Electric utilities are electric power companies that produce and distribute electricity in regulated markets. Electrical power companies play an important role in the public market because the production and distribution of energy is a necessity for all members of society. Energy is one of the main components in the production process for almost all goods and services. A shortage of energy will therefore cause major loss in production. Electricity limts will put limits on production and therefore put strains on the market.
Electric markets exist to buy and sell electricity but do not operate distribution facilities, nor are they self regulated. Since utility service industries are geographically different from each other, the division of service sectors (industrial, commercial, residential, etc.) differs. The individual service sectors have different levels of demand, distribution voltage, and accounting methods.
Electric power has to be produced with demand because it is difficult and expensive to store. Power blackouts occur if production falls short or exceeds demand for less than a minute. Reserve power plants must be in constant operation so that they can immediately replace generators or failed transmission lines. State regulators will require electrical utility companies to plan ahead for the anticipation of growth, in order to supply enough power for developing firms and an increase in power supply.
The importance of electric power to the market production causes a need for the industry to be regulated by state authorities and governments. Regulators will monitor supply and production costs of power plants.
References:© BrainMass Inc. brainmass.com January 23, 2019, 5:12 pm ad1c9bdddf