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35-566: Electric utility systems in North America developed over time as regulated monopolies , jurisdictional utilities given rights to own and operate transmission and distribution networks in a given geographical area along with the responsibility to serve all loads in that same area. At first, utility companies generally served their own system load demand by building local power generation facilities within their systems. Social, economic, and ecological influences later led to new arrangements where

70-411: A dilemma: The problems were often being caused by external influences, and the only way available to them to reduce the stress on the transmission system was to curtail their own transmission sales. This resulted in a loss of revenue and still did not always solve the overloading problems. The North American Electric Reliability Corporation (NERC) stepped in to address this new problem that threatened

105-530: A great deal of private investment. The success in Nicaragua may not be an easily replicated situation however. The movement was known as Energiewende and it is generally considered a failure for many reasons. A primary reason was that it was improperly timed and was proposed during a period in which their energy economy was under more competition. Globally, the transition of electric utilities to renewables remains slow, hindered by concurrent continued investment in

140-645: A utility company might enter into long-term power purchase or sale agreements with neighboring utility companies, or locate new generation facilities outside of their system and enter into long-term agreements for transmission rights to deliver that energy to their own system. In the short-term world of day-to-day operations, utility companies would agree to "preschedule" (day ahead) or "real time" (same day or next hour) energy transactions with adjacent companies to supplement their own generation asset capabilities. As utility companies began integrating their operations in more complex ways with their neighbors, they evolved into

175-434: A vertical organizational structure with three tiers: Generation, Transmission, and Scheduling. On a day-to-day or day-ahead operational level these functions might be performed by three or more people at large utilities, but might be combined into a single employee's job at a small utility. The size of the back office support for each function varies greatly depending upon the size of the utility. The generation group manages

210-843: Is also more likely to attract executives experienced in working in competitive environments. In the United States, the Energy Policy Act of 1992 removed previous barriers to wholesale competition in the electric utility industry. Currently 24 states allow for deregulated electric utilities: Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Virginia, Arizona, Arkansas, California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, New Jersey, New Mexico, New York, and Washington D.C. As electric utility monopolies have been increasingly broken up into deregulated businesses, executive compensation has risen; particularly incentive compensation. Oversight

245-410: Is generally "non-firm" and purchased on an hour to hour basis. Daily non-firm is a slightly higher priority (because the buyer committed to purchasing all day), and increments go up from there to weekly, monthly, seasonally, yearly, or longer with the cost for each also rising incrementally. "Firm" transmission services are even more expensive, but are the last transactions to be curtailed. Even before

280-482: Is inherently independent of more traditional sources of energy, the market seems to have a very different structure. In the United States, to promote the production and development of alternative energies, there are many subsidies, rewards, and incentives that encourage companies to take up the challenge themselves. There is precedent for such a system working in countries like Nicaragua. In 2005, Nicaragua gave renewable energy companies tax and duty exemptions, which spurred

315-458: Is typically carried out at the national level, however it varies depending on financial support and external influences. There is no existence of any influential international energy oversight organization. There does exist a World Energy Council, but its mission is mostly to advise and share new information. It does not hold any kind of legislative or executive power. Alternative energy has become more and more prevalent in recent times and as it

350-518: The EPAct of 1992, construction of new independently owned generation assets began in response to the development of the North American electricity market . Recognizing competition was coming, electric utility companies began modifying their scheduling functions by forming affiliated Power Marketing departments. Similarly, financial trading interests and existing energy companies (outside of electricity) saw

385-471: The French company EDF was the world's largest producer of electricity. An electric power system is a group of generation, transmission, distribution, communication, and other facilities that are physically connected. The flow of electricity within the system is maintained and controlled by dispatch centers which can buy and sell electricity based on system requirements. The executive compensation received by

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420-561: The North American power grid by introducing the NERC Tagging application. NERC Tags captured entire transactions from beginning to end. This let them string together all the transmission legs obtained on various OASIS nodes, and then determine how the total schedule impacted transmission systems, and what priorities of transmission were used in the schedule. This let them determine which schedules should be curtailed to relieve loading on transmission systems. NERC also assumed initial control of

455-613: The OASIS node. Unplanned outages and other system emergencies can adversely impact the total power transfer capability across transmission systems, and it sometimes becomes necessary for transmission providers to curtail power flows across the system by revoking transmission rights given to buyers on the OASIS. Some transmission buyers are willing to pay higher rates to avoid having their transactions curtailed, and as such transmission companies offer different priorities of transmission service at varying rates. The least expensive type of transmission

490-658: The Transmission System Information Networks (TSIN), a database of electric power system data. In 2012 the North American Energy Standards Board (NAESB), an industry council, assumed responsibility for TSIN. It is now the "OATI Web Registry" and requires that users be registered. The registry is a web-based database containing a comprehensive listing of generation points, transmission facilities and delivery points as well as transmission and generation priority definitions with regard to

525-423: The appearance of the OASIS nodes, many groups of transmission owners had already turned over operational control of their collective bulk transmission systems to Independent System Operators of various forms. These ISO's offered OASIS access to their collective systems very early on, so that it was often possible to make a single OASIS transmission service request that could cross multiple transmission systems. Since

560-659: The applications that use it (the various OASIS nodes as well as the NERC Tagging application). Electric utility An electric utility , or a power company , is a company in the electric power industry (often a public utility ) that engages in electricity generation and distribution of electricity for sale generally in a regulated market . The electrical utility industry is a major provider of energy in most countries. Electric utilities include investor owned , publicly owned , cooperatives , and nationalized entities. They may be engaged in all or only some aspects of

595-458: The availability of the transmission system nor the transactions being scheduled on it. Order 889 went to great lengths to detail exactly how all participants in the electricity market should interact with transmission providers. It laid out the structure and function of what became known as OASIS "nodes," which are secure, web-based interfaces to each transmission system's market offerings and transmission availability announcements. Each OASIS node

630-414: The companies themselves cutting corners and costs for profits which has proven to be disastrous in the worst-case scenarios. This placed a strain on many other countries as many foreign governments felt pressured to close nuclear power plants in response to public concerns. Nuclear energy however still holds a major part in many communities around the world. Utilities have found that it isn't simple to meet

665-406: The electric transmission systems in North America. The act's intent was to allow large customers (and in theory, every customer) to choose their electricity supplier and subsequently pay for the transmission to deliver it from the generation to serve their load. Based on the premise that new generating facilities would be allowed fair access to their regional transmission system, and precipitated by

700-777: The executives in utility companies often receives the most scrutiny in the review of operating expenses . Just as regulated utilities and their governing bodies struggle to maintain a balance between keeping consumer costs reasonable and being profitable enough to attract investors, they must also compete with private companies for talented executives and then be able to retain those executives. Regulated companies are less likely to use incentive-based remuneration in addition to base salaries. Executives in regulated electric utilities are less likely to be paid for their performance in bonuses or stock options . They are less likely to approve compensation policies that include incentive-based pay. The compensation for electric utility executives will be

735-486: The expansion of fossil fuel capacity. Nuclear energy may be classified as a green source depending on the country. Although there used to be much more privatization in this energy sector, after the 2011 Fukushima district nuclear power plant disaster in Japan, there has been a move away from nuclear energy itself, especially for privately owned nuclear power plants. The criticism being that privatization of companies tend to have

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770-600: The inception of OASIS, and under the prodding of FERC to move transmission assets under the control of ISO's, the number of OASIS nodes is decreasing as ISO's assume control of transmission systems and consolidate their related OASIS functions. After the doors opened to allow power marketers to move their electricity purchases across multiple transmission systems, many transmission operators saw their transmission systems loaded to much higher levels. Even though transmission services are generally obtained "point-to-point", in actuality power flows divide among numerous paths according to

805-407: The industry. Electricity markets are also considered electric utilities—these entities buy and sell electricity, acting as brokers, but usually do not own or operate generation, transmission, or distribution facilities. Utilities are regulated by local and national authorities. Electric utilities are facing increasing demands including aging infrastructure , reliability, and regulation. In 2009,

840-679: The lowest in regulated utilities that have an unfavorable regulatory environment. These companies have more political constraints than those in a favorable regulatory environment and are less likely to have a positive response to requests for rate increases. Just as increased constraints from regulation drive compensation down for executives in electric utilities, deregulation has been shown to increase remuneration. The need to encourage risk-taking behavior in seeking new investment opportunities while keeping costs under control requires deregulated companies to offer performance-based incentives to their executives. It has been found that increased compensation

875-488: The maintenance and operations of generation assets, with an eye on the future regarding when, where and how much generation assets will need to be developed to keep up with future demand. The transmission group concerns itself with maintaining the high voltage transmission system and lower voltage distribution system. As load demands increase or new generation assets come online in their systems, they upgrade existing facilities or construct new transmission corridors to maintain

910-570: The new open access requirements. The complaints generally followed the same theme: vertically integrated electric utility companies would favor their own affiliated power marketing division over external parties trying to move power on the system. In many cases, the power marketers operated side by side with the transmission operators (or it might even be the same person) and there were no rules to prevent unfair treatment of external transmission system users. To protect and promote generation competition and also enforce fair treatment of external users of

945-589: The opportunities in the emerging electricity market and began to organize unaffiliated power marketing divisions. With open access, anyone with the proper resources and/or creditworthiness could purchase the rights to generation, move it across the transmission network (provided adequate capacity was available), and deliver it to a place of higher demand. Following passage of the EPAct of 1992, independent generation owner/operators (also called independent power producers or IPPs) and unaffiliated power marketers lodged frequent complaints with FERC about unfair treatment under

980-411: The opportunity to negotiate the rates they will pay their supplier for electricity. In some cases they might even have their own generation assets as well. If they chose to use their supplier's generation instead of their own, they might also be required to pay a fee for the transmission to deliver it, since that transmission might be built specifically to serve their needs. Fees for services provided by

1015-461: The power grid to operate reliably. Transmission operators perform system studies in various future time frames to determine how much transfer capacity is required to serve their own "native load", and how much capacity must remain as a buffer to prevent unscheduled or accidental overflows that can damage high voltage equipment. The difference between the capacity needed to serve load and to maintain safe flow margins can be made available for purchase on

1050-410: The properties of electricity and thus the actual energy flows follow the path of least resistance —actually the flows are based on the relative (not least) inverse of the resistances in parallel circuits. A result of the long distance electricity transactions being scheduled was the impact of "loop flows" caused by energy flowing on these alternate paths. Transmission system operators were faced with

1085-527: The reliable delivery of energy. The scheduling group is responsible for ensuring that there is adequate power supply to meet the demand of the customer load on a day-to-day and hour-to-hour basis, and also for procuring resources to meet long term needs. These resources can be procured through the generation group, or through purchases and sales with other companies. Unlike a typical residential or commercial/industrial customer, large bulk users of electricity such as mills, mines and large factories generally have

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1120-481: The transmission group were defined in a pro forma tariff, a document the transmission group supplied that detailed requirements and responsibilities for the purchaser and provider, and definitions and costs of the types of transmission services available. The Energy Policy Act of 1992 (EPAct) laid the initial foundation for the eventual deregulation of the North American electricity market. This Act called for utility companies to allow external entities fair access to

1155-522: The transmission system, FERC issued Order 888 and Order 889 on April 24, 1996. The EPAct of 1992 was the beginning of electric deregulation in North America, but Orders 888 and 889 marked the point where the trading of electricity gained a firm foothold. Order 888's primary objective was to establish and promote competition in the generation market, by ensuring fair access and market treatment of transmission customers. FERC outlined six points to accomplish this goal: One fairly immediate result of this order

1190-429: Was the functional separation and isolation of the power schedulers and power marketers within vertically integrated utilities from their company's area of transmission operations. Affiliated power marketers could no longer work alongside the transmission operators who were charged with treating them and external parties equally, and at the same time affiliated power marketers would no longer have any "inside information" on

1225-716: Was to be the single point of information dissemination to the market as well as the customer portal for transmission service requests (TSR), even for affiliated power marketers wanting access to their own parent company's transmission. OASIS nodes are entirely web-based, and public access is limited. Power marketers that become signatories to a transmission provider's OATT gain more complete access so they can view existing transmission and service availability and existing service requests made by other parties. There are also market observers who have read-only access, who may view activity but not request services. Transmission facilities have power transfer limits that must be maintained to allow

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