With the deregulation of electricity markets and rise of alternative electricity companies that’s happened recently, energy companies have changed and evolved quite a bit in many parts of the country. For example, the average cost to deliver electricity for investor-owned utilities was 7.1 cents per kilowatt hour and generation accounted for approximately two-thirds of that cost in 1995.
According to the Edison Electric Institute, the cost of generating electrons currently accounts for less than half of the price of electricity in today’s day and age. That being said, there are still many aspects of power suppliers and energy companies that remains virtually the same as in years past. Here are three basic elements of traditional energy suppliers to know.
- Power Transactions: Energy companies are typically connected into groups of power systems that generate, distribute, transmit, and communicate with dispatch centers on their grid. Dispatch centers are basically the main control center that coordinates the actual buying and selling of electricity and energy. From there, individual energy companies may then buy and sell among themselves.
- Tariff Structure: When it comes to electricity, customers are divided into four basic groups: residential, commercial, industrial, and other. Some of the factors that influence these individual buyers include, demand levels, rate schedules, distribution voltage, accounting methods, and end-use applications.
- Executive Compensation: This is probably the most controversial aspect of all energy companies across the country. On the one hand, in locations where utilities are essentially monopolies it can become quite a point of contention when executives at the top of these companies are found to be making exorbitant sums of money off their constituents.
One of the arguments utility and energy companies will make when the eventual expense reports are released to the public is that regardless of how they sell their product, they still have to compete with other companies in similar industry to attract the best talent to run their company. In order to retain those top level executives the pay cna sometimes seem a bit high to the average person.
Today, electricity and energy is used in excess every day. In fact, electricity use alone is about 13 times greater today than it was in 1950.