Understanding electricity
How it's generated, measured and more
Understanding electricity
How it's generated, measured and more
Electricity is a property of matter that results from the presence or movement of electric charge. Electric power is a secondary energy source, which means that we get it from the conversion of other primary sources of energy – like coal, natural gas, oil, nuclear power and other natural sources.
Electricity is measured in units of power, called watts. One watt is a small amount of power. It would require nearly 750 watts to equal one horsepower.
A kilowatt represents 1,000 watts. A kilowatt hour (kWh) is equal to the energy of 1,000 watts working for one hour. The amount of electricity a power plant generates or a customer uses over a period of time is measured in kilowatt hours.
Consumers expect electricity to be available whenever they plug in an appliance or turn on a switch. Meeting these requirements is not as simple as it may seem. To deliver electricity seamlessly to consumers, utilities and non-utility power producers rely on a complex system of generation.
Utilities and power producers get their energy from electric generating units powered by a wide range of fuel sources, including uranium, renewable fuels and fossil fuels (e.g., coal, natural gas and petroleum).
Steam-electric generating units burn fossil fuels such as coal, natural gas and petroleum. The steam turns a turbine that produces electricity through an electrical generator. Natural gas and petroleum are burned in gas turbine generators, and the hot gases produced from that combustion are used to turn the turbine. The turbine spins the generator to produce electricity. Additionally, petroleum is burned in generating units with internal-combustion engines. The combustion occurs inside the cylinders of the engine, which is connected to the shaft of the generator. The mechanical energy provided from the engine drives the generator, thus producing energy.
Nuclear-powered generating units have a reactor in which the fission of uranium is used to make steam to drive the turbine.
Hydroelectric power units use flowing water to spin a turbine connected to a generator. In a falling water system, water is accumulated in reservoirs created by dams and then released through conduits to apply pressure against the turbine blades. In a run-of-the-river system, the force of the river current applies pressure to the turbine blades, turning them and producing electricity.
Non-water renewable sources of electricity generation contribute only small amounts to total power production. These sources include geothermal, refuse, waste heat, waste steam, solar, wind and wood sources.
The electricity produced by a generator travels along cables to a transformer, which changes electricity from low voltage to high voltage. Electricity can be moved long distances more efficiently using high voltage. Transmission lines carry the electricity to a substation, and transformers at the substations change high-voltage electricity into lower-voltage electricity. Distribution lines carry the electricity from the substations to homes, offices and factories, which require low-voltage electricity.
Source: U.S. Department of Energy
With competitive pricing, you can shop for and choose the retail electricity provider that’s right for you. Retail electricity providers, like Reliant, compete to sell electricity to you. Texas electricity providers are responsible for selling electricity, providing bills to our customers and handling customer service functions.
Your local utility company, now commonly referred to as your local wires company, will not change if you decide to switch to a different retail electricity provider. They will:
If you decide to switch to Reliant, there's no risk of losing power in the switching process. Your electricity will continue to flow without interruption. Along with being risk-free, competitive pricing offers Texans good rates, innovative product and service offerings and improved customer service.
You may not realize it, but natural gas prices have a significant impact on the electricity prices we pay. Retail electric providers, like Reliant, must purchase all of our supply in the competitive market, and the market price is established by natural gas generation. In fact, natural gas is the single biggest driver of electricity prices, even for renewable electricity, and our dependence on natural gas is increasing.
Retail electric providers, like Reliant, must purchase all of our supply in the competitive market, and the market price is established by natural gas generation. Electricity sources include natural gas, coal, nuclear fuel, wind and water. Although natural gas prices generally fluctuate more than other fuel prices, natural gas-fired generation is still considered the most economical generation to build in Texas.
Why then, do we use natural gas as a primary electricity source?
There are many reasons. Most new electricity generators run on natural gas, because gas is cleaner than many other conventional electricity sources. Most new housing construction includes natural gas heating, in large part because gas has historically been cheaper than oil for home heating.
Why does natural gas have such an impact on electricity prices, even on renewable electricity markets?
The short answer is, because it can. All energy markets move up and down together, in part because all forms of electricity — coal, nuclear, wind or natural gas — sell into the same market. All electricity sells into the same power pool, and all retail suppliers buy out of that power pool.
Smart meters, also called advanced digital meters, are the equivalent of a home’s electricity nerve center, connecting it to the smart grid and enabling consumers to have better control over their usage and spending.
Texas utilities are in the process of a phased deployment that will eventually equip millions of homes statewide with smart meters. Hundreds of thousands of electricity customers throughout the state have already had Smart Meters installed in their homes, with plans for full deployment to be completed during the next few years.
Traditional meters measure how much electricity your household consumes and requires your Transmission and Distribution Service Provider (TDSP) to manually read it. The usage data gathered is reported to your retail electric provider, such as Reliant, to determine your usage for the month. Smart meters capture data every 15 minutes, giving you consistent information about your electricity usage. As a result, action can be taken almost immediately to reduce consumption and cost.
If you would like to know more about Smart Meters and their accuracy compared to traditional meters, please contact your TDSP regarding specific details for your area:
It's easier to grasp the concept of a smart grid if you understand how electricity reaches us in the first place. Known as the "grid," our nation’s electric power infrastructure is often considered the single most important engineering achievement of the 20th century.
Our expansive electricity grid consists of more than 9,200 electric generating units with over 1 million megawatts of generating capacity at any given moment — the largest interconnected machine on Earth. More than 300,000 miles of transmission lines carry the electricity generated to our homes and offices, making it possible to power our modern conveniences at the flip of a switch.
Unfortunately, we are reaching the point in our existing grid’s life cycle where demand exceeds supply. From 1988 to 1998, electricity demand in the United States rose by nearly 30 percent, while the transmission network’s capacity grew by only 15 percent. Equally troubling, peak demand during summer months is expected to increase by almost 20 percent over the next 10 years. This is the result of a lot of things. A denser U.S. population, more widespread use of electronic devices and climate changes brought on by contamination of the environment are all contributing factors.
What will ultimately determine how efficiently we are able to complete the conversion to a smart grid is the willingness of each of us to do our part. Small changes in usage behavior can reduce an individual’s carbon footprint significantly and represent exponential possibilities when applied collectively to the American way of life. Something as simple as doing your laundry at night, for example, can save you money and lessen the load on the grid during peak daytime hours. Energy-smart appliances can further reduce your electric bills and carbon footprint. The idea is for all stakeholders at the different grid levels — generation, transmission, distribution and consumption — to gradually incorporate the technology as it becomes accessible and economically feasible. That way, we continue to move toward the goal of a smarter grid in phases that allow us to benefit increasingly over time.
The interconnected nature of the smart grid offers every home a unique opportunity to support the nation’s power infrastructure — rather than simply place stress on it, as is the case with our existing grid. Every advancement in the technology used to generate and distribute electricity represents a piece of the puzzle necessary for evolving our current over-burdened grid. Likewise, every home or business that implements smart-energy technology plays a major role in making it all come together.
| Feature | Benefit |
|---|---|
| Two-way, customer-centered power system |
Enables active participation by end users—in the generation as well as consumption of electricity |
| Versatile power generation and storage options |
Encourages distributed energy resources over our current centralized-generation model* |
| Integration of new products, services and markets |
Promotes innovation and usability designed to put consumers in control of their electricity consumption; greater variety in electricity plans and pricing |
| Abundance of real-time data in frequent intervals daily |
Provides detailed information for comparison of daily and weekly usage habits; customers know how much they are spending in time to do something about it (before their next bill) |
| Improved power quality for the digital economy | Speedier resolution of issues |
| Optimized assets and functionality | Focuses on prevention of issues, moving from a reactive service model to a more proactive one |
| Intuitive technology | Detects and responds to problems automatically to minimize impact to consumers (self-healing) |
| Resilience to natural disasters and acts of terror; rapid restoration of capabilities | Decreases interruption to business and industry, as well as the resulting negative effect on the economy |
| Exponential energy- and money-saving implications for the future | Likely to be the “Internet” of energy consumption, in terms of broadening our electric-power capabilities in ways we have not even thought of yet |
The investment necessary to fund the smart grid has been estimated at approximately $1.5 trillion. The U.S. government has earmarked several billion dollars specifically for the development and implementation of smart grid technologies.
Reliant is working closely with the U.S. Department of Energy (DOE) to help bring the benefits of this new technology directly to Texas residential customers. In fact, we are the only competitive retailer in Texas selected by the DOE to receive federal stimulus funding for upgrades of the nation’s electricity grid. We’re putting the funding to good use, developing a suite of smart-energy products and services that will enable customers to manage their electricity usage, promote energy efficiency and lower overall energy costs.
Consumers will also help pay for the evolution of our electricity infrastructure through what can be likened to an infrastructure mortgage. The government has provided a large part of the money necessary to build a smart grid from its foundation, i.e., the existing grid. Consumers will then help pay these funds back over time to lessen impact on the national deficit. You may have already noticed a small surcharge on your electricity bill, known as the transmission and distribution service provider (TDSP) charge. Consider that to be your portion of the infrastructure mortgage — a small price to pay today for smaller electricity bills and cleaner air tomorrow. So, who’s footing the bill to convert to a smarter electricity grid? We all are.
Texas has emerged in recent years as a pioneer in renewable energy. The Lone Star State leads the nation in total operating wind-energy capacity. And if it were an independent country, Texas would rank sixth in the world in terms of total wind power production capacity. Initiatives are underway to expand the production of solar, nuclear and biomass energy sources to support the smart grid.
Source: U.S. Department of Energy
Don't know your REP from your TDSP? No sweat. The energy-related terms defined below often show up on electricity bills and contracts. Understanding these terms can help you better grasp your bill and make smarter energy choices.
To find definitions of terms more related specifically to your needs, read through our targeted customer glossary and industry glossary.
Base charge
A flat fee on your electric bill, applied each month regardless of the amount of kilowatt hour (kWh) used.
Base rate
A fixed kilowatt-hour charge for electricity consumed that is independent of other charges and/or adjustments.
Building envelope
The structural elements (walls, roof, floor, foundation) of a building that encloses conditioned space; the building shell.
Circuit
The complete path electricity follows from a source through a connection to an output device. For example: A circuit can be made from a battery (source) through a copper wire (connection) to a light bulb (output device) and back to the battery.
CFL (compact fluorescent light bulb)
A fluorescent lamp compressed into the size of a standard-issue incandescent light bulb that’s designed as an energy-efficient replacement. Compared to incandescent lamps that produce the same amount of visible light, CFLs typically last at least six times as long and use at most a quarter of the energy of an equivalent incandescent bulb.
Conductor
An object that permits an electric charge to flow easily. Examples of conductors are metal, salt, water and wool.
Connection fee
A fee charged to connect and start electric service at a particular address.
Customer choice/electricity choice
In deregulated retail electricity markets like Texas, customer choice means you can choose a retail electricity provider (REP) and an electricity plan to meet your specific needs. While just one company maintains the poles and wires that deliver your electricity; many companies compete to sell the electricity that runs over the poles and wires. As a result, you benefit from competitive rates, better product options and greater customer service.
Delivery charge
A fee charged to cover the cost of delivering electricity to your home.
Disconnect/reconnect fee
A fee charged by the transmission and distribution service provider (TDSP) to disconnect or reconnect electric service.
Distributed renewable generation (DRG)
A program for customers who own small-scale renewable power systems, such as solar panels, and who want to sell excess power back to their electricity company.
Electric current
A measure of the amount of electrical charge transferred per unit. It represents the flow of electrons through a conductive material. A common unit of current is the ampere.
Electric energy
The ability of an electric current to produce work, heat, light or other forms of energy. It is measured in kilowatt hours.
Electric Reliability Council of Texas (ERCOT)
The state’s largest electricity management agency that oversees the electric grid, which receives electricity from power generators and distributes it to homes and businesses using electric utilities. ERCOT serves 23 million Texas customers, representing 85 percent of the state’s electric load and 75 percent of the state’s land area.
Electric service identifier (ESID)
The unique identifier created for your meter by your transmission distribution service provider. Think of it like an IP address for your meter.
Electric utility
An electric power company, often a public utility, which engages in the generation, transmission and distribution of electricity.
Electrical grid
A network of transmission lines, substations and transformers that delivers electricity from suppliers to consumers.
Electricity
The supply of electric currents to a house or other building for heating, lighting or powering appliances.
Electricity demand
The amount of electricity being consumed at any given time. Demand rises and falls throughout the day in response to the time of day and other environmental factors.
Electricity deregulation
In deregulated retail electricity markets like Texas, electricity deregulation means you can choose a retail electricity provider and an electricity plan that meet your specific needs. While just one company maintains the poles and wires that deliver your electricity; many companies compete to sell the electricity that runs over the poles and wires. As a result, you benefit from competitive rates, better product options and greater customer service.
Electricity facts label (EFL)
A standardized format document required by the Public Utility Commission of Texas that provides customers with disclosure information on a retail electricity provider’s prices, contracts, sources of power generation and emissions.
Electricity generation
The process of producing electricity or the amount of electricity produced by transforming other forms of energy, commonly expressed in kilowatt hours (kWh) or megawatt hours (MWh).
Electricity usage
On your electricity bill, this is the amount of electricity used in a billing cycle, measured in kilowatt-hours (kWh).
Emergency backup generation
The use of electric generators only during interruptions of normal power supply.
Energy audit
A review of your home or place of business to find out how much energy you are using and identify ways to reduce energy usage. The audit could be performed in person or by reviewing energy usage data for your residence or business property.
Energy charge
A portion of your total charge for electricity service; the total number of kilowatt-hours consumed within the billing cycle times the price you pay per kWh.
Energy efficiency
Using less energy to provide the same level of performance, comfort and convenience. The goal of energy efficiency is to reduce energy use, which may result in cost savings and less impact to the environment.
EnergyGuide Label
Yellow and black labels found on appliances that can help you compare the energy use of similar models while you shop. The Federal Trade Commission's Appliance Labeling Rule requires appliance manufacturers to put these labels on:
Energy service provider
An energy entity that provides service to a retail or end-use customer. Also known as a retail electricity provider.
Energy source
The primary source of providing power. The energy could be converted to electricity through chemical, mechanical or other means. Common energy sources include coal, petroleum, gas, water, uranium, wind, sunlight, geothermal, etc.
ENERGY STAR®
ENERGY STAR is a U.S. Environmental Protection Agency program that helps individuals and businesses save money and protect the environment through superior energy efficiency. Products that earn the ENERGY STAR label are independently certified to save energy without sacrificing features of functionality.
ESI I.D. (electric service identifier)
A unique 17- or 22-digit number in the ERCOT market given to an electricity delivery point by the TDSP. You can find this number on your electricity bill.
Fixed rate
You pay a certain rate for electricity, usually per kilowatt hour (kWh), each billing cycle. On a fixed rate plan, the rate will stay the same for the duration of your contract. Variable rate plans could change the rate from one billing cycle to the next.
Fossil fuel
A natural fuel formed in the earth from plant or animal remains, such as petroleum, coal and natural gas.
Fuel
Any substance that can be consumed to produce energy.
Generation
The production of electricity. In Texas, electricity is produced by a number of methods, including natural gas, coal, nuclear power, wind, water and solar energy.
Generator
A machine that converts mechanical energy into electricity to serve as a power source for other machines. Electrical generators found in power plants use water turbines, combustion engines, windmills or other sources of mechanical energy to spin wire coils in strong magnetic fields, including an electric potential in the coils.
Geothermal energy
Energy obtained by tapping underground reservoirs of heat, usually near volcanoes or other hot spots on the surface of the Earth.
Halogen lamp
A type of incandescent lamp that lasts much longer and is more energy efficient than the common incandescent lamp. The lamp uses a halogen gas, usually iodine or bromine, which causes the evaporating tungsten to be redeposited on the filament, thus prolonging its life.
Hydroelectricity
Hydroelectricity or hydroelectric power is the electricity obtained by harnessing the power of water flowing down from a high level. It is a timeless and renewable resource. Huge generators convert the potential energy of falling or fast-moving water into electrical energy.
HVAC
An abbreviation for the heating, ventilation and air-conditioning system, which is the system or systems that condition air in a building.
Incandescent lamp
A glass enclosure that produces light when a tungsten filament is electrically heated so that it glows. Much of the energy is converted into heat; therefore, this class of lamp is a relatively inefficient source of light. Included in this category are the familiar screw-in light bulbs, as well as somewhat more efficient lamps, such as tungsten halogen lamps, reflector or r-lamps, parabolic aluminized reflector (PAR) lamps and ellipsoidal reflector (ER) lamps.
Incandescent light bulbs
An incandescent light bulb or lamp is a source of electric light produced by a filament heated by an electric current. Governments around the world are phasing out incandescent light bulbs in favor of more energy-efficient lighting alternatives, such as compact fluorescent light bulbs (CFLs).
Kilowatt (kW)
A standard unit that measures electrical energy (1,000 watts = 1 kW).
Kilowatt hour (kWh)
A unit or measure of electricity supply or consumption equaling 1,000 watts operating for one hour. Ex: 1 kWh = ten 100 watt bulbs all burning at the same time for one hour; 10 bulbs x 100 watts each x 1 hour = 1 kWh.
Local wires company
The company that transmits and delivers electricity to a customer's home or business along the electrical poles and wires. The local wires company is responsible for maintenance and repair of these poles and wires and is also referred to as the Transmission and Distribution Service Provider (TDSP).
Lumens
A unit of measurement of light energy. Specifically, lumens measure the amount of light a lamp produces in all directions.
Meter
A device that measures the amount of electrical energy consumed by a residence, business or an electrically powered device. Power companies read meters to determine how much electricity each customer used. Types of electricity meters include digital meters and smart meters.
Nuclear power
The energy produced by splitting atoms in a nuclear reactor.
Off peak
A period of relatively low system demand for electricity. These periods often occur in daily, weekly and seasonal patterns. The use of smart meter technology has allowed electricity companies to offer new products that take advantage of off-peak pricing periods.
On peak
Periods of relatively high system demand for electricity. These periods often occur in daily, weekly and seasonal patterns.
Portable generator
Portable generators provide a source of backup power during a power outage. Types of portable generators include natural gas fueled, propane fueled and gasoline fueled.
Prepaid plans
Prepaid electricity plans provide electricity service on a pay-as-you-go basis. These plans offer customers the freedom to decide how much electricity to purchase, as opposed to a traditional plan that delivers a bill at the end of a billing cycle. Customers can choose to make recurring payments and avoid any worries about dwindling account balances.
Public Utility Commission of Texas (PUC)
The state agency responsible for the regulation and oversight of electricity and local telecommunication services in Texas. Under electricity choice, the PUC regulates the delivery of electricity and enforces customer protections.
R-value
A measure of the resistance of an insulating or building material to heat flow, expressed as R-11, R-20 and so on. The higher the R-value, the greater the resistance to heat flow and better insulating capability.
Radiant barrier
A thin, reflective foil sheet that reflects radiant heat back to its source. Typically installed in attics or as a house wrap, radiant barriers reduce summer heat gain and winter heat loss—resulting in a reduction in energy usage.
Rate
The amount you pay for your electricity is the rate, and it is usually an amount per kilowatt hour (kWh).
Renewable energy
Electricity made from resources that rely on fuel sources that restore themselves over short periods of time. These fuel sources include the sun, wind, moving water, organic plant and waste material (biomass), and the earth’s heat (geothermal).
Retail electric provider (REP)
In Texas, a REP is a company that sells electricity to consumers and is responsible for sending a monthly electricity bill.
Solar power
Heat radiation from the sun that is converted into electrical power.
Smart energy
The term smart energy comes from the philosophy of using the most cost-effective approach to meeting your electricity needs while maintaining the lowest environmental impact.
Smart home
A home equipped with lighting, heating and electronic devices that can be controlled remotely by phone or computer. Smart homes use a variety of tools to make their residents’ lives easier and more efficient, while also allowing for a smaller impact on the environment.
Smart meter
A type of electricity meter that has continuously available, remote, two-way communication and information storage capability. Smart meters record and store your electrical usage in 15-minute intervals and communicate that usage information back to your local wires company. Unlike traditional electric meters that only measure total consumption, smart meters show when the energy was consumed.
Thermal
A rising air current caused by heating from the underlying surface.
Transformer
A device used to transfer electric energy from one circuit to another.
Transmission and distribution service provider (TDSP)
The local wires company responsible for the poles and wires that transmit and deliver electricity to your home or business. TDSPs are responsible for the maintenance and repair of these poles and wires.
Usage
The amount of electricity you used during a specified billing period listed in kilowatt-hours (kWh). This is listed on your electric bill as kWh used.
Variable rate
With a variable rate electricity plan, the rate you pay may go up or down depending on the monthly changes in the marketplace.
Volt
A unit that measures the force used to produce an electric current. Also the push or force that moves electric current through a conductor.
Watt
A unit that measures electric power. 1 kW = 1,000 watts. 1 Megawatt (MW) = 1,000,000 watts.
Whole house generators
Whole house generators are a permanent solution to avoid the threat of a power outage. Whole house (or standby) generators require professional installation.
Wind power
A form of energy conversion in which turbines convert the kinetic energy of wind into electrical energy that can be used for power.
Wind turbine
A device that converts kinetic energy from the wind, also called wind energy, into mechanical energy in a process known as wind power.