EGEE 101
Energy and the Environment

Your Electric Bill & Energy Choice

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These sit on the outside of many of our homes and apparently at least once every 2 months someone comes and reads the dial (I have never seen this elusive individual).On the bottom, there is a wheel that spins. The faster it spins the more electricity you are using. Try looking at 3:00 AM do you think you will be using more, the same or less electricity than noon? We are now moving to digital smart meters that can be accessed remotely.

When you are a homeowner, a trivial thing, like the temperature, impacts you where you notice it the most, in your wallet (or purse). If you have electric heating and cooling in your home (I have 1,600 square feet of finished living area), it is a considerable expense. Waiting for the dreaded electric bill in February is just one of the many joys of homeownership awaiting you! We have seen that our use of appliances requires energy.

In the past, the electricity market was regulated. This means that instead of using market forces, the price of electricity was controlled by a regulatory authority. If you moved into State College, home of University Park campus and Beaver Stadium, before 1996, you would have had no choice other than to purchase your electricity from Allegheny power. They, in return, had a guarantee of a catchment area for customers. To ensure that this would not be a monopoly (a single provider who can set their own price); the maximum price that they could charge was regulated. Allegheny Power, being a private company, still needed to make a profit for the shareholders and have the money to meet the environmental regulation expenses (more on this in Unit 3). Many of the states looked at their neighbors and wondered why their constituents were paying more than the constituents of other states. Deregulation opened up the generation component of electricity so there is now competition (also with natural gas). Competition helps to lower prices and is the American way! (Well, the US still regulates milk prices!) Most of the US now has a deregulated electricity market. Unfortunately, this deregulation also caused challenges related to electricity planning, delivery, reliability, and emissions. The management of electricity generation and delivery is regionally controlled by either a regional transmission organization (RTO's) and often cover multiple states or parts of states. Or are locally controlled in regulated systems.

Map of regulated systems in the US
Click for a text description.
  • ISO New England = Conneticut, Massachusets, Vermont, Rhode Island, Maine
  • New York ISO = New York state
  • PJM Interconnection = Pennsylvania, New Jersy, Ohio, West Virginia, Delaware, Maryland, Viginia, Eastern Kentuck, a small part of NE North Carolina, and small parts of Indiana and Illinois
  • Midcontinent ISO = Minnesota, Wisconsin, Michigan, eastern North Dakota, Most of Iowa, eastern Missori, most of Arkansas and Louisiana, western Mississippi and a very small part of south eastern
  • Texas Electric Reliability Council of Texas = vast majority of Texsas
  • Southwest Power Pool = Most of North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, north-west Texas, and eastern New Mexico
  • California ISO = vast majority of California
Credit: Homeland Infrastructure Foundation-Level Data (2019)

Electricity Generator Choice

We have a choice of electricity generators to choose from. Listen or read my explanation below

Listen to my audio explanation.

Or read

In Pennsylvania when you move to a new area like I did coming to State College essentially whoever provided your electricity was more or less a controlled monopoly. I had to go through Alleghany Power, they were the only people that could sell me electricity. Now we have an electric choice. I can decide how I would like the electricity made. Now it is somewhat of a con because if I say buy wind power there is no way of getting those electrons from wind delivered to me. It is just electricity that gets dumped into the system. And I will take out the appropriate quantity of electricity. And so it is not quite right in that you are choosing how your electricity it made. But you are choosing how components of the electricity are made. And of course, you can either go with the cheapest, which is generally coal, or you can go environmentally sensitive and decide to go with wind. Either way, what you are picking is how the electricity is made. The delivery, and the transportation across the country, and delivery to your home is, however, done via the existing entity, in this case, Alleghany Power. Now, this was done for several reasons. One if which is because with more choice and competition it is hoped that the electricity price will be reduced. And, in fact, they certainly will be when the transition period payments go away. And so that is certainly going to help lower the cost of electricity. Which currently runs about six or seven cents per kilowatt-hour. 

Since this audio was produced, the cost has increased to around 13 cents per kilowatt-hour.

Electricity Choice Map

Those states in blue are in deregulated (competitive) states where you have energy choice for your electricity generation. The other states are in regulated systems where you do not have the choice.
Click for a text description.
The following states are deregulated: Oregon, California, Montana, Texas, Illinois, Michigan, Ohio, Pennsylvania, Maryland, Deleware, New Jersey, New York, Massachusetts, Connecticut, Rhode Island, New Hampshire, and Maine
Source: EPA

One electricity bill, but three charges

Your electricity bill currently consists of 3 components: generation, transmission, and distribution. Bottom line is that competition and choice drive down prices or give the ability for green options (of course, at a cost!)

Generation here is shown as a fossil fuel plant but it could also be renewable or nuclear energy.
Click for a text description.
Infographic of how electricity is generated, transmitted, and distributed
  • A power plant generated electricity and sends it to the transformer
  • The transformer steps up voltage for transmission and it is sent to the transmission lines
  • The transmission lines carry electricity long distances and then send it to a neighborhood transformer
  • The neighborhood transformer steps down the voltage and sends it to to a distribution line
  • Transformers on poles step down electricity before it enters houses.
  • The distribution lines carry electricity to houses. 
Credit: Adapted from National Energy Development Project(public domain)