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Where Can I Get Electricity?

U.S. homeowners consume electricity from four general sources


United States residents may get electricity for their homes from four sources: self-generation, electric cooperatives, public utilities, and investor-owned utilities.

Anyone with the motivation and technical wherewithal can self-generate electricity, but most U.S. residents don’t choose that route and instead become a customer of whatever type of provider is available in their area. In states where electricity has been deregulated, such as Texas, some residents may have a choice of types of providers.

Generating your own electricity

It’s possible to generate your own electricity using a stand-alone system based on a renewable power source such as solar. In addition to solar options, home owners can generate their own electricity by installing wind-turbine generators, small hydroelectric systems; biomass systems; fuel cells; and more. In emergencies, diesel generators are popular as a self-generation backup to utility-provided power.

Some self-reliant home owners may have the motivation, means and the right circumstances to generate electricity “off the grid” just for themselves. Others who want to generate their own electricity but also want peace of mind can choose to connect their systems to the grid and take advantage of “net metering.” Net metering means that if the grid-connected stand-alone system creates more electricity than the household uses, the home owner “sells” excess electricity to the utility.

For example, the first Bosch net zero house in the United States was recently unveiled in Chattahoochee Hills, Ga., southwest of Atlanta.

“Net zero” or “zero net energy” is a term used by the federal Department of Energy to describe homes that are ultra-efficient. The homes are constructed with the most energy-efficient building materials. And they’re outfitted with the most energy-efficient equipment.

For example, energy consumed by the house from Greystone Power Corporation, a local cooperative, is offset by the house’s solar power system and energy-saving mechanical and passive features. A geothermal pump provides heat and air conditioning from below the earth’s surface.

The solar-power system produces more electricity than the house uses. The unused electricity is distributed to GreyStone’s grid, where it’s used elsewhere as needed. Greystone debits power used from its grid and credits excess power generated by the house. It’s estimated that the house’s electricity use – and the electric bill – should be at or near net zero at the end of the year.

Getting electricity from an electric cooperative

Today’s electric cooperatives in rural America are tax-exempt non-profit businesses set up and owned by the consumers who benefit from the services provided. Generally, cooperatives distribute electricity to customers in a specific geographic area that’s not served by any other utility.

For example, People’s Energy Cooperative (PEC) offers electricity to members in a service area that covers six counties surrounding Rochester in the southeast corner of Minnesota. PEC was organized in 1936 and now has more than 11,500 members. In its 2011 fiscal year, PEC had $30.2 million in revenue from electricity sales.

One of the challenges of rural cooperatives is that they serve areas where populations are much less dense than in cities and towns. PEC has only five customers per mile of transmission line, whereas, the average number of customers per line mile for investor-owned utilities is 35. Despite that challenge, cooperatives offer members numerous advantages compared to other electricity providers.

How electric utilities differ from commercial utilities

Getting electricity from a public utility

Homeowners may be able to purchase electricity from a public utility, which includes not-for-profit municipal, state, and federal utilities or authorities.

Customers of publicly owned utilities are generally residents of the controlling jurisdictions such as cities and towns and states. The federal government also owns utility agencies such as the Bonneville Power Administration based in Portland, Ore., and the Tennessee Valley Authority based in Knoxville, Tenn. These agencies own and operate generation facilities such as hydroelectric dams; coal-, gas- and oil-fired plants; and nuclear-powered plants.

Many U.S. residents are indirect customers of the federal public utilities because they consume electricity generated by agencies such as BPA and TVA, who wholesale it to electric distributors and marketers, as well as other public utilities, such as Decatur (Ala.) Utilities.

Decatur Utilities was created in 1939 and provides electric service to more than 26,000 residential and commercial/industrial customers in the north-central Alabama city of 55,683 (2010). About 69 percent ($97.9 million) of Decatur’s $141.9 million fiscal 2011 revenue was from electricity.

The utility has the fourth-lowest residential electricity rate among TVA’s 155 distributors.

Getting electricity from an investor-owned utility (IOU)

Privately owned for-profit companies and corporations owned by stockholders are often referred to as investor-owned utilities (IOUs).

These utilities are privately-owned electric corporations whose stock is traded on the public exchanges. The utilities are regulated by state commissions or boards, which must authorize rate changes and other business policies.

http://www.nrgenergy.com/about/subsidiaries.html NRG Energy, Inc., based in Princeton, N.J., is among the nation’s most diversified IOUs. The company is on the Fortune 500 list and is an S&P 500 Index company. NRG has a large power generation portfolio with plants that have capacity to produce more than 25,000 megawatts. That’s enough to power almost 20 million homes.

The company’s consumer electric providers Reliant Energy and Green Mountain Energy Company combined have almost 1.9 million residential, business, commercial and industrial customers. NRG has investments in solar, wind and nuclear power, as well as an electric vehicle recharging/support system. In 2011, NRG had net sales of almost $9.08 billion and earned more than $2.4 billion in gross profit.

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