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The electric grid ("grid") is the system of power lines that carry electricity from where it is generated to consumers. Because electricity is not always used where it is produced, due the location of power plants or power sources, transmission lines are needed to carry that electricity to consumers. There are three factors the U.S. Department of Energy (DOE) considers to be the most important characteristics of an energy grid: reliability, resiliency, and security. Reliability is the ability to get electricity where and when it is demanded. Resiliency is the ability for the grid to be able to recover from severe weather and other detrimental events. Security refers to the ability for the grid to withstand cyber and physical attacks.

Overview[edit]

How the electric grid works[edit]

In simple terms, the electric grid works through the following six steps.^[1][2][3][4]

1. Power is generated in a power plant. These power plants can be fueled by coal, crude oil, natural gas, hydropower, solar, wind, geothermal, or biofuels.
2. That power is transferred to a power substation where the voltage is increased so the power can move along transmission lines. The higher the voltage, the less electricity is lost during transmission.
3. Transmission lines carry electricity across long distances to neighborhood substations.
4. The voltage of the electricity is decreased (stepped down) in neighborhood substations.
5. Distribution lines carry electricity to homes, schools, and businesses.
6. Transformers on electricity poles step down the electricity once again for use in homes and other buildings.

The graphic below shows these steps along with the kilovolts and volts (kV and V respectively) required at each point in the process.

An example of a typical North American energy grid
Source: Federal Energy Regulatory Commission

Supply and demand[edit]

Power plants using traditional fuels such as coal, natural gas, and crude oil can more easily increase the supply of power when demand for electricity increases than plants using variable sources such as solar and wind. Additionally, electricity storage technology is not advanced enough for most areas to rely completely on variable sources of electricity. Technology is being developed to make it easier to store more electricity, and, in part, to increase the use of renewable energy. The electrical grid can store a certain amount of electricity, which is known as the "reserve margin." Grid operators manage this reserve margin, in addition to monitoring electricity demand, supply, and what type of energy is being used to generate electricity.^[4][4]

History[edit]

The electricity transmission system in the United States has been built over the last 100 years as interconnections were built between local electric providers. There has always been a debate over who should provide associated services such as electricity transmission grids: the private market, the government, or some combination of the two. During the 1970s, only public utilities, which are often government monopolies or companies regulated by a governmental public utility commission, were allowed access to the electricity grid. The calls to further increase government regulation of the transmission grid increased in the 1970s as proponents argued that providing affordable, consistent power was too important a task to be left to the market. These calls were not answered, however, and in 1996 new rules were created that shifted the grid to a more market-oriented system. This system, known as wholesale electricity markets, allowed more competition between electricity providers because non-public utilities could now access the transmission grid. According to the Department of Energy (DOE), this shift has benefited consumers, because electricity can more easily be transmitted to where it most demanded, keeping prices from rising quickly when demand spikes. This new system has caused problems, however, because it has strained the transmission infrastructure, which was not built to accommodate such a large and diverse group of utilities. According to the DOE and many other energy experts, the United States is facing widespread, necessary infrastructure improvements, including electricity infrastructure. The DOE has warned that if infrastructure improvements are not made, the resulting complications could seriously threaten the economy. While there have been large investments in energy production facilities, these investments have not been matched in the energy transmission system.^[5][6][7]

Microgrids[edit]

Microgrids are smaller, localized electric grids that can be either connected or disconnect from the traditional electrical grid and still provide electricity to the consumers on that grid. Microgrids provide electricity through a combination of electricity storage facilities, solar panels, and backup generators (or other types of distributed energy). Distributed energy technology, or the ability generate power where that power is consumed, has contributed to the growth of microgrids. One of the benefits of microgrids is that they can provide a reliable and resilient source of electricity during severe weather. Microgrids can also in some cases be cheaper, have a smaller environmental impact, or provide localities with more independence. Supporters argue that microgrids should be more widely adopted for these reasons. Opposition to microgrids has generally consisted of utilities and other electricity providers who face reduced demand for their services if microgrids grow. Opponents primarily cite the safety hazards that could be posed to utility workers if a microgrid continues to produce power during a blackout on the traditional grid and the utility workers attempt to get the traditional grid running again. The occurrence of microgrids producing power when the traditional energy grid is offline is known as islanding and is usually considered one of the benefits of microgrids. During islanding, the equipment that usually automatically reconnects to the grid can be prevented from reconnecting due to microgrids. Opponents may also cite the difficulties in disconnecting from the grid. New technologies have made these points less salient, however.^{[1][8][9][10][11]}

Reliability[edit]

Reliability[edit]

A reliable source of electricity is vital to a modern economy. A reliable electrical grid is one that can provide electricity without interruptions when demand is high. In the United States, reliability standards are set and enforced by the North American Electric Reliability Cooperation (NERC), a nonprofit organization under the Federal Energy Regulatory Commission that has regulatory power across the United States, Canada, and Mexico. NERC's "mission is to assure the reliability of the bulk power system in North America...[for] more than 334 million people." Bulk power systems are the facilities and systems needed to generate and transmit energy reliably.^{[12][13][14][15][16]}

NERC's 2014 assessment of the reliability of the North American power system found that due to consumer preferences and environmental regulations, the United States is increasingly relying on natural gas to power the electrical grid. This means that power suppliers must work to ensure that reliability is not affected as the power mix changes. The report also found the following:^[17]

• During peak demand, natural gas had become the most prominent source of energy and this trend is expected to continue.
• Reserve margins, or the capacity to generate electricity available to meet anticipated demand, have decreased. At the same time, expected future demand is growing slower than expected.
• Environmental regulations in both the United States and Canada are leading to the retirement of coal-fired power plants, which increases the dependence on other energy sources.
• The United States is shifting away from coal-fired power plants and towards electricity generated by natural gas, wind, solar and nuclear energy. Because wind and solar can only supply energy intermittently, dependence on natural gas will increase. This means power suppliers will need to ensure that natural gas-fired power plants can handle the increased load.

This report did not account for the U.S. Environmental Protection Agency's (EPA) upcoming Clean Power Plan, which is expected to transform the energy sector significantly. This study did account for the expected effects of new mercury and air toxics standards (MATS), which are also set by the EPA.^[17][18]

Resiliency[edit]

Resiliency[edit]

The resiliency of the grid, or the ability for the grid to recover from severe weather and other detrimental events, is important because severe weather is the leading cause of power outages in the United States. Power outages cost the U.S. economy an estimated $18 billion to $33 billion from 2003 to 2012. According to an August 2013 report from the Obama administration (from which the previous figures were taken), climate change has also made grid resilience an increasingly important issue as the number of severe weather occurrences has increased. The increase in weather-related energy outages and the costs of those outages can be seen in the graphs in this section. Additionally, the nation's energy grid is aging: over 70 percent of the nation's transmission lines are over 25 years old and the average age of a power plant in the country is 30 years.^[19]

The American Recovery and Reinvestment Act of 2009 allotted $4.5 billion to grid improve the resiliency and security of the electrical grid. This funding was used to install automatic sensors and invest in the technology to store electricity. Automatic sensors alert grid operators to mechanical failures in the grid, while better energy storage systems allow more electricity to be stored for longer periods of time.^[19]

According to the Obama administration report, a more resilient grid can be achieved through the following steps.^[19]

• General grid maintenance: servicing electricity poles and preventing vegetation from affecting the grid
• Hardening strategies: upgrading infrastructure with stronger materials and elevating substations
• Increasing flexibility: increasing transmission line capacity and energy storage capabilities
• Increasing awareness: installing sensors and other technology to better alert utilities about grid outages
• Improving grid control: deploying technology that allows sections of the grid to be cut off when outages occur, so the outages do not spread
• Improving software: developing new software and tools that inform grid operators when equipment requires maintenance

Security[edit]

Security[edit]

Among the top five challenges facing the energy grid, according to the U.S. Energy Information Administration (EIA), is securing the electrical grid from cybersecurity and other attacks. Several different tactics can be deployed to harm an electrical grid: nuclear weapons with an electromagnetic pulse, an electromagnetic pulse created with common electric equipment, cyber warfare, and physical attacks. According to Secure the Grid Coalition, "an ad hoc group of policy, energy, and national security experts, legislators, and industry insiders" nuclear attacks that include an electromagnetic pulse are considered a real threat to the energy grid. The report specifically cites Iran and North Korea as who countries that pose this threat. Smaller strikes using an electromagnetic pulse are possible too. The sun can also have the same effect as an electromagnetic pulse if a solar flare were to hit the earth in the correct manner. Cyber attacks on the U.S. energy grid have been increasing in total number and sophistication. A cyber assault on the electrical grid would be the fastest way to disrupt the U.S. economy and attacks have been perpetrated by nation states and terrorist groups. Physical attacks, using guns or other weapons also present a hazard. In April 2013 such an incident occurred near San Jose, California. In that instance, yet-apprehended assailants used automatic rifles to destroy transformers. While no blackout occurred, the damaged equipment took almost a month to repair.^{[3][20][21][22]}

Siting[edit]

Siting[edit]

Energy siting, also known as energy facility siting, is the entire process, from start to finish, of planning, permitting, and constructing energy facilities, including transmission lines, pipelines, and power plants. Until recently, state and local governments have primarily regulated the siting of energy facilities (except facilities located on federal lands). Power disruptions and outages have increased public attention on the reliability of the U.S. energy grid, leading to an expansion of the federal government's role in energy siting.^[23][24][25]

The steps necessary to site an energy facility vary by state. A study by the Edison Electric Institute, an association of electric utility shareholders, reviewed energy siting regulations in each state. The report can be found here. Some of the steps required by states to site energy facilities include obtaining state and local zoning permits, holding public comment periods and/or hearings, and conducting environmental reviews.^[26]

Within the Energy Policy Act of 2005 (EPAct) was a provision requiring the U.S. Department of Energy (DOE) to produce studies every three years on congestion within the U.S. electrical grid. The first of these congestion studies (2006) identified several areas in the United States where approval for energy siting projects wasn't occurring, which resulted in congestion within the energy grid. To remedy this problem the DOE proposed two National Interest Energy Transmission Corridors, to be permitted by FERC, that were later invalidated by a federal court. National Interest Energy Transmission Corridors are areas that DOE has designated as "experiencing … transmission capacity constraints or congestion that adversely affects consumers."^[27]

Role of FERC[edit]

EPAct also authorized the Federal Energy Regulatory Commission (FERC) to take on a role as the "backstop siting authority in designated transmission corridors." This authorization meant that FERC could issue energy facility siting permits for facilities located within National Interest Energy Transmission Corridors, but only if one of three conditions had been satisfied:^[25]

1. The facility applying for a permit did not qualify for the necessary state permits;
2. The state had withheld approval of the permit for more than one year; or
3. The state did not have the authority to issue the permit.

A decision by the federal court of appeals to invalidate the proposed National Interest Energy Transmission Corridors led some legislators to call for new legislation to give FERC the express power to permit energy facility siting. Advocates for an increased federal role in energy siting include former FERC Chairs Joseph Kelliher (2005-2009) and Jon Wellinghoff (2009-2013).^[28][29]

Some renewable energy advocates, meanwhile, have asked the federal government to increase its role in energy siting permitting as a means to increase the production and use of renewable energy. According to the Congressional Research Service, any action from Congress regarding increased federal energy siting permitting would likely fall under the Commerce clause. One group opposed to FERC taking on a larger role in regulating energy facility siting is the National Association of Regulatory Utility Commissioners (NARUC). In March 2009, NARUC released a resolution asking Congress to limit FERC's ability to regulate energy siting.^[25][30]

History[edit]

Historically, state-authorized and regulated monopolies built and maintained the energy facilities that generated and sold electricity to consumers. Most of these companies, and thus most energy transmission systems, remained within states. As these transmission systems expanded and became interstate systems, however, the federal government expanded its role with the Federal Power Act (1920) and began regulating "wholesale electric power transactions" and interstate electricity transmission. As demand for electricity increased, small, local power distributors increased their connectivity among one another to support the increased demand, causing operators to look for ways to share costs and increase reliability. This integration continued throughout the 20th century. The federal government maintained its control over interstate transmission and began its own transmission systems (with the advent of the Tennessee Valley Authority in 1933) and states continued to regulate increasingly connected local distributors, until the Energy Policy Act of 2005 altered the federal-state regulatory relationship.^[25][31]

Regulation[edit]

Governmental regulation[edit]

The electrical grid, electricity prices, the type of energy used to generate electricity, and many other factors related to energy use are regulated by a mixture of federal, state, and local government entities with significant overlap between private companies and government agencies. For example, much of the electric grid is owned by for-profit utility companies (a utility is any company that generates, transmits, or sells electricity). These for-profit utilities are regulated by independent agencies known as Public Utility Commissions. There are also public utilities, which have government agencies regulating the electricity prices and practices of those utilities.^[19]

Below is a list of the major regulatory agencies that set policy related to the energy grid along with a short description what each agency is responsible for.^{[4][19][32][33][34]}
Federal

• Department of Energy (DOE): in addition to housing FERC, the Department of Energy offers technical assistance to utilities when new U.S. Environmental Protection Agency (EPA) regulations must be implemented.
• Federal Energy Regulatory Commission (FERC): the division of the DOE that is primarily responsible for regulating the energy grid. FERC is responsible for the following items.
  • Regulating interstate electricity generation and transmission, energy facility siting (including pipelines), and hydroelectric projects
  • Permitting new transmission lines
  • Settling mergers and conflicts among operators and regulatory agencies

State

• Public Utility Commissions (PUC) or Public Service Commissions (PSC) are legislatively appointed, independent agencies that regulate electricity companies and utilities. PUC and PSC set electricity prices and must approve the purchase of new electricity generators by utilities and electricity companies. PUCs/PSC also must approve any new transmission lines.

Local

• Municipal utilities are publicly owned utilities that provide electricity for a city. This type of utility can either contract with companies that generate electricity, or it can generate its own electricity. About 62 percent of all utilities in the United States were publicly owned in 2010.

Private groups[edit]

The electricity market is heavily regulated with significant overlap between private companies and the government. Below is a list of the major private groups and companies that set policy related to the energy grid along with a short description what each group is responsible for.^[19]

• Independent System Operators (ISOs) "facilitate competition among electricity suppliers and provide access to transmission by scheduling and monitoring the use of transmission lines."^[4]
• Regional Transmission Organizations (RTOs) "facilitate competition among electricity suppliers and provide access to transmission by scheduling and monitoring the use of transmission lines."^[4]
• The National Association of Regulatory Utility Commissioners (1889) is a nonprofit organization that represents "state public service commissions who regulate the utilities that provide essential services such as energy, telecommunications, water, and transportation." This association lobbies on behalf of utilities for and against certain utility policies.^[35]
• Rural Electric Cooperatives (RECs) are nonprofit organizations that are "owned by their customers and members," and are usually in rural areas. These cooperatives provide electricity by either distributing it or transmitting and generating it.^[32]
• Investor-Owned Utilities (IOUs) are for-profit businesses that typically own all parts of the electricity production process, from generation to delivery. IOUs serve the majority of customers in the United States—68 percent as of 2010.^[32]

Major regulation[edit]

• The Federal Power Act (1920) created the Federal Power Commission, which later became the Federal Energy Regulatory Commission. The Federal Power Commission was given the authority to regulate interstate power transmission and wholesale electricity. The law put the Federal Power Commission in charge of hydropower projects, reservoirs, and transmission lines that allow for power development from any navigable waters. The original law can be found here.^[36][37]

• The Energy Policy Act of 2005 (EPAct) was signed into law by President George W. Bush in August 2005. EPAct was the first comprehensive national energy legislation in more than 10 years. The act established renewable fuel standards, mandating a two-fold increase in the country's use of biofuels, and provided energy-related tax incentives totaling $14.5 billion.^[38]

• The American Recovery and Reinvestment Act of 2009 (ARRA) provided loan guarantees and tax credits to incentivize the development of renewable energy and transmission projects. ARRA directed the DOE to create National Interest Energy Transmission Corridors in areas "where renewable energy may be hampered by lack of access to the grid."^[25][39]

Ballot measures[edit]

• Alabama Utilities in Tuskegee, Amendment 6 (2008)
• Rhode Island Question 7, Emergency Water Interconnect Bonds (2004)
• Montana Electrical Deregulation Changes, IR-117 (2002)
• Montana Hydroelectric Security Act, I-145 (2002)
• Colorado Amendment 37, Renewable Energy Sources for Utilities Initiative (2004)
• Oregon Measure 90, Returns on Investments for Utilities Referendum (2000)

Transmission[edit]

Transmission[edit]

In order for electricity to get from where it is generated to consumers, it crosses through a series of transmission lines. Transmission lines are long cables that carry electrical currents either above or under the ground over large distances. When power is generated, it has a very high voltage—too high for use in homes and businesses—and must be fed through a system of substations that lower the voltage. These substations are often found in between power plants and places where electricity is consumed, e.g., homes or schools. The U.S. Department of Energy (DOE) has likened the transmission system in the United States to an "interstate highway system for wholesale electricity commerce." Some power is lost during transmission as the current (or flow of electricity) changes. The U.S. Energy Information Administration (EIA) estimates that 6 percent of all electricity transmitted in the United States is lost each year during transmission. As of 2002, according to the DOE's most recent transmission study, over 150,000 miles of transmission lines linked electricity providers across the United States, even reaching into Canada and Mexico.^{[5][40][41][42][43]}

Electricity transmission systems in North America

As the graphic in this section shows, there are three electricity transmission systems in North America: the Western Interconnection, ERCOT Interconnection, and Eastern Interconnection. There are 10 regional councils that manage the 140 local control areas within this network. Just as bottlenecks and congestion on highways have costs, so do bottlenecks and congestion with electricity transmission systems; congestion can lead to higher energy prices and power outages. In a 2002 study, the DOE found bottlenecks and congestion across 50 of the 186 transmission paths in the Eastern Interconnection block. In the Western Interconnection block, the DOE identified 37 points of congestion out of 106 transmission paths. The DOE did not identify congestion in the ERCOT Interconnection block. In California, one path alone was estimated to have cost consumers $222 million during a 16-month period ending in December 2000 due in part to higher energy prices. The cost of transmitting electricity is less than 10 percent of the final cost of electricity.^[5][44]

Energy in the 50 states[edit]

Click on a state below to read more about that state's energy policy.

See also[edit]

• 

  Energy policy in the United States

• 

  Fracking in the United States

• 

  Glossary of energy terms

Footnotes[edit]

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