July 2015

United States Electricity Industry Primer

Office of Electricity Delivery and Energy Reliability U.S. Department of Energy

DOE/OE-0017

U.S. Department of Energy Office of Electricity Delivery and Energy Reliability

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ACKNOWLEDGMENTS

This report was prepared by the Office of Electricity Delivery and Energy Reliability under the direction of Patricia Hoffman, Assistant Secretary, and Devon Streit, Deputy Assistant Secretary.

Specific questions about information in this report may be directed to Jamie Clark, Infrastructure Systems Analyst (Jamie.Clark@hq.doe.gov).

Contributors include Matthew Gilstrap, Shravan Amin, and Kevin DeCorla-Souza.

mailto:Jamie.Clark@hq.doe.gov

U.S. Department of Energy Office of Electricity Delivery and Energy Reliability

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TABLE OF CONTENTS 1 Industry Overview ................................................................................................................................. 4

2 Electricity Basics .................................................................................................................................... 5

3 Electricity Supply Chain ......................................................................................................................... 6

3.1 Generation .................................................................................................................................... 6

3.2 Transmission and the Grid .......................................................................................................... 11

3.3 Distribution ................................................................................................................................. 21

4 Markets and Ownership Structures .................................................................................................... 24

4.1 Overview ..................................................................................................................................... 24

4.2 FERC ............................................................................................................................................ 24

4.3 NERC ............................................................................................................................................ 25

4.4 ISOs/RTOs .................................................................................................................................... 25

4.5 State Regulatory Agencies .......................................................................................................... 27

4.6 Utilities ........................................................................................................................................ 27

4.7 Wholesale Electricity Markets .................................................................................................... 28

4.8 Retail Electricity Markets ............................................................................................................ 30

4.9 Capacity Markets ........................................................................................................................ 30

5 Power Outages and Restoration ......................................................................................................... 31

5.1 Power Sector Vulnerabilities ....................................................................................................... 31

5.2 Black Start ................................................................................................................................... 33

5.3 General Preparedness ................................................................................................................. 33

5.4 Prestorm Preparation ................................................................................................................. 35

5.5 Restoration Process .................................................................................................................... 36

5.6 Interdependencies ...................................................................................................................... 39

5.7 Conclusions ................................................................................................................................. 39 Appendix A: Understanding the Grid .......................................................................................................... 40

Appendix B: Circuit Basics Continued ......................................................................................................... 43

Appendix C: Reliability Standards ............................................................................................................... 55

Appendix D: U.S. Department of Energy Authorities and Key Legislation .................................................. 58

Appendix E: Common Industry Terms ........................................................................................................ 85

U.S. Department of Energy Office of Electricity Delivery and Energy Reliability

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FIGURES Figure 1: Basic Electricity Definitions ............................................................................................................ 5 Figure 2: Conceptual Flow Chart of the Electricity Supply Chain .................................................................. 6 Figure 3: U.S. Power Generation by Fuel Type in 2014 ................................................................................ 6 Figure 4: U.S. Generation Capacity in 2013 .................................................................................................. 6 Figure 5: Geographic Distribution of U.S. Power Plants (More than 1 Megawatt) ...................................... 7 Figure 6: Conceptual Illustration of a Thermal Generation Power Plant ...................................................... 8 Figure 7: Overview of a Nuclear Power Generation Process ........................................................................ 9 Figure 8: Overview of Hydroelectric Power Generation Process ............................................................... 10 Figure 9: Overview of Wind Farm Power Generation ................................................................................. 10 Figure 10: Map of Four North American Power Grid Interconnections ..................................................... 11 Figure 11: Daily System Demand Profile ..................................................................................................... 12 Figure 12: Electricity Supply Chain ............................................................................................................. 13 Figure 13: High Voltage Transmission Towers ............................................................................................ 13 Figure 14: Structural Variations of Transmission Towers ........................................................................... 14 Figure 15: Transmission Voltage Classes .................................................................................................... 15 Figure 16: Large Power Transformer Detailing Major Internal Components ............................................. 17 Figure 17: 2011 Large Power Transformer Procurement Process and Estimated Optimal Lead Time ...... 18 Figure 18: Estimated Characteristics of Large Power Transformers in 2011 .............................................. 18 Figure 19: State-Level Distribution of Electric Customers in 2013.............................................................. 20 Figure 20: Flow of Electric Power Through a Distribution Substation ........................................................ 21 Figure 21: Diagram of Transmission and Distribution Networks ................................................................ 22 Figure 22: Service Drop for an Industrial Facility ........................................................................................ 22 Figure 23: Household Service Line Drop from Distribution Line ................................................................. 22 Figure 24: Pad-Mounted Distribution Transformer .................................................................................... 22 Figure 25: Schematic of Underground Distribution Network ..................................................................... 22 Figure 26: Commercial Microgrid Application at Santa Rita Jail in California ............................................. 23 Figure 27: Map of Regional Reliability Councils Under NERC ..................................................................... 25 Figure 28: Map of North American Transmission Operators ...................................................................... 26 Figure 29: Vertically Integrated Utility Model ............................................................................................ 28 Figure 30: Conceptual Smart Grid Schematic ............................................................................................. 34 Figure 31: Typical Power Restoration Process ............................................................................................ 38 Figure 32: Conceptualization of Free Elctrons Flowing Through Metal ...................................................... 43 Figure 33: Electricity Terms, Derivations, and Conversions ........................................................................ 43 Figure 34: Power Consumption of a 15-Watt Light Bulb ............................................................................ 44 Figure 35: Hie