HOME

TheInfoList



OR:

Electricity retailing is the final sale of
electricity Electricity is the set of physical phenomena associated with the presence and motion of matter possessing an electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described by Maxwel ...
from
generation A generation is all of the people born and living at about the same time, regarded collectively. It also is "the average period, generally considered to be about 20–⁠30 years, during which children are born and grow up, become adults, and b ...
to the end-use consumer. This is the fourth major step in the electricity delivery process, which also includes
generation A generation is all of the people born and living at about the same time, regarded collectively. It also is "the average period, generally considered to be about 20–⁠30 years, during which children are born and grow up, become adults, and b ...
, transmission and
distribution Distribution may refer to: Mathematics *Distribution (mathematics), generalized functions used to formulate solutions of partial differential equations *Probability distribution, the probability of a particular value or value range of a varia ...
.


Beginnings

Electricity
retail Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholes ...
ing began at the end of the 19th century when the bodies which generated electricity for their own use made supply available to third parties. In the beginning, electricity was primarily used for street
lighting Lighting or illumination is the deliberate use of light to achieve practical or aesthetic effects. Lighting includes the use of both artificial light sources like lamps and light fixtures, as well as natural illumination by capturing daylight. ...
and
tram A tram (also known as a streetcar or trolley in Canada and the United States) is an urban rail transit in which Rolling stock, vehicles, whether individual railcars or multiple-unit trains, run on tramway tracks on urban public streets; some ...
s. The public could buy once large scale electric companies had been started. The provision of these services was generally the responsibility of electric companies or
municipal authorities Local government is a generic term for the lowest tiers of governance or public administration within a particular sovereign state. Local governments typically constitute a subdivision of a higher-level political or administrative unit, such a ...
who either set up their own departments or contracted the services from private entrepreneurs. Residential, commercial and industrial use of electricity was confined, initially, to lighting but this changed dramatically with the development of
electric motor An electric motor is a machine that converts electrical energy into mechanical energy. Most electric motors operate through the interaction between the motor's magnetic field and electric current in a electromagnetic coil, wire winding to gene ...
s, heaters and
communication Communication is commonly defined as the transmission of information. Its precise definition is disputed and there are disagreements about whether Intention, unintentional or failed transmissions are included and whether communication not onl ...
devices. The basic principle of supply has not changed much over time. The amount of energy used by the domestic consumer, and thus the amount charged for, is measured through an
electricity meter file:Hydro quebec meter.JPG, North American domestic analog signal, analog (Galileo Ferraris, Ferraris disk) electricity meter. file:Transparent Electricity Meter found in Israel.JPG, Electricity meter with transparent plastic case (Israel) fil ...
that is usually placed near the input of a home to provide easy access to the meter reader. Customers are usually charged a monthly service fee and additional charges based on the electrical energy (in kWh) consumed by the household or business during the month. Commercial and industrial consumers normally have more complex pricing schemes. These require meters that measure the energy usage in time intervals (such as a half-hour) to impose charges based on both the amount of energy consumed and the maximum rate of consumption, i.e. the maximum demand. This is usually called peak demand charge. Frequent reporting also allows the retailer to pass on the spot price (with some markup) to its customers.


Monopoly supply

The rapid growth in electric appliance usage in the early part of the 20th century contributed to an explosive growth in
electrification Electrification is the process of powering by electricity and, in many contexts, the introduction of such power by changing over from an earlier power source. In the context of history of technology and economic development, electrification refe ...
around the world. The supply of electricity to homes, offices, shops, factories, farms, and mines became the responsibility of
public utilities A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and r ...
, which were either private organizations subject to
monopoly A monopoly (from Greek language, Greek and ) is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by a lack of economic Competition (economics), competition to produce ...
regulation Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. Fo ...
or public authorities owned by local, state or national bodies. In some countries a statutory or
government-granted monopoly In economics, a government-granted monopoly (also called a "de jure monopoly" or "regulated monopoly") is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a go ...
was created to be controlled by legislation, for example
Eskom Eskom Hld SOC Ltd or Eskom is a South African electricity public utility. Eskom was established in 1923 as the Electricity Supply Commission (ESCOM) (). Eskom represents South Africa in the Southern African Power Pool. The utility is the larg ...
in
South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. Its Provinces of South Africa, nine provinces are bounded to the south by of coastline that stretches along the Atlantic O ...
. Electricity retailing in the period from approximately 1890 to 1990 consisted of managing the connection, disconnection and billing of electricity consumers by the local monopoly supplier. In many utilities there was a
marketing Marketing is the act of acquiring, satisfying and retaining customers. It is one of the primary components of Business administration, business management and commerce. Marketing is usually conducted by the seller, typically a retailer or ma ...
function which encouraged electricity usage when there was excess capacity to supply and encouraged conservation when supply was tight.


Creating a market

An electricity provider is often known as "the electric company" or "the power company". In 1990 there was a significant development in the way electricity was bought and sold. In many countries, the
electricity market An electricity market is a system that enables the exchange of electrical energy, through an electrical grid. Historically, electricity has been primarily sold by companies that operate electric generators, and purchased by consumers or electr ...
was
deregulated Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental Economic regulation, regulation of the economy. It became common in advanced industrial economies in the 19 ...
to open up the supply of electricity to competition. In the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...
the
electricity supply industry The electric power industry covers the generation, transmission, distribution and sale of electric power to the general public and industry. The commercial distribution of electric power started in 1882 when electricity was produced for elect ...
was radically reformed to establish competition, including a market in advising users about switching supplier. This trend continued in other countries (see New Zealand Electricity Market and
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
) and the role of electricity retailing changed from what was essentially an administrative function within an integrated utility to become a risk management function within a competitive
electricity market An electricity market is a system that enables the exchange of electrical energy, through an electrical grid. Historically, electricity has been primarily sold by companies that operate electric generators, and purchased by consumers or electr ...
. Electricity retailers now offer fixed prices or variable for electricity to their customers and manage the risk involved in purchasing electricity from spot markets or electricity pools. This development has not been without casualties. The most notable example of poor risk management (coupled with poor market regulation) was the 2001 California electricity crisis, when
Pacific Gas and Electric The Pacific Gas and Electric Company (PG&E) is an American investor-owned utility (IOU). The company is headquartered at Kaiser Center, in Oakland, California. PG&E provides natural gas and electricity to 5.2 million households in the norther ...
and Southern California Edison were driven into bankruptcy by having to purchase electricity at high spot prices and sell at low fixed rates. Customers may choose from a number of competing suppliers. They may also opt to purchase "green" power, i.e. electricity sourced from
renewable energy Renewable energy (also called green energy) is energy made from renewable resource, renewable natural resources that are replenished on a human lifetime, human timescale. The most widely used renewable energy types are solar energy, wind pow ...
generation such as
wind power Wind power is the use of wind energy to generate useful work. Historically, wind power was used by sails, windmills and windpumps, but today it is mostly used to generate electricity. This article deals only with wind power for electricity ge ...
or
solar power Solar power, also known as solar electricity, is the conversion of energy from sunlight into electricity, either directly using photovoltaics (PV) or indirectly using concentrated solar power. Solar panels use the photovoltaic effect to c ...
.


United States

Over the past several decades, many US states have moved to deregulate their electric markets, with 24 states allowing for at least some competition among retail electric providers (REPs) including
California California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...
,
Texas Texas ( , ; or ) is the most populous U.S. state, state in the South Central United States, South Central region of the United States. It borders Louisiana to the east, Arkansas to the northeast, Oklahoma to the north, New Mexico to the we ...
, and New York. Deregulation of electric retailers has been subject to much controversy as more states have opted for competitive markets.


See also

*
Distributed generation Distributed generation, also distributed energy, on-site generation (OSG), or district/decentralized energy, is electrical generation and storage performed by a variety of small, grid-connected or distribution system-connected devices referred ...
* Eugene Green Energy Standard *
Net metering Net metering (or net energy metering, NEM) is an electricity billing mechanism that allows consumers who generate some or all of their own electricity to use that electricity anytime, instead of when it is generated. This is particularly impor ...
* Microgeneration * Peak demand and off-peak *
Vehicle-to-grid Vehicle-to-grid (V2G) describes a system in which plug-in electric vehicles (PIEVs) sell demand response services to the electrical grid. Such services are either backfeeding electricity to the grid, or reducing the rate of charge from the gri ...
* Deregulation of the Texas electricity market


References

{{Authority control Electric power distribution Electricity markets Service retailing