![]() ![]() Purchases and sales of high-voltage power between utilities, known as the bulk power market, have grown substantially since 1970. Some of these, such as Los Angeles and San Antonio, generate their own power, but most only resell power purchased from others. The remaining users were served by one of 2,011 municipal or 953 cooperatively owned entities. In 1990, 267 corporate utilities generated 76 percent of America's electricity (down from over 2,000 such firms in the twenties) and served 77 percent of final users. These interconnections allow emergency support, coordination of operations, and purchases of low-cost power by higher-cost utilities. Most control areas are interconnected with adjacent control areas. It (or several utilities) is responsible for the operation of a control area, within which it must maintain reliability and dispatch generation economically. It holds a monopoly granted by government in return for which it has a legal obligation as a public utility to serve all customers in an area. Not surprisingly, given these characteristics, the typical electricity supplier is a large integrated owner of generation, transmission, and distribution. Generation must be operated as a network, centrally dispatched (usually by computer programs) to meet both predictable changes and unforeseen contingencies. Reliable supply, therefore, requires operating generators to be backed up by "spinning reserve" units that can begin producing instantaneously. Failure to adjust production to demand can cause brownouts or blackouts over a large region. Second, because electricity cannot be stored cheaply, it must be produced instantaneously on demand. Because a single high-capacity line minimizes both capital costs and losses to electrical resistance per unit of power carried, transmission and distribution are natural monopolies. First, both high-voltage transmission and low-voltage distribution are most economically performed by a single line or a single network of lines. ![]() Two characteristics of electric power make utilities different from most other industries. Households consumed 34.6 percent of delivered electricity. These users spent $178.2 billion for it in 1990. Newly generated power is transmitted at high voltage and distributed to residential and business users at lower voltage. In 1991, 68.2 percent of electricity was generated by fossil fuel, 21.6 percent in nuclear power plants, 9.8 percent by hydroelectric plants, and 0.4 percent from sources such as wind, solar, and biomass conversion. Under pressure the steam turns a turbine, whose rotation induces an alternating current. Most electricity in the United States is generated by steam from burning fossil fuels or from nuclear fission. ![]()
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