Transmission overview: the business of electric transmission

Electricity Transmission Fact Sheet

Electricity transmission lines provide the transport highways to move electricity from the generation sources to concentrated areas of customers. From there, the distribution system moves the electricity to where the customer uses it at a business or home. The transmission systems are unique because they are designed to move this energy at the speed of light from the generator to the consumer since there is no long-term storage capability for electricity. Electricity, when transmitted, flows over all available paths to reach the customer and it cannot be easily directed in one particular way. Therefore, the buying and selling of electricity requires direct coordination and proactive monitoring of the electrical systems. If a problem develops somewhere, the impact affects other operations elsewhere. To handle this coordination, 10 industry reliability councils were established that operate 3 independent electrical systems (called power grids) in the United States (see map). (This action was taken because electrical reliability is a major responsibility of transmission oversight.) Within each of these power grids, there are different types of equipment and facilities that are owned by many different entities. Yet, each system is operated in a coordinated and unified manner within its power grid. However, since the 3 power grids are not simultaneously linked together, electricity (alternating current power) cannot flow between them.

  • The Federal Energy Regulatory Commission (FERC) for jurisdictional utilities regulates interstate wholesale trade and the associated transmission interconnections. Federally owned utilities, and State and municipally owned utilities are not regulated by FERC, but must follow Federal regulations if they wish to buy and sell electricity in the wholesale market or use the transmission facilities of jurisdictional utilities.
  • Before the Energy Policy Act of 1992 authorized individual utility access to all the interstate transmission systems, each requesting utility that wanted to move electricity across another system had to get approval and was charged for this service. FERC has further altered the access to the transmission system under FERC Order 888/889 by opening its access to power suppliers and purchasers and reduced the ability of each system owner to add transmission charges (pancaking) when power was transferred across several electrical systems. FERC also allowed nonjurisdictional utilities to access jurisdictional utilities operating in competitive markets, if they would allow usage of their own transmission systems by these jurisdictional utilities.
  • Reliability is defined as adequacy of supply and security of operations. The electric power industry has stated that for reliability of service, customers have power when they want it more that 99 percent of the time. When they do not, weather (ice storms, lightning, and natural disasters like floods) is the primary factor for 70 percent of those outages, followed by animals damaging equipment. However, the future is uncertain and is an ongoing concern. Overall use of the transmission system is growing without significant additions of new construction or upgrades. Approving new projects and acquiring new right-of-ways has been difficult. Many customers oppose having new transmission facilities built near them. These transmission facilities support interstate commerce; but the siting and approval are generally a State and local governmental responsibility.
  • To make the introduction of competition successful, FERC is attempting to establish new business entities that will operate the transmission portion of the electrical system. These operational entities are called Regional Transmission Organizations (RTO) and are being structured under the guidance found in FERC Order 2000. Although some RTOs have become functional, significant opposition by both industry and consumer groups has developed to FERC’s overall plan. Among FERC’s expectations for these new entities are an improvement in the power grid reliability, reductions in discriminatory transmission practices, and increased investments in transmission infrastructure. Traditional utilities that previously operated as vertically integrated regulated monopolies are being directed by FERC to remove some functions (that could allow the implementation of traditional market power actions) in order to operate in competitive markets.
  • Over 9,500 miles of new high-voltage transmission lines were built during the 1990s (nearly a 7 percent increase). Most of that construction emphasized 230 kilovolts (kV) as the primary voltage used for transmission, but preference for this voltage is projected to drop. Overall, new investment is not at the same level as in the past, yet some 345 kV projects have been undertaken (see table).


High Voltage Alternating Current Transmission Mileage in the United States, Selected Years

Voltage 1990 1999 Change Added by 2004

230 kV





345 kV





500 kV





765 kV










Related Websites

SOURCE: U.S. Energy Information Administration