Consumers
Electricity is one of America's most commonly used forms of energy. It is used to cook our food, wash the dishes, clean our clothes, and powers our TVs and stereos. Even a short interruption of electricity supply caused by a storm or a controlled "black-out" immediately reminds us of our enormous reliance on this source of energy. About a third of the nation's output of electricity is consumed in private homes and apartments for lighting, cooling, heating, refrigeration, appliances, computers and home entertainment equipment. Another third of the electricity generated is used by industry in manufacturing, mining, construction, and agriculture. Stores, shopping malls, offices, hotels, restaurants, trains, and subways account for most other electrical consumption.
Demand
To meet consumers' needs, the electric power industry generated about 3,700 billion kilowatt-hours of electricity in 2000.* Electricity demand is expected to grow by about 2 percent annually over the next 20 years - a significant drop from the annual growth rates of 7 percent experienced in the 1970s. Factors contributing to slowing growth include improved efficiency in lighting, refrigeration, air-conditioning and industrial equipment, and less use of electricity for space heating. Even with conservation and the slowing of demand for electricity, the electric power industry faces major challenges in building enough new capacity to meet consumers' needs and to replace older generating facilities that must be retired.
*Electric power is measured in units called watts. Ten 100-watt bulbs require 1,000 watts, or 1 kilowatt. Ten 100-watt bulbs burning for one hour would require 1 kilowatt-hour of electric energy.
Supply
Most electricity provided in the United States is generated from burning fossil fuels (coal, natural gas and oil), from hydroelectric dams, or from nuclear power plants. A small amount is also produced from solar, wind and geothermal sources, with wind power growing most rapidly. More than half the electricity supply comes from coal, followed by nuclear with 20 percent, natural gas with 16 percent, and hydroelectric with 8 percent. In all, there are about 3,000 large generating plants in the country, plus hundreds of smaller generators associated with various industries which produce electricity (cogeneration) for their own uses as well as outside consumers.
The power generation industry attempts to provide enough extra capacity to meet peak use periods such as summer heat waves when there is heavy demand for air-conditioning. Extra capacity also helps ensure a reliable flow of electricity to consumers when some generating equipment must shut down for service. Up through 1992, electric utilities operated with capacity margins of between 25 and 30 percent. Since then, however, the nation's overall capacity margin has shrunk to about 16 percent, primarily because not enough new generating facilities have been built. This trend is now being reversed as power plants now under construction come on line. By 2004, the national capacity margin is expected to improve to above 18 percent. Whether this gain is sufficient to avert local or regional supply problems remains to be seen. In the meantime, consumers in some areas of the country such as California will be vulnerable to supply interruptions during period of extremely high demand.
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