The Electric Grid

How electricity moves across the US
By Valentin Uzunov

When you flip on the light switch tonight, ponder for a second, do you know how that electricity got there and who makes sure that it does virtually without fail?. Prior to writing this post, I had never given it much thought, beyond electricity is generated at some source, carried by wires to utility companies for electricity distribution, which then feeds it my house at a price of a cents per kilowatts per hour. Indeed it is something like that but with far more complexity.

Prior to 1880s coal gas was the main source of energy delivered to people's homes. A network of pipe connected gas utility companies to commercial buildings and residences. Like, electrify it was primarily used for heating and lighting. Once electricity provision became economically viable at scale, electric utilities quickly monopolized power generation, distribution, and system management assets. About 40 years later, utility companies formed joint-operations to share peak load coverage and backup power, making business more efficient and cost-effective network. These companies remained unregulated until 1934 with the passing of the Public Utility Holding Company Act. But it was not until the Energy Policy Act of 1992 that electric generation companies were required to provide open access to their network by the Government. A subsequent restructuring occurred which has given rise to the modern electric grid in the US.

The transmission grid for North America is overseen by the North American Electric Reliability Corporation (NERC), whose role is to ensure the reliability and smooth performance of the interconnected electrical system. The 'system' components are the control systems at generation and transmission facilities and the transmission wiring connecting them. Collectively this system is called the bulk power system (BPS)(Figure 1,2,3,4). Additionally, NERC also promotes continuous improvement of operations, and monitors resources, events, and actions which can impact the BPS reliability.

Figure 1. The infrastructure for transmission. The transmission lines can be further subdivided ranges of high-voltage transmission lines, for various industrial purposes. 

Figure 2. The renewable energy power generation accounts for only 12% of the total US production in 2016
Figure 3. Fossil Fuels remain US main source of energy, account for 78% of total US production in 2016

In the US, the BPS is made up of three major interconnections (aka wide area synchronous grids ): Eastern Interconnection, Western Interconnection and the Electric Reliability Council of Texas (Figure 3). An 'interconnection' is the physical structure that composes the grid: generating stations, that produce electrical power, step-up and step-down transformer stations, and the high-voltage transmission lines. The Eastern Interconnection is controlled by 6 Regional Reliability Entities (RRE) which oversee and manage 31 balancing authorities. The Western Interconnection has 3 RREs who manage 34 balancing authorities, and the Electric Reliability Council of Texas (ERCOT) which covers most Texas, consists of only one balancing authority. Rather unusually ERCOT also acts as its own RRE (Figure 4 and Figure 5). Because electricity demand and supply varies across different regions and time zones, the distributed interconnected grid allows for in real time management of virtually all electricity produced in the USA. The benefits are: efficient pooling of total generated power which reduces cost for everyone; pooling of total demand resulting in significant equalizing effects on grid, reducing cost from inefficiency and in transmission; and common provisioning of reserves, resulting in cheaper reserve power costs; electricity trade, formation of independent and mutually exclusive interests, balancing authorities enabled the formation of an electricity interstate market.
Figure 4. The authority overseeing the entire transmissions and generation aspect of the electric grid is the North American Electric Reliability Corporation which is made up of three interconnections with their represenative Regional Reliability Entities

Figure 5. The balancing authorities which directly manage power distribution and interstate electrical market exchanges

There are two types of balancing authorities, Independent System Operators (ISO) & Regional Transmission Organizations (RTO). Both are independently responsible for maintaining system balance between production and consumption and as marketplaces for electricity. The differences between these entities can be subtle, but very crudely, ISOs only manage the distribution network to consumers, while RTOs have the added responsibility for managing the transmission network as well. It is not uncommon for an ISOs to be an electric utility company. This is because balancing authorities are regulated by the Federal Energy Regulation Commission (FERC). FERC was established as an independent regulatory agency within the Department of Energy following the passing of the Department of Energy Organization Act in 1977. FERC has exclusive jurisdiction over the transmission of electric energy in interstate commerce, the wholesale of electric energy through interstate commerce, and overall facilities for such transmission or sale of electricity, among other things. Similarly for oil and gas, and only answers to Congress.

A key constraint of electrical power, compared to oil or gas, is storage, thus it must be used immediately as it is generated. As such the production of power must be well managed so that production balances demand, at all times of the day. In 1996 FERC issued orders 888 and 889 which defined the fundamental purpose of balancing authorities as electricity marketplaces, independent of any business interest, purely for the sale or purchase of electric power by utilities. Prior to 1996, the supply of energy to customers was owned and controlled by single entities who often owned the entire generation, transmission, and distribution pipeline. As a result, consumers had little to no choice regarding their electricity provider and utility companies could set whatever rates they wanted. Order #888, led to the unbundling of an electric utility operation, separating generation and transmission from distribution, in the hope of incentivizing market competition. It worked, and ISOs and RTOs formed voluntarily establishing the electricity market. The market allows for electricity to be traded like any other commodity, with long-term contracts and short-term power exchanges. Today's utility company does not need to actually produce any electricity but rather can buy electricity from the market and resell it to consumers. More traditional utility companies generate some portion of their electricity and buy the rest to meet consumer demand. While the FERC makes sure all weaving and dealing are by the books after everyone shares their extra generation capacity toward a combined power pool.

Understanding how an electrical system operates is important because it leaves you with a profound respect for the electricity we consume and have access to. However 900 million around the world don't have access to energy. Green Empowerment is one of too few non-government organization which facilitate the developed on locally owned and sustainable electric grids in rural communities. Access to electricity provides light to homes, schools, and hospitals. Given the reliability of the US electric grid and the pervasiveness of electricity based technology, it is not strange to take it for granted, but maybe now you too will be reminded of the luxury it really is, next time you flip a switch.