My daughter recently started asking questions that I couldn’t answer. One of her teachers assigned the class an “origins” project, where they had to choose something they could bring to class and prepare a report on where all the pieces of it came from. My daughter chose crayons, and we researched Crayola, paraffin wax, and petroleum. One kid in class researched his science textbook. That led to the legislature. One kid brought in a Whopper.
My daughter loved the project. But for weeks, she’s been pointing at everything she can see and asking me: “Dad, where does coffee come from? Dad, where do diamonds came from? Dad, where does electricity come from?”
Coffee and diamonds I don’t know about, and I don’t really want to. But when she brought up electricity, I thought, finally something I can handle. I do it every day, working for Liberty Power. I sat down with my daughter that Sunday and together we researched how electric power in the U.S. gets to our lightbulbs.
It turns out, it’s kind of complicated. In the U.S., electricity is generated, by volume, from: coal, natural gas, nuclear fusion, hydropower, wind, biomass, petroleum, solar energy, and geothermal vents. Of course, telling my daughter this just got her asking what each of these were, and where they came from. So here’s the rundown:
By the time my daughter and I got through these different energy sources, it was time for lunch. As she ate the grilled cheese sandwich I cooked for her on our electric stove (probably coal or nuclear powered), she chewed on what we’d learned that morning. “Okay, Dad,” she asked. “But how does it get to our house?” I looked out the window. The steady drizzle showed no signs of letting up. I suppose yard work could wait then. Besides, it was kinda nice to spend some time learning with her. I cleaned up our plates and we headed back to our research.
After a little while, she picked her head up from her tablet. “Hey, Dad, look at this,” she said. “I figured it out. Most of them work the same way. They spin a turbine, and that makes electricity.”
“Almost there,” I told her. “The turbine is only part of the mechanism. It’s really just something that can be spun by wind, water, or hot gases. Then the turbine spins a generator, and the generator makes electricity. It does that by spinning magnets near copper wire.”
“Okay,” she said. “I think that makes sense. But still, how does it get to our house?”
“Let’s take a look,” I said.
Power plants make energy, but they don’t deliver it. Once they make it, they sell it to other companies who transport it to customers. There are a few more steps in between power plants and your light bulbs.
Moving gasses or liquids spin turbines, which spin a rotor. The rotor spins magnets in a generator, which creates an electrical current.
Like gas being pushed through a pipeline, the energy that comes directly from power plants needs to be sped up to travel long distances to where it’s needed.
Transformer stations increase the voltage of electricity—which is roughly equivalent to the speed of a current—from power plants and push this high voltage charge into the transmission grid. Voltage is how fast electrons are moving, amperage is how many electrons are moving.
This is what we call the electric highway. Large, high-voltage wires deliver electricity across states to various substations. Substations are like highway exits. Electricity gets off the highway to travel on local roads to homes and businesses.
Transformers also decrease the voltage of electricity after it has traveled through the transmission grid. Just like you wouldn’t want to drive 70 mph through your local subdivision, you don’t want to run high-voltage electricity through low-voltage distribution wires.
This low voltage charge then travels through smaller wires to your home and business.
Just like electricity passes through many physical stages to get from the power plant to your home, it passes through many businesses. Aha! This is where a third party energy supplier comes in!
Power plants sell electricity on energy markets. While these transactions occur on computer mainframes at barely conceivable speeds, in concept they are relatively simple. Power plants bring their electricity to the market, like farmers bringing in broccoli in the back of their wagons. Depending on the supply and the demand, customers and suppliers negotiate the price. Wholesalers, utility companies, and third party energy suppliers buy electricity from these markets, and each other. Utilities and third party suppliers sell that energy to homes and businesses.
“Well, what’s the difference between utilities and third parties?” she asks.
“Let’s take a look,” I tell her.
Utilities run and maintain the transmission systems. So, third party energy suppliers, who don’t have to carry the costs of the transmission and distribution infrastructure, are able to offer competitive rates on electricity. Whether you purchase your electricity from a third party or the utility, you still must pay the utility for the cost of transmission. Often, third party suppliers are able to purchase energy in bulk from wholesalers ahead of time, then offer consumers fixed energy prices as opposed to variable rates that fluctuate based on current market prices. Fixed rate plans protect consumers from rate shifts due to spikes in demand or drops in supply. This predictability can help consumers plan their costs ahead and develop more accurate budgets. In states where the government has restructured utility monopolies to allow third party energy suppliers, consumers can choose who to buy their electricity from. In Texas, unlike in other states, consumers actually can’t even buy their electricity from utilities, they must buy it from the city they live in. Or, if their city doesn’t sell electricity, one of a variety of third-party suppliers.
“Why’s that?” she asked.
“Texas plays by their own rules,” I said.
“Okay,” she said. “I think I get it.” Outside, the sun was coming out from the clouds. In the misty space between them, we both spotted a beautiful rainbow. We watched it together for a minute. Then she looked at me and asked me: “Dad, where do rainbows come from?”
“Let’s figure that one out next week,” I said. “The sun’s coming out. How about we take a walk around the lake?”
At Liberty Power, we understand the energy industry can be complex, but we are here to make it easier. We strive to provide predictable, reliable energy plans for our customers. To learn more about our fixed-rate power plans, get in touch today.