EBF 483
Introduction to Electricity Markets

1.2 Overview of the US Electric Power Grid


Please read the "Electricity Explained" series of articles from the U.S. Energy Information Administration (EIA).

A good source where you can start looking at some electricity data in the U.S. is the State Electricity Profiles article also from EIA.

As you read the Electricity Explained article, here are a few things to keep in mind:

  • There is a big difference in the types of power plants that we have and how we use them to generate electricity. For example, more than 40% of our electric generation capacity is in natural gas, but only around 30% of the electricity we use comes from natural gas.
  • There are three major portions of the electricity supply chain: Generation, Transmission (high voltage power lines that move electricity over many miles), and Distribution (low voltage power lines for local delivery of electricity).
  • Electricity in the United States is delivered via three large power grids (you also saw this in the figure in section 1.1). One grid, the "Eastern Interconnect" serves the area east of the Rocky Mountains; a second, the "Western Interconnect," serves the area west of the Rocky Mountains; and a third, the "Electric Reliability Council of Texas (ERCOT)" grid serves most of the state of Texas. If you are curious about why Texas has its own power grid, you can read more about that in the following article Why Does Texas Have Its Own Power Grid?.
  • Each of the three big grid interconnects is actually run by a number of different utility companies in parallel. These companies, known technically as "balancing authorities," each control a regional portion of the power grid. Some of these balancing authorities are large, controlling the grid in multiple states, while others are very small, controlling portions of the grid no larger than the size of a city.
  • The cost of electricity varies a lot between different states. The fuels used for power generation are the biggest reason that some states have expensive electricity and some states have cheap electricity.
  • All electricity production has some environmental impact. Electric power generation is a major source of both air and water pollutants. Keeping the pollution level low while keeping prices and the reliability of the grid high is one of the biggest challenges facing the industry in the coming decades.