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Electric power generation, transmission, and distribution. This segment includes firms engaged in the generation, transmission, and distribution of electric power. Electric plants harness highly pressurized steam or some force of nature to spin the blades of a turbine, which is attached to an electric generator. Coal is by far the dominant fuel used to generate steam in electric power plants, followed by nuclear power, natural gas, petroleum, and other energy sources. Hydroelectric generators are powered by the release of the tremendous pressure of water existing at the bottom of a dam or near a waterfall. Scientists also are conducting considerable research into renewable sources of electric powergeothermal, wind, and solar energy.
Legislative changes and industry competition have created new classes of firms that generate and sell electricity. Some industrial plants have their own electricity generating facilities, capable of producing more power than they require. Those that sell their excess power to utilities or to other industrial plants are called nonutility generators (NUGs). A type of NUG, termed an independent power producer, is an electricity generating plant designed to take advantage of both industry deregulation and the latest generating technology to compete directly with utilities for industrial and other wholesale customers.
Transmission or high voltage lines supported by huge towers connect generating plants with industrial customers and substations. At substations, the electricity's voltage is reduced and made available for household and small business use via distribution lines, which usually are carried by telephone poles.
Natural gas distribution. Natural gas, a clear odorless gas, is found underground, often near or associated with crude oil reserves. Exploration and extraction of natural gas is part of the oil and gas extraction industry, covered elsewhere in the Career Guide to Industries. Once found and brought to the surface, it is transported throughout the United States, Canada, and Mexico by gas transmission companies using pressurized pipelines. Local distribution companies take natural gas from the pipeline, depressurize it, add its odor, and operate the system that delivers the gas from transmission pipelines to industrial, residential, and commercial customers. Industrial customers, such as chemical and paper manufacturing firms, account for nearly half of natural gas consumption. Residential customers who use gas for heating and cooking, electric utilities, and commercial businessessuch as hospitals and restaurantsaccount for most of the remaining consumption.
Water, sewage, and other systems. Water utilities provide about 100 gallons of fresh, treated water every day for each person in this country, or close to 40 billion gallons per day nationwide. Water is collected from various sources such as rivers, lakes, and wells. After collection, water is filtered, treated, and sold for residential, industrial, agricultural, commercial, and public use. Depending on the population served by the water system, the utility may be a small plant in a rural area that requires the occasional monitoring of a single operator or a huge system of reservoirs, dams, pipelines, and treatment plants, requiring the coordinated efforts of hundreds of people. Sewage treatment facilities operate sewer systems or plants that collect, treat, and dispose of waste from homes and industries. Other utilities include steam and air-conditioning supply utilities, which produce and sell steam, heated air, and cooled air.
Utilities and the services they provide are so vital to everyday life that they are considered "public goods" and are typically heavily regulated. Formerly, utility companies operated as "regulated monopolies," meaning that in return for having no competition, they were subject to control by public utility commissions that ensured utilities acted in the public interest and regulated the rates they were allowed to charge. However, legislative changes in recent years have established and promoted competition in the utilities industry. The electric utilities industry, for example, is currently restructuring in an effort to promote efficiency, lower costs to customers, and provide users with an increased number of service options.
Many utility companies are municipally owned. For example, of the roughly 2,000 gas distribution companies in the United States, about 1,000 are municipally owned. In general, utilities serving large cities have sufficient numbers of customers to justify the large expenditures necessary for building plants, and are operated by private, investor-owned companies. In rural areas, where the small number of customers in need of services would not provide an adequate return for private investors, the State or local government funds the plant construction and operates the utility.
The various segments of the utilities industry vary in the degree to which their workers are involved in production activities, administration and management, or research and development. Industries such as water supply that employ relatively few workers employ more production workers and plant operators. On the other hand, electric utilities generally operate larger plants using very expensive, high technology equipment, and thus employ more professional and technical personnel.
A unique feature of the utilities industry is that urban areas with many inhabitants generally have relatively few utility companies. For instance, there were about 53,400 community water systems in the United States in 2002 serving almost 268 million people. The 45,000 small water systems served only 25 million people while the 8,400 largest systems served more than 242 million. Alaska, with a 2002 population about 10 percent of that of Massachusetts, had about 3 times more electric generating plants than Massachusetts. These examples show that economies of scale in the utilities industry allow one or two large companies to serve large numbers of customers in metropolitan areas more efficiently than many smaller companies. In fact, some utility companies, predominately serving large metropolitan areas, offer more than one utility to their customers.
Unlike most industries, the utilities industry imports and exports only a small portion of its product. In the natural gas industry, for example, this reflects the fact that the country has a sizable, proven resource base that can be used economically to meet the country's needs. This is the result of a National policy that utilities should be self-sufficient, without dependence on imports for the basic services our country requires. However, easing trade restrictions, increased pipeline capacity, and shipping natural gas in liquefied form have made importing and exporting natural gas more economical. In 2002, about 18 percent of the natural gas consumed was imported, mostly from Canada. A small portion of natural gas is exported in liquefied form, primarily to Japan.
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