The Generation and Transmission of Power
By Chris Schweitzer, General Manager, Auburn Electric
This is part of a continuing series on the electric utility. The first blog explained how rates are calculated. In the second blog, we focused on how the electric utility is regulated and how rates are determined and put into effect. In this third blog, we are explaining the wholesale cost of power and a perspective of how power is generated and transmitted.
Some argue that the electrification of America is one of the most significant technological advancements ever made—and we agree. Today it’s a luxury we’ve had for so long, many rarely think about it unless there’s a significant outage. And we don’t often stop to think how we get our power and what it takes to provide it.
Utilities across the U.S. get their electric power in different ways. Some generate their own power, while others like Auburn Electric purchase power from wholesale providers who generate it. We currently purchase wholesale power from Indiana Michigan Power Company (I&M) through a federally-regulated contract. Auburn Electric then delivers this purchased power to our ratepayers’ homes and businesses via the electric lines you see above ground and don’t see underground.
Energy Sources Continue to Evolve
Today, in the United States, wholesale providers generate electricity using several different sources of energy:
|Fossil Fuels||Nuclear Energy||Renewable Energy Sources|
Source: U.S. Energy Information Administration
Just like the digital technology we use daily has significantly evolved, so has the way we generate and supply power (albeit not as fast). Consider that in the 1970s it was illegal to generate power from natural gas because it was in such short supply. Now, its availability has made it the leading source of power generation. In the same way, decades ago, solar-generated power wasn’t even used. Now, it’s slowly emerging as a viable source. Auburn’s electric grid is beginning to see a small subset of customers implement small solar arrays.
Considering the evolution of renewable energy sources, most industry experts still advocate for a blend of electricity sources. The provider’s “energy mix” depends on a few variables, including:
- Availability of usable resources
- Extent and type of energy needs
- Policy choices
- Cost and reliability of different resources
Even more, a blend of energy sources also provides insulation from the variability of renewable energy sources. After all, the sun is not always shining and the wind isn’t always blowing.
I&M (the wholesale provider that produces the power we purchase) reports that it generates 66 percent of its energy from emission-free sources that include solar, wind, hydro and the company’s Cook Nuclear Plant. I&M also operates four solar power plants in Indiana and buys energy from three Hoosier wind farms. That means 34% of the power they generate is reliant on natural gas and coal. I&M delivers wholesale power to Auburn over high voltage transmission lines.
Powering Our Community
The next time you look at your power bill, we hope you’ll think a little differently about where that power was generated and how it gets delivered to your home or business. This correlates directly to your monthly bill. Your bill is comprised of the cost of power purchased from I&M and the cost of the local Auburn electric infrastructure. In Auburn, the total cost of electricity is 80% external wholesale purchased power and transmission and 20% local Auburn facilities and services. That’s why every day at Auburn Electric, as we implement more process, strategy and technology to ensure our ratepayers have reliable power at all times, we’re extremely aware of where our electricity comes from and what it takes to get it to you.