How do electric companies supply electricity to homes in countries where energy is privatized?

Question

Before I start, sorry if this doesn't make sense English is not my first language.

In my country electricity is nationalized so there is only one energy company and one grid. When you build new house you just connect your house cables to the gird.

My question is in country/region where there are multiple companies providing energy, does each company have its own grid/cables/wires reaching homes?

And what happens if there is a new company, does it have to build it is own grid?

Are there multiple transmission lines for each company?

Answer 1

Works similarly in the US (compared to UK responses). Natural monopolies are allowed to exist for utilities as it wouldn't make sense to have 3 or 4 different sewer lines running to everyone's home.

The distribution company that owns the grid may or may not produce electricity itself. But there is (usually) only one power line that connects to a user.

Answer 2

In the UK there are three different parts of the complete system: generation, transmission and distribution, and supply (sales) to customers.

There are many companies that generate electricity, varying in size from national (and even international) companies down to small organizations that operate a few wind turbines at one location.

There are two parts to the transmission and distribution system. The "National grid" is a single system for long-distance transmission between large generating plants, operating at high voltages. This feeds local "distribution" networks operating at lower voltages and eventually connecting to individual customers (i.e. houses and factories).

Electricity supply companies buy power from the generating companies, pay the transmission and distribution companies to transport it, and sell it to individual customers.

Usually, domestic customers are only connected to one distribution network and have one electricity meter. If a customer wants to change supplier (e.g. to get a better price) nothing is changed physically. The customer's meter readings are used by the new supplier instead of the old one. The supply company knows the total amount of electricity it is selling (using the meter readings) and buys that quantity from the generator companies. The buying price changes continuously depending on supply and demand, but the supplier company sets its own price to sell to customers.

Some large (national) companies may operate both as both generation companies and supply companies but the two functions are logically separate.

Note, the UK supply network does not actually end at the borders of the UK - for example there are links to France, Belgium, and the Netherlands which can operate in either direction depending on supply and demand. On average, around 5% of the electricity used in the UK is actually generated in Europe.

Answer 3

I doubt there is any place where the provision of electricity is completely privatized. Take California, for example. There's Pacific Gas & Electric, which is a corporation that is owned by stockholders. (The terms "public" and "private" get confusing here; since the stock is publicly traded, it's a "public" company, but since it is owned by individuals rather than the government, it's a "private" company).

However, there's also the Public Utility Commission, which is a government entity that has wide discretion over PG&E. It can veto price increases, levy fines, order diversification, etc.

PG&E owns the power lines, and they ultimately supply the electricity to consumers. However, the situation regarding the production of electricity is much more complicated, and I have only a vague understanding. My understanding is that PG&E is both a power production and power distribution company, but there are also companies that are just power production companies, and PG&E is required to allow them to offer their services to consumers. So if someone sets up a wind farm and wants to sell their electricity, PG&E has to let them use their power lines. There was a thing with Enron which, again, I only vaguely understand it, but my understanding is that Enron was supplying energy to PG&E, and they were manipulating the price of energy to gouge consumers.

Answer 4

In the UK the grid is owned by one entity and power suppy companies sell to customers in the areas they service.

The power companies may or may not be generating power...

In fact, EDF is one company that sells in the UK and it is based in France.

This causes price choices so customers can shop around for the best deal for their needs.

Answer 5

In the UK, the grid is divided into the transmission network (high voltage; long distance) and the distribution networks (lower voltage networks; connects directly to the consumer and small generators). The transmission network is owned by National Grid (in England and Wales) and the distribution networks are owned by a different companies that operate in different regions.

Your electricity supplier doesn't need to own any physical infrastructure. They buy ahead of time the amount of generation they expect their customers to need on the electricity market. Physical location of customers and generators doesn't matter; the grid is treated like a collective "pool" of power and you have to put in as much in as your customers will take out. Wind forecasting allows wind farms to sell generation ahead of time.

National Grid then look at the generation profile and make adjustments to ensure that circuits are not overloaded, generation matches demand and various other constraints are met. Engineers in the control room can see prices for each generator to increase or decrease generation. The price for fossil fuel generators to decrease generation is usually negative because they save fuel but still get paid for the electricity they would've generated. For wind farms it is positive because they loose their renewable energy incentives.

Electricity flows into and out of the transmission network are all metered. A company called Elexon does the accounts with those readings. As a generator or electricity supplier, if your generation or demand didn't match what you contracted for, you pay money according to the difference. This money pays for National Grid to balance the system as above.

I don't know how Elexon work out how much your electricity supplier's customers consumed given that suppliers share the distribution networks. I assume it must be based on estimates for households and meter readings for large consumers.

Essentially owning infrastructure (power lines, cables etc.) is a separate business from being an electricity supplier.