Power to the People

The Present and Future U.S. Electric Grid

By Alex Klein

THE PRESENT
Basic Functions and Purpose
America is a nation hungry for electrical energy, and it is fed by a large system of
complex machinery, all connected, that can start and end in vastly different places. The
electricity that runs to your house may have been derived from coal, natural gas, wind, nuclear
energy, hydro energy, the sun, biomass, geothermal energy, or a number of other smaller energy
sources (“Electricity Delivery System” page 1). It may have travelled underground or above
ground for thousands of miles or just a few blocks. In some cases, the electrical energy powering
your laptop or refrigerator may come from a different country. But there’s only one way that the
electrical energy gets to its destination: the electric grid.
The electric grid can be defined several ways. It could describe the entire electrical
process, from generation to transmission to distribution, or it could simply describe the last two
legs of that process—transmission and distribution. This paper will explore all three components
of the electrical process, but will focus more heavily on the second and third properties of the
electrical system, as they are most closely associated with the electric grid. The grid is a vital
contributor to modern society, and some even consider it to be the most integral part of today’s
world. The U.S. Department of Energy states that “economic prosperity, national security, and
public health and safety cannot be achieved without it” (“Gridworks” 1).

Physical and Theoretical Reach

The electric grid truly describes a grid, albeit not one with strict right angles and regular
spatial distribution. Power is fed into the system from many power plants (powered by nearly a
dozen different energy sources; see Figure A) across the country, from New England to the
Rocky Mountains to the Pacific states, and can “can be rerouted through other power lines to
continue delivering power to customers” (“Grid Architecture...” 1) when their normal
transmission line is taken out of service. This grid-like power generation and delivery system is
physically divided into three interconnects: the Eastern, the Western, and the Texan (see Figure
B) (Lerner 1). Spread throughout those three regions are some 10,000 power plants, 10,000
transmission substations, and 2,200 distribution substations, owned and operated by about 3,100
electric utilities (“Gridworks” 1; “Electricity Delivery System” 2).
The power plants are ideally located in central zones, such as major cities or equally
between many small towns, but sometimes power has to travel very far to reach its users—most
of the Northwest’s power comes from “hydroelectric plants that are located far from the cities
that depend on their power” (“Electricity Grid” 1). The system of connections (termed
transmission substations), then, is crucial for the nation’s electrical supply. Indeed, if only four
percent of these substations were lost, connectivity would plunge 60 percent (“Electricity
Delivery System” 2). Getting power from afar is a slippery slope, though; decreases in
hydroelectric production in the Northwest in 2000 affected California, too, plunging it into an
electricity crisis (“Power Crunch” 1).

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 The electric grid’s theoretical reach is massive, too. The physical component—described
by some as “the world’s biggest machine” (Lerner 1)—is just a means to a more important end.
The grid exists because, without a way to distribute electricity to the masses efficiently, people
would have “trouble meeting basic needs for food, water, shelter, law, and order” (“Gridworks”
1). The reach of the grid, both physically and theoretically, is easy to see on a map, but is even
easier to see when one large region loses power for a day or two.

Basic Components and Operations

To lose power for a day or two, though, a region must have power beforehand. What is
involved in the generation, transmission, and distribution of electricity? There are about eight
major physical components of this process (see Figure C). It is important to note that these eight
major components are parts of two larger processes. There are the “high-voltage transmission
systems which carry electricity…and transmit it hundreds of miles away, and lower-voltage
distribution systems…which distribute it to individual customers” (“Electricity Grid” 1).
First, electricity is generated at the power plant in any number of ways, ranging from coal
to wind to geothermal. This energy is sent through a step-up transmission substation (usually
considered the beginning of the electric grid), where a “large power transformer increase[s] the
voltage for transmission to distant locations” (“Electricity Delivery System” 2). The voltage
leaves this substation at between 155,000 and 765,000 volts, and travels for up to 300 miles via
high voltage transmission lines (Brain 3). These lines are easy to spot—they are usually huge
steel towers (see Figure D). Eventually these lines will lead to a step-down power substation—a
“switching point”—where power can be transferred to both subtransmission lines and
distribution lines.
If a transfer between high voltage transmission lines and distribution lines occurs, the
voltage will be radically decreased to about 10,000 volts after it is passed through a transformer
(Brain 3). This power is typically carried on poles through residential or business areas, as it will
most likely end up in homes or businesses soon. The final major step in this grid is the
transformer drum. Each small group of customers will share a drum, and it is the drum that
decreases the voltage to usable levels of 120 and 240 volts. The electricity is then distributed one
last time—this time to the end user through an outlet. Sometimes theses last lines run
underground, but because of high installation costs and lower reliability, the lines only account
for 0.2% of total lines in the U.S. as of 2001 (“Electricity Delivery System” 5). The eighth major
component of the electric grid is one found in many places in the process. The “ground” is most
often a wire that runs from a transmission substation, distribution substation, power pole, or
transformer into the ground. This “grounding” provides a good return path for electrons, and
because the literal ground (dirt, rocks, groundwater) is a good conductor, wires are simply run
into it. There are many other smaller components in this system, like regulator banks, taps, and
circuit breakers, but none would exist without these other eight components.

Relationship with Money

The more than 3,100 electric utilities that form the U.S. electric grid are run by
stockholder-owned companies, state and local government-run agencies, and cooperatives. The
213 stockholder-owned companies—some of which are now owned by major investment
institutions like Citigroup and Morgan Stanley as a result of the fallen Enron (Lerner 4)—
provide 73 percent of the power. The 2,000 government agencies provide 15 percent, and the 930
electric cooperatives about 12 percent. The percent of total energy produced by shareholder-

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owned utilities varies greatly by region of the U.S.: 97.4 percent of energy in New England is
produced by shareholder-owned companies, while only 42.1 percent is in the Northern Midwest
(“Electricity Delivery System” 3). Even though the government only provides about an eighth of
the nation’s electricity, it regulates the prices and rates-of-return for all shareholder-owned
utilities, effectively exercising much more control than its 15 percent contribution to total power
would suggest. All of these systems for distribution operate as “franchise monopolies as
established by state law” (“Gridworks” 2).
The electricity sector’s economic significance “is staggering. It is one of the largest and
most capital-intensive sectors of the economy” (“Gridworks” 1). The costs most heavily
associated with operating a utility are the construction and refurbishing of old equipment and
input costs for fuel. Power prices across the U.S. have risen up to 29 percent this year, in part
because many companies are being forced to upgrade equipment or build new plants. The cost of
building one new mile of 138 kV single circuit line is $390,000, while one mile of 345 kV
double circuit line will run, on average, $1,710,000. Even an upgrade from a 69 kV to a 138 kV
line will cost $400,000 (“Electricity Delivery System” 5). The cost of building transmission
plants and distribution plants rose 23 and 21 percent from 1996 to 2005, respectively
(“Electricity Delivery System” 6). Nuclear reactors cost around $10 billion each for South
Carolina Electric & Gas (Davidson 1), a number that extends across the industry landscape. Not
helping matters is the fact that fuel prices have risen dramatically in recent years, too. Coal, for
example, has doubled in price, and natural gas’s price has risen 50 percent (Davidson 1). These
increases in capital costs and fuel prices have affected both utility companies and consumers.
One hundred and one million electricity customers in America, nearly every household
and business, spend $247 billion each year for the ability to be wired and wireless. The average
price per kWh is about seven cents (“Gridworks” 1). With the increases in fuel prices and power
plant innovations and repairs, customers can expect to see their bills rise up to 25 percent now,
and up to 115 percent in the next few decades (Davidson 1). Currently, there is often no price
distinction between heavy-load and light-load; however, if electrical load pricing becomes
widespread, “when generation is in short supply and prices rise, more and more customers with
accurate pricing [would be] likely to turn off loads” (“Electrical Load...” 1). This system would
benefit utilities and consumers alike and would likely put the brakes on high price increases for a
bit.

THE FUTURE
Changing Demands
The equivalent of 937 new 300 MW power plants is needed to meet growing demand for
electricity by 2025, according to the Energy Information Administration. That’s 281 gigawatts of
new generating capacity (“Electricity Delivery System” 1). But, in opposition of this trend has
been the trend in construction of new facilities. While electricity demand has increased by 25
percent since 1990, construction of new facilities has decreased about 30 percent (“Gridworks”
2). This has resulted in more bottlenecks in the system, which has meant more distribution
losses, which ultimately means a higher price for electricity consumers. To solve the supply-and-
demand problem, many agencies such as the Department of Energy, FERC, the Edison Electric
Institute, and the Electric Power Research Institute have advocated adding physical capacity.
These costs would “certainly be in the tens of billions of dollars,” and Energy Secretary Spencer

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Adams insisted that “the people who benefit from the system have to be a part of the solution
here” (Lerner 5). What will surely happen is that consumers will continue to see rising prices;
both the do-nothing approach and the build-something approach will result in higher prices for
everyone, including consumers. Two promising technologies are microturbines and fuel cells
(Overbye [II] 8), both of which will provide a bit of power for a few people very close to the
source. These technologies will likely produce cheaper electricity, but will count on deregulation
of the industry, something many shy away from discussing.

Technological Innovation
It is no secret that the electricity sector is a bit overdue for some upgrades; “the majority
of the existing capacity is 30 or more years old” (“Gridworks” 1). There have been some minor
technological changes in recent years, though. For instance, almost half the capital investments
in new wires for transmission and distribution from 1993 to 2002 were for underground wires,
even though they currently cost four times as much to construct as above-ground ones
(“Electricity Delivery System” 5). However, building “large power plants, often involving
investments of billions of dollars, started to be viewed as unacceptable risks” in the mid-eighties.
Therefore, there was a rise in popularity of demand-side management programs. This rise in
popularity was not large enough to start any major revolutions, though, and there has been little
change in that area—until now.
Three new ideas are each garnering support, as each promises to reduce costs for
everyone in an age of ever-growing energy costs. The first is a return to the idea that demand-
side management programs can effectively increase energy efficiency and load reduction. This
technology rests on the premise that real-time pricing, when made available to consumers, will
“enable a closer match between demand and supply on a continuous basis” (“Electrical Load...”
1). There are three technological innovations riding on the coattails of this school of thought—
minigrids, power parks, and flexible AC transmission systems (“Electrical Load...” 1). All
promise more efficient ways to deal with load handling, whether it’s with more responsive
electronics or sheer locality.
The second is the idea of a “superconductor,” a “solid ceramic compound that conducts
electricity more efficiently than traditional copper wires” (Ruggiero 1). In a June 27, 2007 press
release, the U.S. Department of Energy announced it was providing $51.8 million to five
companies working on the emerging technology of semiconductors. The report says that the
semiconductors “have the potential to alleviate congestion on an electricity grid that is
experiencing increased demand” and that “research [is] critical to improving power delivery
equipment” (Ruggiero 1).
The third area that is seeing support is that of “smart grids.” The Energy Independence
and Security Act of 2007, Section 1301, states that it will “support the modernization of the
Nation's electricity transmission and distribution system to maintain a reliable and secure
electricity infrastructure that can meet future demand growth and to achieve each of the
following, which together characterize a Smart Grid” (SEC. 1301 1). “The following” refers to a
list of ten goals the government has for a “smart grid,” including “timely information and control
options,” “deployment of ‘smart’ technologies…for metering, communications,…and
distribution automation,” and “identification and lowering of unreasonable or unnecessary
barriers” (SEC. 1301 1). The act calls for an advisory committee to be established that will
oversee the planning of the “smart grid.” Essentially, the smart grid gives the governmental go-
ahead for every plausible technological advance in the electricity sector.

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Climate and Environmental Changes
The rapidly changing environment (mostly in the form of climate change and its
externalities), will have a great effect on the U.S. electric grid. Currently, the warmer summers
across the U.S. place a very heavy, and in the case of the August 14, 1998, Northeastern
blackout, overly heavy strain on the grid (Lerner 4). If our world were to continue to get warmer,
there would be an even longer stressful period for the grid every year, and there would naturally
be more system failures. Also, the thermal limits on power system components are much stricter
on warmer days, which would cause them to “fail more frequently, age faster, and require more
maintenance and earlier replacement” (Overbye 20).
The electric grid will also be affected indirectly in addition to directly. The uptick in
extreme weather as a result of global warming and pollution increases will take its toll on the
grid, causing problems ranging from fallen trees to new design needs to more extensive
emergency planning. The anticipated migration of people will also put higher loads on areas
where there were previously light loads, and vice-versa. This is an inefficient way to handle a
limited and expensive resource. Many plants use water to power their turbines or to help
maintain safe temperatures, but with an increase in global warming, changes in river runoff
would potentially change the course of the rivers, or even render them dry (Overbye 20).

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 Figure A

The geographical distribution of the major power

plants in the United States, and what they’re
powered with.
(source: Brain, Marshall. How Power Grids Work. How Stuff Works.
9 Sept 2008 <http://www.howstuffworks.com/power.htm>.)

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 Figure B

The three “interconnects,” and their base and first-

contingency transfer levels, in MW
(source: Lerner, Eric J. “What’s Wrong with the Electric Grid?”
The Industrial Physicist October/Novermber 2003: SEC. 1301 13.
<http://www.aip.org/tip/INPHFA/vol-9/iss-5/p8.pdf>.

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 Figure C

The major components of the U.S. electric grid.

(source: Brain, Marshall. How Power Grids Work. How Stuff Works.
9 Sept 2008 <http://www.howstuffworks.com/power.htm>.)

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 Figure D

Each different transmission or distribution tower

has a distinct shape and size.
(source: The Electricity Delivery System. U.S. Department of Energy. 7 Sept 2008
<http://www.energetics.com/gridworks/pdfs/factsheet.pdf>.

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 Works Cited

Brain, Marshall. How Power Grids Work. How Stuff Works. 9 Sept 2008 <http://www.

howstuffworks.com/power.htm>.

Davidson, Paul. “Price jolt: Electricity bills going up, up, up.” USA Today 20 June 2008.

Electrical Load as a Reliability Resource. U.S. Department of Energy. 9 Sept 2008

<http://www.eere.energy.gov/de/electrical_load.html>.

Electricity Delivery System, The. U.S. Department of Energy. 7 Sept 2008 <http://www.

energetics.com/gridworks/pdfs/factsheet.pdf>.

Electricity Grid. U.S. Department of Energy. 9 Sept 2008 <http://www.eere.energy.gov/de

/electricity_grid.html >.

Flexible Alternating Current Transmission Systems (FACTS). U.S. Department of Energy. 9

Sept 2008 <http://www.eere.energy.gov/de/facts.html>.

Grid Architecture and Function. U.S. Department of Energy. 9 Sept 2008 <http://www.eere.

energy.gov/de/grid_architecture.html>.

Gridworks: Overview of the Electric Grid. U.S. Department of Energy. 9 Sept 2008

<http://www.energetics.com/gridworks/grid.html>.

Lerner, Eric J. “What’s Wrong with the Electric Grid?” The Industrial Physicist

October/Novermber 2003: 8-13. <http://www.aip.org/tip/INPHFA/vol-9/iss-5/p8.pdf>.

Minigrids. U.S. Department of Energy. 9 Sept 2008 <http://www.eere.energy.gov/de/

minigrids.html>.

Overbye [II], Thomas. Reengineering the Electric Grid. American Scientist. 29 Sept 2008

<http://www.americanscientist.org/issues/feature/reengineering-the-electric-grid>.

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Overbye, Tom, et. al. The Electric Power Industry and Climate Change: Power Systems

Research Possibilities. Arizona State University. 29 Sept 2008 <http://www.pserc.org/

cgi-serc/getbig/publicatio/reports/2007report/pserc_climate_change_final_rpt_june07

.pdf>.

Power Crunch, The. U.S. Department of Energy. 9 Sept 2008 <http://www.eere.energy.gov/de/

power_crunch.html>.

Power Parks. U.S. Department of Energy. 9 Sept 2008 <http://www.eere.energy.gov/de/

power_parks.html>.

Ruggiero, Julie. DOE Provides up to $51.8 Million to Modernize the U.S. Electric Grid System.

U.S. Department of Energy. 07 Sept 2008 <http://www.energy.gov/news/5180.htm>.

SEC. 1301. STATEMENT OF POLICY ON MODERNIZATION OF ELECTRICITY

GRID. The United States Congress. 29 Sept 2008 <http://thomas.loc.gov/cgi-

bin/query/F?c110:8:./temp/~c110gpboE8:e929784:>.

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