. Neutrons have no charge. Protons and neutrons form the nucleus, or center, of an atom.
The electrons spin around the nucleus. Most atoms have the same number of protons and
neutrons.
However, some atoms have electrons which tend to move easily to other atoms. When
electrons move from atom-to-atom, a charge is created. If an atom loses an electron and ends
up having more protons than electrons, it becomes positively charged. On the other hand, if an
atom gains an electron and ends up with more electrons
than protons, it becomes negatively charged. Charged
atoms, whether positive or negative, are called “ions.”
Consider the visual to your right. This is an atom of
carbon. The red spheres are protons and the blue spheres
are neutrons. These red and blue spheres form the nucleus
of the atom. The yellow spheres are electrons. This
particular atom is a positively charged ion because you will
note it has more protons (there are six of them) than
electrons (there are five of them).
So why is all this important? It’s important because a
current of electricity is created when electrons move from atomto-atom. This is the basic idea behind electricity. This is the same
process that allows the electricity to “flow” through the power
lines, wires and circuits that power our society. When the carbon
atom above lost an electron, another atom gained that electron
and that movement of electons created a current of electricity. The
image to your left provides a basic illustration an electrical
current (i.e. the movement of electrons from one atom to another
atom.).
Now that we’ve given you the scientific concept behind electricity, Questions 1-5 will
move one step further and test your knowledge of slightly more advanced, yet still quite basic,
concepts relating to electricity.
A.
ELECTRICITY BASICS
Question 1. What fundamental distinction separates electricity from other energy sources
discussed in our text, such as wind, water, coal, petroleum and natural gas?
a.
Electricity does not occur naturally and is a “synthetic” energy source
b.
Electricity cannot be imported, exported or traded on the open market
c.
Electricity is a “secondary,” as opposed to “primary,” energy source
d.
Electricity cannot be easily reduced to a solid or liquid state and is considered to
be an “intangible” energy source
Answer to Question 1: Choice c is the correct answer.1 An important background concept to
consider when studying electricity is its role as a secondary energy source generated by a
primary energy source. The image below illustrates this concept using wind as the primary
energy source.
The primary wind
energy source spins the armature (a
device which generates power) and the
secondary energy source of electricity
is created. This can also be thought of
in terms of an input and output
relationship; the input (a primary
energy source) will always produce the
same output, electricity.
Another way to remember this
distinction is by looking at the term for
electricity produced by water, hydroelectric power. “Hydro” refers to the primary energy source,
water, which is harnessed to produce electricity, the secondary energy source.
1
United Nations, Concepts and Methods in Energy Statistics, With Special Reference to Energy Accounts and
Balances, New York, 1982, available at: http://unstats.un.org/unsd/publication/SeriesF/SeriesF_29e.pdf
Question 2. You now know that electricity is a secondary energy source. So what? Who
cares? Which passage below describes one of the major benefits of electricity as a secondary
energy source?
a.
“To get electricity from a power plant to your house, it may require that it travel
through many miles of wire. . .”
b.
“When you turn on a light or use an electric tool, you don’t need the source of the
energy in the same building. . .”
c.
“When electricity was first produced commercially in the late nineteenth century,
however, it was far from clear that it would prevail over its competitors.”
d.
“In a series of experiments in 1831, [Michael Faraday] discovered that when a
magnet is moved, an electric current will flow in wires near it.”
Answer to Question 2: Choice b is the correct answer. Choice b describes one of electricity’s
most beneficial characteristics: it can be generated thousands of miles from the source where it
will ultimately be consumed. For example, look at the power plant under this text. At this plant,
nuclear fission (i.e. the
primary energy source)
is producing electricity
(i.e. the secondary
energy source). And
once that electricity is
generated,
it
is
delivered
to
you
through the power lines
which you also see in
the image. But you
don’t need (or want)
that nuclear power
plant in your building
(or anywhere near it) to
be able to utilize the
electricity it produces. And that’s the beauty of electricity as a secondary energy source; it can
be produced from one primary source at one central location and then be easily delivered as a
secondary source across thousands of miles to millions of different end-users (this is known as
the “central station” paradigm and forms the model for the United States’ electrical network).
Question 3:
What are the three components of the modern “central station” electrical system?
a.
b.
c.
d.
e.
Production, Filtration and Distribution
Generation, Filtration and Distribution
Production, Transmission and Recycling
Generation, Transmission and Distribution
Transmission, Generation and Disposal
Answer to Question 3: Choice d is the correct answer.2 A centralized electric power system
begins with Generation, where the primary energy source is converted to electricity. Next, the
Transmission phase transports the electricity from Generation source to power lines and other
similar forms of infrastructure. Finally, Distribution transforms the high-voltage energy in the
Transmission process into energy fit for residential and commercial use, namely through
substations, poles, wires and other localized infrastructure.
The central station model has made electricity widely available and affordable for American
consumers. The access to such energy in urban environments has formed the backbone for the
growth of the economy and business sector. Outside of cities, 99 out of 100 rural households
have
access
to
electricity as of
today. Much of this
progress is due to the
“cheapness”
of
electricity,
which
stems in large part
from this centralized
model.
The figure
above and to the
right provides an
excellent visual
representation of
how these three
components come together in a modern electrical system.
Question 4: Along with its benefits, this centralized model also comes with downsides.
Consider the following passage: “Let’s face it: there’s something very attractive about having
2
See United States Occupational Health & Safety Administration, Illustrated Glossary, available at:
http://www.osha.gov/SLTC/etools/electric_power/illustrated_glossary/
energy available when you want it, while someone else has to deal with the pollution and other
social costs of its generation.” What concept is the author trying to get at in the above passage?
a.
b.
c.
The concept of “internality,” meaning that all the costs of electricity production
have been factored into its price and the consumer pays the true cost of electrical
service
The concept of an “externality,” meaning that all the costs of electricity
production have not been factored into its price and the consumer pays less than
the true cost of electrical service
The concept of “distributed generation,” where the costs of electricity production
are distributed equally throughout a society
Answer to Question 4: Choice b is the correct answer.3 The author observes that centralized
electricity production creates “externalities” (i.e. costs) which all of society must pay for and
which are not factored into the price of electricity. These externalities are important
considerations for our lawmakers as we decide the direction of future energy policy.
In 2011, Paul Epstein, a researcher at Harvard Medical School’s Center for Health and
Global Environment, and others published a study entitled Full cost accounting for the life cycle
of coal. The study notes a number of externalities which are currently not factored into the true
cost of coal, such as: government subsidies; decreased property values; loss of biodiversity; and
loss of infrastructure resulting from coal mining. The bar graph to your right was also taken
from that study; Epstein et al.
assert that the true cost of coal
would be almost 400% higher if
all of coal’s externalities were
reflected in its cost.
Question 5: By the way,
which primary energy source
accounted for almost half of the
electricity generated in the
United States in 2009?
a.
3
Natural gas
See Jonathan Macey, The Limits of Legal Analysis: Using Externalities to Explain Legal Opinions in Structured
Finance, 84 TEX. L. REV. 75, 79 (2005) (“An externality occurs when private activities have an effect on third parties
who receive no compensation for the effects generated by these private activities.”)
b.
c.
d.
e.
Coal
Petroleum
Water
None of the above
Answer to Question 5: Choice b is the correct answer.4 According to the United States Energy
Information Administration (“USEIA”), 44.5% of all electricity generated in the United States
came from coal, with natural gas generating 23.3% of our electricity, petroleum producing 1.0%
of our energy and water producing 6.8% of our energy. This is one reason why focusing on the
long-term externalities of coal usage in electricity production is so important. The USEIA piechart reproduced below provides of graphic representation of these facts.
B.
THE COMPONENTS OF THE (CURRENT) MODERN ELECTRICAL SYSTEM:
GENERATION, TRANSMISSION AND DISTRIBUTION
4
United States Energy Information Administration, Form EIA-923, “Power Plant Operations Report.”
Question 6: In the Generation phase, certain types of power plants operate more than others.
There are “must run” plants, which usually have low operating costs, are usually fueled by a coal
or nuclear source and cannot be taken online or offline quickly. There are also “peaking” plants,
which have higher operating costs, are usually fueled by natural gas or diesel and can be taken
online or offline relatively quickly. What is the reason for these distinctions?
a.
The type of fuel used to generate electricity may be more or less expensive;
factoring in a fuel’s cost-effectiveness may determine which plants make the most business sense
to run
b.
Demand for electricity is varies widely, both daily and yearly
c.
Power plant operators have to balance using the most cost-efficient plant with the
need to make sure electricity can be taken online or offline quickly, due largely to the fact
electricity cannot be stored easily
d.
All of the above
Answer to Question 6: Choice d is the correct answer.5 Choices a and b are both true. Choice
c summarizes the cost-benefit analyses which power plant operators must take into account in the
real world. If the generating plant did not have a duty to the public to provide stable electricity,
it would likely choose to only utilize the “must run” plants, as they are the cheapest. On the
other hand, if a generating plant did not have to worry about cost, it would likely always run a
“peaking” plant, as this type of plant can generate electricity in a more flexible manner, but is
more expensive. These distinctions indicate a balancing between cost-efficiency and the duty to
provide a stable source of electricity to the public.
Image Left: A “must run” coal plant in California.
Image Right: A “peaking” natural gas plant in Michigan.
Question 7:
In the
Transmission
phase,
electricity is
carried from
its generation
5
See generally National Renewable Energy Laboratory, Solar Power and the Electric Grid, available at:
http://www.nrel.gov/csp/pdfs/45653.pdf
source along “high voltage” lines throughout a city, state or country. What does it mean when
our text discusses the possibility of moving away from the current Transmission paradigm
toward a future paradigm of “distributed generation”?
a.
“Distributed generation” refers to more effectively coordinating electricity
production at a central power plant, thus making the current Transmission paradigm much more
efficient
b.
“Distributed generation” refers to a system of federal and state government
incentives encouraging small business to enter the utility sector, thus reducing the role of the
centralized Transmission paradigm
c.
“Distributed generation” refers to the process of developing smaller scale power
plants for more localized and “on-site” generation of power, thus reducing the role of the
centralized Transmission paradigm
d.
“Distributed generation” refers to a progressive system of transmitting electricity
to those locations which most urgently require it, thus suggesting major modifications must be
made to the current Transmission paradigm
Answer to Question 7: Choice c is the correct answer.6 “Distributed generation” is a foil to the
current centralized Transmission paradigm. While the current paradigm takes advantage of
excellent economies of scale, its need to develop infrastructure to transmit electricity over long
distances has negative social and environmental consequences. In contrast, “Distributed
generation” is a de-centralized Transmission model, reducing the amount of energy lost in the
transmission process. The
image to your right
contrasts
the
two
paradigms.
Question 8:
6
Apple, Inc.
The Energy Policy Act of 2005 defines “distributed generation” as “an electric power generation facility that is
designed to serve retail electric consumers at or near the facility site.” Energy Policy Act of 2005, Pub. L. No. 10958, § 917(g)(3), 119 Stat. 594, 864 (2005).
was recently issued permits to begin construction of a 171-acre solar farm which will completely
power a Maiden, NC data center. The center will not rely on any coal and nuclear power sources
for its energy needs. The company also has similar facilities in Cork, Ireland; Elk Grove,
California and Austin, Texas. These facilities are concrete examples of “distributed generation”
in action: True or False?
Answer to Question 8: True. The Maiden, NC data center, as well as the facilities in Ireland,
California and Texas all embody the concepts fundamental to “distributed generation.” These
facilities generate and transmit energy locally; the Maiden, NC data center will generate the
electricity locally (i.e. through on-site photovoltaic panels) and then transmit the energy through
its localized infrastructure.7
Image Right: An aerial view of Apple’s Maiden, NC data center, a facility embodying many
concepts associated
with distributed
generation, an
electricity paradigm
which is quickly
gaining steam.
7
See generally Suzanne Goldenburg, “Apple hopes to turn green with solar power data centre”, The Guardian,
November 23, 2011, available at http://www.guardian.co.uk/environment/2011/nov/23/apple-green-solar-datacentre.
Question 9: The final phase of the modern electrical system, Distribution, doesn’t seem to be
much different than the second phase of that system, Transmission. How can these two phases
be distinguished from one another?
a.
Transmission refers to the process of transferring power from Generation to high
voltage lines; on the other hand, Distribution refers to the process of using transformers to reduce
the voltage of transmitted energy for use in homes and businesses
b.
The Distribution phase encompasses functions that Transmission does not, such
as billing customers, providing customer service and meter reading
c.
Some smaller utilities only operate a Distribution phase by purchasing
“wholesale” power from other utilities. Thus, these utilities have a separate Distribution model
and do not involve themselves with either Generation or Transmission
d.
Both a & b
e.
All of the above
Answer to Question 9: Choice e is the correct answer.8 While “transmitting” and “distributing”
energy may be semantics to some degree, the phases are distinguishable. Choice a provides the
clearest example of the technical differences between Transmission and Distribution. Choice b
illustrates the broader nature of the Distribution phase when compared to Transmission, with the
former including many administrative tasks the latter does not. Choice c distinguishes the two
phases by noting that certain utilities may engage only in Distribution. As all these answer
choices illustrate the differences between Transmission and Distribution, choice e is the best
answer.
Image Right: In 2007, Debra Brooks
and Jennifer Ryan realized they
needed to improve productivity by
bringing consistency and efficiency to
distribution workflows at Southern
California Edison, one of the United
States’ largest utilities. The graph to
the right is one of their preliminary
logistical models showing how to do
so, focusing mainly on software
integration and streamlining/avoiding
repetitious data entry.
8
See Edison Electric Institute, Electricity Distribution, available at:
http://www.eei.org/ourissues/electricitydistribution/Pages/default.aspx
C.
MAJOR PLAYERS IN THE ELECTRICITY SYSTEM
Question 10: The phrase “electric industry” is a broad term and does not shed much light on
how the electric industry is structured. Is there a recognizable structure within the “electric
industry”? Are there entities and organizations which tend to dominate the industry?
a.
No. There are simply too many individuals and entities within the electric
industry to identify any basic structure
b.
Yes, the electric industry is comprised of five major entities (Investor-Owned
Utilities, publicly-owned utilities, federal agencies, rural electric cooperatives and power
marketers)
c.
Yes; federal and local governments dominate the industry, typically producing
over 75% of all of the United States’ energy
d.
The mergers of traditional electricity companies with gas companies, energy
marketers and a wide range of other businesses are redefining the once “traditional” structure of
the industry
e.
Both b & d
Answer to Question 10: Choice e is the correct answer. Choice b identifies the entities which
have traditionally dominated the electric industry. Choice a is overbroad; there are recognizable
entities and organizations which provide the industry with some identifiable structure. Choice c
is simply wrong; in 1998, investor-owned utilities produced 68% of the United States’
electricity, with local and state utilities producing approximately 17% of the nation’s energy.
Choice d is also correct, as the deregulation of the electric industry is resulting in a vast array of
new and unprecedented business structures. As both choices b and d are correct, choice e is the
most appropriate answer.
Image Left: Duke Energy, headquartered in
Charlotte, NC, serves Ohio, Kentucky, Indiana, North
Carolina and South Carolina. It is an Investor-Owned
Utility (“IOU”) with around 4 million customers and
$49 billion in total assets.