edison electricity

8/4/2019 Edison Electricity

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Is it a factor have I dreamt itthat, by means of electricity, theworld of matter has become a

great nerve, vibratingthousands of miles in abreathless point of time?

Nathaniel Hawthorne, 1804-1864American Novelist

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Mid-1700sInterest in harnessing power of electricity

1882First workable electric system built by Edison

at Pearl Street Station

Pearl Street Station, New York

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Schenectady Museum:Hall of Electrical History Foundation

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1890sElectric utilities began to develop primarily inur an areas ecause o econom es o sca e

Industry had characteristics of a natural monopoly

,reasons, it is most efficient to have only one provider of agood or service

Provided service regarded as vital to economic andsocial fabric of community (i.e., a public utility)

Operated through large, integrated networks

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1907State regulation of electric utilities began in

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Regulation spreads to two-thirds of states by 19205


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By 1920sMost urban areas

are electrified

Exclusive utilit franchises(monopoly rights) also camewith an obligation to serve

all customers in the definedre ions

Limited federal regulationof multi-state utilities

6Times Square, New York, 1920s6

Corbis


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1920sMany small utilities were consolidated and became parts oflarger holding companies

companies. This is a common corporate structure in many industries.

The rapid growth, consolidation, and complexity of the utility industryoutpaced the ability of many local regulators at the time.

1929Stock market crash revealed that many holding companies

were over-leveraged As a result, federal and state governments strengthened utility

regulation.

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1935: Congress passed federal legislationaddressing interstate utility operations

The Federal Power Act

Interstate sales of

Primarily regulates

shareholder-owned

The Public Utility

Holding CompanyAct (PUHCA)

Corporate structure ofutilities

88FDR signs legislation

Corbis


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Federal and state regulatory scrutiny has grownsignificantly since 1935

The federal government regulates interstate powersales and services; mer ers; cor orate structure

State governments regulate retail electric service;

mergers; facility planning and siting

Other federal and state laws, rules, and regulationsalso apply to the electric utility industry, including,

Anti-trust laws / Dept. of Justice / FTC

SEC requirements, including Sarbanes-Oxley

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Environmental regulations/EPA

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--

Electricity finds many new applications in homes andbusinesses

New power plants are built to meet customer needs

Because of economies of scale, electricity pricesactually go down as larger and more efficient power

plants come on line

Transmission lines begin to connect utilities to oneanother

" " shape

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1970s: Rate Re ulation Re-examined1970s: Rate Re ulation Re-examined

To encourage competition,Congress re-examined rateregu a on mo e o na ura

monopolies, including: Railroad, natural gas, trucking,

,

Public Utility Regulatory

Policies Act of 1978 (PURPA) equ res ut t es to purc ase

electricity produced bycogenerators and small powerproducers

Federal government expandsregulatory role in state rate policies

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1979Motorists line up for first dayof gas rationing

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Ener Polic Act of 1992Ener Polic Act of 1992

w x wpower in competitive wholesale markets

Ex ands FERCs authorit to order transmission-owninutilities to provide transmission access to other wholesalemarket players

,appliances, and federal government

Encourages development of alternative fuels and renewableenergy

Expands clean coal programs

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Reforms and streamlines nuclear plant licensing

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1990s: Some States Move to Retail Choice1990s: Some States Move to Retail Choice

During the 1990s, anumber of statesa opte erentmodels to encourage

competition among

retail customers

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Ener Polic Act of 2005 Electricit InitiativesEner Polic Act of 2005 Electricit Initiatives

Requires mandatory reliability standards

Promotes transmission investment and facilitatestransmission siting

Repeals PUHCA and reforms PURPA

Promotes fuel diversity

Gives FERC stronger consumer protection, anti-market

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Electricit : Its All About ConversionsElectricit : Its All About Conversions

nergy can ne er e crea e nor es roye - can on y etransformed (converted) from one form to another

Our lives are surrounded by energy conversion technologies:

Chemical to thermal

Home furnace using fuel oil, natural gas or wood

Chemical to thermal to mechanical

Chemical to electrical

Fuel cell

Electrical to mechanical

ec r c mo or

Electrical to radiant

Toaster, light bulb

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converting fuel and energy sources into electricity


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.current of 1 ampere flowing across a resistance of 1 ohm.

Kilowatt (kW)A unit of power equal to 1,000 watts.

Kilowatt Hour (kWh)A unit by which residential and most business customers arebilled for monthly electric use. It represents the use of one kilowatt of electricity forone hour.

A 100 watt light bulb burning for 10 hours would use 1 kilowatt-hour of electricity.

Megawatt (MW)A unit of power equal to one million watts.

Megawatt Hour (MWh)The use of 1 million watts (or 1,000 kilowatts) of electricity

for one hour. This term is used most often for large-scale industrial facilities and largepopulation centers.

The average U.S. household uses 11.3 MWh (11,327 kWh) of electricity everyyear.

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(measured in Volts) or Volts X Amps = Watts.

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Electricity, where it comes from and how it gets to me

1. Electricity is generatedand leaves the powerplant

.at a step-up substation

3. The energy travels alonga transmission line tothe area where the poweris needed

4. Once there, the voltage

stepped-down, atanother substation

5. A distribution power line

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carries the electricity6. Electricity reaches your

home or business


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Generating

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Getting It to theConsumer


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Thick wires on tall towerscarry high-voltage electricityfrom ower lants to localcommunities and connectone region to another

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Thinner wires on smallertowers (or in some casesunder round carr muchlower voltage power tohomes and businesses

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n im l Wh h h?n im l Wh h h?

Electricity cannot be stored, so supply (generation) mustbe roduced exactl when needed to meet customerdemand and to avoid system failure

Level in lake mustbe kept constant atall times

dictate that powerflows on path ofleast resistance, notnecessar y w erewed like it to

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Individual Lake Model


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n im l Wh h h?n im l Wh h h?

Lakes

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NetworkModel


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Different T es of Ownershi -StructureDifferent T es of Ownershi -Structure

Shareholder-Owned Utilities

Cooperatively Owned Utilities

Government-Owned Utilities

Federally Owned Utilities -

Municipally Owned

Political Subdivisions

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Percentage of Customers ServedPercentage of Customers Served

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Source: Edison Electric Institute,Business Information Group.


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Size and Footprint of the Shareholder-OwnedSize and Footprint of the Shareholder-Owned

Capital Invested = $533.6 Billion(as of December 31, 2005)

300,000 OperationsEmployees

(2001 total)

Percentage ofUltimate Customers Served

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Source: Edison Electric Institute,Business Information Group.


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The Industr s Record

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El ri i DPEl ri i DP

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In r in l l nIn r in l l n

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Following section would incorporate Timsgraphics that come from the Fuel Diversity pie

chart that appears on slide 10

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What Are the Fuels Used to Generate Electricit ?What Are the Fuels Used to Generate Electricit ?

National Fuel Mix

*Non-Hydro Renewables and Other includes generation from solar, wind, geothermal, biomass (agricultural waste, municipal solid waste, landfill gasrecovery, wood, pitch), hydrogen, batteries, chemicals, non-wood waste, purchased steam, sulfur and miscellaneous technologies.

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Source: U.S. Department of Energy, Energy Information Administration, Power Plant Report (EIA-920), Combined Heat and Power Plant Report (EIA-920), Electric Power Monthly (2006 Preliminary), and Electric Power Annual 2006.

2008 by the Edison Electric Institute. All rights reserved.

Diff t R i f th C t UDiff t R i f th C t U


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Different Regions of the Country UseDifferent Regions of the Country Use

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F l Di itF l Di it


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Fuel Diversity:Fuel Diversity:

No individual fuel is capable of meeting all of our nations

electricity demands

Maintaining the diversity of available fuel resources helps toensure that we do not become too dependent on one fuel

source

Fuel diversity protects consumers from contingencies such asfuel unavailability, price fluctuations, and changes in regulatory

ractices Fuel prices greatly affect the price of electricitytoday, fuel

costs are on the rise

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Environmental As ects of Fuel DiversitEnvironmental As ects of Fuel Diversit

Fuel choices allow environmental impacts to be balanced and

still assure reliable, cost-effective power supply to consumers

Any fuel source for generating electricity involves someenvironmental impact

impacts, fish and wildlife impacts, waste disposal concerns,and aesthetics

nv ronmen a mpac s are s gn can y ess an ey were adecade ago

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Electricit Generation from CoalElectricit Generation from Coal

Coal is a fuel source for 49% of electricity generated in theUnited States

Most abundant domestic energy resourceU.S. has about

25% of worlds total coal reserves (275 billion tons) andconsumes 25% of worlds coal used annually

Significant improvements in pre- and post-combustionemission reduction technology

, ,rising from $1.22 cents/million Btu in 1999 to $1.54cents/million Btu in 2005

problems, and maintaining coals ability to compete on costsare key drivers to future use of coal

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Electricit Generation from NuclearElectricit Generation from Nuclear

103 nuclear power plants in the U.S. provide 19.4% of this

Nuclear power produces no sulfur dioxide, nitrogen oxides,mercury, or carbon dioxide emissions

Uranium is plentiful and efficient. One pellet of enricheduraniumthe size of the tip of your little fingeris theequivalent of 17,000 cubic feet of natural gas, 1,780 poundsof coal, or 149 gallons of oil

Existing nuclear power plant performance continues toimprove

major challenges to building new plants

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Electricit Generation from Natural GasElectricit Generation from Natural Gas

19.9% of total current generation is gas-based; in pastdecade almost 95% of new lants have been as-based

Lower emissions than other fossil fuels

Low capital costs and regulatory barriers for other fuelsma e gas- ase genera on eas er o s e an u

Declining production, limited access to natural gas

supplies, and rising demand are causing natural gas

The average price electric utilities paid for natural gas rosefrom $2.57 cents/million Btu in 1999 to $8.20 cents/million

Large volumes of onshore and offshore natural gas are offlimits due to moratoria, regulation

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U.S. isolated from global market and its plentiful supplyand lower prices

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Electricit Generation from H dro owerElectricit Generation from H dro ower

6.9% of electricity generation is from hydrolargest sourceo renewa e energy

Low-cost domestic fuel, emissions free, abundant in someregions, helps contribute to system reliability

Provides flood control, navigation, irrigation, recreationaland fish and wildlife benefits

Difficult licensin renewal rocess often results ingenerating capacity reductions and loss of flexibility tooperate facility for electric reliability purposes. EnergyPolicy Act of 2005 contains provisions to improve the

h dro ower licensin rocess

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Electricity Generation fromElectricity Generation from


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Electricity Generation fromElectricity Generation from

Generation from non-hydro renewables and other sources

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Biomass produces 1.6% of generation; wind, 0.4%;geothermal, 0.4%; solar, 0.01%

Largely CO2 emission free. (Emissions from biomasscombustion are CO2-neutral to the extent that theyrepresent atmospheric carbon fixed in plant materialthrough photosynthesis, a process that can be repeatedindefinitely.)

Renewable technologies face high initial capital costs

limitations, intermittent nature, transmission availability,frequent expiration of production tax credit, environmentaland aesthetic challenges

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Electricit : A Great ValueElectricit : A Great Value

e na ona averageprice for electricity

today is less than whatit was in 1985 whenadjusted for inflation

Even with recent price

rate for electricity pricesremains comparable to,and even lower than,

o er mpor anconsumer goods

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Th n r El ri i Ar Ri inTh n r El ri i Ar Ri in

ue pr ces grea yaffect the price ofelectricity

Fuel prices haverisen considerably

since 1999,particularly fornatural gas

,demand forelectricity continuesto row

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Demand for Electricit Is GrowinDemand for Electricit Is Growin

While efficiency improvements have had a major impact inmeeting national electricity needs relative to new supply,the demand for electricity continues to increase

According to EIA, electricity consumption is expected to increase at least 40percent by 2030

To meet this increasing demand, electric utilities mustinvest in a new generation of baseload power plants, thosethat run continuously to meet the countrys minimumdemand

According to EIA, 258 gigawatts (GW) of new capacity will be needed by2030

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Infrastructure Investment CostsInfrastructure Investment Costs


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investment coinciding with

surge in generatingca acit

From 2000 to 2005, industry hasinvested more than $28 billion innations transmission system

- ,planning to invest $31.5 billion inthe transmission system, nearly a60% increase over the amountinvested from 2002-2005

Benefits include newertechnologies, biggermarkets, lower prices,

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reliability

Environmental Compliance CostsEnvironmental Compliance Costs


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pp

u u uenvironmental rules, including dozens of federal and

state air and water quality requirements created in thewake of the Clean Air Act and Clean Water Act

From 2002-2005, the electric utility industry as a wholespent at least $21 billion on compliance with federalenvironmental laws state and local rules drive that totaleven higher

According to the U.S. Environmental Protection Agency,

Air Interstate Rule and the Clean Air Mercury Rule, whichare aimed at further reducing power plant emissions ofNOX, SO2, and mercurywill cost the electric utility

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n ustry . on etween t e years to

Price Caps Set During IndustryPrice Caps Set During Industry


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p g yp g y

competition, many statepolicymakers decreed thatcustomers bills would be frozen,and in man cases reducedtypically for a period ranging fromtwo to ten years

The first rate caps were put in,to expire in 2011

As rate freezes and reductions arebeing phased out, many customers

perceive that their rates are beingincreased, when in fact they arereflecting the costs alreadyincurred by utilities

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What Are Utilities DoingWhat Are Utilities Doing


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gg

Many utilities try to hedge or enter into long-term, fixedcontracts for fuel at set prices

Not all companies have this option, and such forward contracts cannotcover a ue nee s

Utilities have increased the productivity (capacity factors)

of their power plants while at the same time decreasingtheir operations and maintenance costs

Electric utilities have taken a leading role in developing

residential, commercial, and industrial customers

Between 1989 and 2005, electric utility efficiency programs saved about797 billion kilowatt-hours of electricityenough electricity to power nearly

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74 million average U.S. homes for one year

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Electricit Use in the T ical U S HomeElectricit Use in the T ical U S Home


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Electricit Use in the T ical U.S. HomeElectricit Use in the T ical U.S. Home

By 2030, average household consumption is expected to increase bymore than 11 percent

This increase will be entirely driven by appliance-relatedconsumption, reflecting the use of computers and other digital

technologies

e amoun o e ec r c y nee e or ea ng, re r gera on, anclothes washing is expected to decline as efficiency increases

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rea er eman or e ec r c

power does not translatedirectly into higher householdexpenditures

The average Americanhouseholds total spending onelectricity has fallen steadily

over time

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Ke Challen esKe Challen es


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Ke Challen esKe Challen es

Natural gas supply

Fuel diversity

Environmental policy

Coal transportation

Rising costs of doing business

Need for increasing infrastructure investment

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Investin in Americas Electric FutureInvestin in Americas Electric Future


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Investin in America s Electric FutureInvestin in America s Electric Future

Electric utilities are entering a new cycle of growth andinvestment, and a new era of ratemaking

improvements, benefits will include:

Long-run reductions in operating costs

Enhancements of reliabilit and ower ualit

Improvements in competitive power markets

Cleaner generation

Increased customer choice and control over energy use

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Edison Electric Institute (EEI) is the association of U.S.


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- .percent of the ultimate customers in the shareholder-owned

segment of the industry, and represent approximately 70 percent ofthe U.S. electric power industry. We also have more than 65International electric companies as Affiliate members, and more than170 industry suppliers and related organizations as Associatemembers.

Organized in 1933, EEI works closely with all of its members,re resentin their interests and advocatin e uitable olicies inlegislative and regulatory arenas. In its leadership role, EEIprovides advocacy, authoritative analysis, and critical industry datato its members, Congress, government agencies, the financial

community and other opinion-leader audiences. EEI providesorums or mem er company represen a ves o scuss ssues an

strategies to advance the industry and to ensure a competitiveposition in a changing marketplace.

For more information on EEI programs and activities, products and

services, or membership, visit our Web site at www.eei.org.

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edison electricity

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