Electricity, like the printing press or the Internet, is what is known as a "general purpose" technology—an innovation that revolutionizes society and forms the foundation of modern life as we know it. When you think of all the ways we use electricity every day—riding an elevator, heating our food, charging our phones—it becomes difficult to imagine a world without it. But what, exactly, is electricity? And how has it come to play such a central role in our lives?
Electricity is a naturally occurring phenomenon that people have learned to harness through a series of creative inventions. For modern commercial usage, electricity is generated at power plants by burning nonrenewable fossil fuels such as coal, natural gas, and petroleum, or by capturing the energy of renewable sources such as the wind, sunshine, and water. Each of these processes converts energy from its original source into usable electricity, which is carried away from the power plant along high-capacity transmission wires and into the network of power lines known as the electric grid. Before it reaches our homes, the electricity first travels to neighborhood substations and then along smaller distribution lines to electrical transformers (either underground or high on telephone poles), which reduce the strength, or voltage, of the electricity to a level that is safe to use for our everyday needs. When you plug a device into an outlet, you are tapping into the electric grid – electricity flows into one prong, through the device, and out the other prong, completing a circuit that provides the energy your phone charger, microwave, or television needs to function.
Before electricity, lighting was provided by candles and gas lamps, our food was stored in iceboxes, and fireplaces were the main source of heat in our homes. Although people have been aware of electric forces since Ancient Greece, the term "electricity" was only first used in 1600. Since then, many familiar names – Benjamin Franklin, Thomas Edison, Nikola Tesla – have contributed to our understanding of electricity, making it impossible to give credit to just one or two inventors. Benjamin Franklin, in his famous 1752 kite experiment, discovered that lightning is a naturally occurring source of electricity. Italian physicist Alessandro Volta invented the electric battery in 1800, providing us with the first controlled, usable source of electricity. Throughout the 19th century, many important scientists contributed to our knowledge of electricity – the work of Michael Faraday led to the invention of the electric generator, Thomas Edison’s light bulb led to the first widespread commercial use of electricity, and Nikola Tesla’s experiments with alternating current allowed electricity to be transmitted across vast distances. Building on all of these innovations, electricity started playing a greater role in everyday life. Cleveland, Ohio became the first city to use electric lamps for public lighting in 1879, and that same year San Francisco’s California Electric Light Company, Inc. became the first company to sell electricity to customers. Small electrical stations capable of powering a few blocks were in place in many American cities by 1890, and by the time America’s first alternating current power line – the same kind of power line we use today – opened in 1893 between Folsom and Sacramento, California, the country’s electricity industry was rapidly expanding.
Electricity from the power plant is brought to you along a network of power equipment and lines. Electricity leaves the power plant on high power transmission lines on tall towers to substations and is brought to homes and businesses by transformers that manage the voltage and service lines that carry the current.
Producing and delivering the energy that powers our homes and businesses often involves introducing new terms. We've listed and defined many of those to help you navigate the energy process along with us.
There are four main areas that make up the cost of your energy:
Generation means the production of electricity. You will pay electricity suppliers for the generation of electricity. We will charge you for the Standard Offer Service (SOS) based on the rate at which we buy electricity for our customers. Or, you can choose another energy supplier and pay them directly. Distribution is everything needed to deliver electricity safely and reliably to your electric meter. It covers the cost of maintaining, expanding and improving our electric system. Transmission is the cost of transmitting electricity from power plants over high-voltage lines and towers to the distribution system. While we own some transmission facilities, all transmission in the region is regulated by a regional transmission operator (RTO). Both the distribution and transmission costs are regulated. Surcharges refer to taxes and other charges that we are required to include on your bills. Some examples are Delivery Tax, Environmental Surcharge and Gross Receipts Tax. The funds are collected by the company and passed through to the appropriate government agency. To see the breakdown of your dollar, check out the graphics for our customers. You can also learn more about how rates are determined by reading our Rates 101 information.
