SIC 4911 Electric Services

SIC 4911

This industry classification includes establishments engaged in generating, transmitting, and distributing electricity. Establishments providing electric services in combination with other services, where the electric services account for less than 95 percent of revenues, are classified in SIC 4931: Electric and Other Services Combined; SIC 4932: Gas and Other Services Combined; or SIC 4939: Combination Utilities, Not Elsewhere Classified, according to the major service supplied.

NAICS CODE(S)

221111

Hydroelectric Power Generation

221112

Fossil Fuel Electric Power Generation

221113

Nuclear Electric Power Generation

221119

Other Electric Power Generation

221121

Electric Bulk Power Transmission and Control

221122

Electric Power Distribution

INDUSTRY SNAPSHOT

The electric service industry is less than 150 years old, but it runs America. In the span of a century, electricity replaced gas as a preferred means of lighting and succeeded steam engines in many growing industries. Electric service utilities comprise the nation's largest business, gauged according to capital investment and market value. Electricity is so widely available in modern American society that service disruptions are newsworthy. Throughout the twentieth century, its use consistently increased. Although industry forecasters disagree about how rapidly demand will continue to grow, they generally agree that demand for electricity will continue to increase into the foreseeable future.

Electricity is measured in watts. A watt is a basic unit of electrical power equal to about 1/746th of one horsepower. A kilowatt is equal to 1,000 watts; a megawatt is equal to one million watts; a gigawatt is equal to one billion watts. Electricity is sold in kilowatt-hours (kWh). One kWh equals the amount of electrical energy needed to keep ten 100-watt bulbs burning for one hour. Not all the electricity generated is available to be sold. Some is used by the power plant and some is dissipated during transmission and distribution. Furthermore, because electricity cannot be stored, it must be used or lost.

The Energy Policy Act of 1992 marked the beginning of the deregulation of the electric services industry. By 1999 almost half of the states had passed, or had pending, new legislation that provided for restructuring of the industry, open access to transmission lines, and wholesale/retail competition among producers, transmitters, and distributors of electricity.

At the beginning of the twenty-first century, the electric power industry in the United States was in disarray. Service reliability became a serious issue during 2000 when segments of California experienced power shortages and outages. Later, questions were raised concerning whether power companies had artificially engineered the shortage to drive up prices. Accounting scandals made headlines when power-giant Enron was forced to declare bankruptcy after its accounting practices were revealed as fraudulent. The fallout from the Enron scandal brought on a sudden and severe lack of trust in the public trading of power. In turn, the industry experienced debilitating liquidity and capital problems. These difficulties all took place in the midst of fragmented and inconsistent state-led deregulation efforts conducted in the middle of a recessive economy. Profits fell, and those companies able to stay afloat reported very slim profit margins.

ORGANIZATION AND STRUCTURE

There are several kinds of electric service establishments in the United States. Investor-owned companies are owned by shareholders; cooperative utilities are owned by their members and are operated to meet members' needs. Public utilities are nonprofit government agencies such as municipalities, public power districts, and irrigation districts. The federal government also produces electricity under the direction of agencies such as the U.S. Army Corps of Engineers and the U.S. Bureau of Indian Affairs. The largest federal producer is the Tennessee Valley Authority, which provides electricity to both wholesale and retail markets.

Although public utilities and rural cooperatives account for about 90 percent of the nation's more than 3,200 electricity utilities providers, they are generally small. Cooperative electric utilities provide service to their members, who are usually in rural areas where investor-owned electric utilities would find it uneconomical to operate because of low population densities. In 1999 there were 932 cooperatively owned utilities; some 2,010 non-profit publicly owned utilities; 10 federally owned utilities; and 267 for-profit, investor-owned utilities.

Electricity providers differ by class of ownership and vary greatly in size, services, profitability, and organization. An integrated utility may operate its own generation plants and maintain its own transmission and distribution lines. Other companies may distribute electricity to customers but buy it from other producers rather than generate it. Some rural cooperatives operate with less than 100 employees and own less than $1 million in total assets. Some corporations supply electricity to customers through subsidiary companies in several states. These giant organizations may employ tens of thousands.

The North American Electric Reliability Council (NERC) was established in 1968 by the electric utility industry and consists of ten regional reliability councils. The councils are responsible for setting and maintaining standards to foster reliable service within the three power grids that supply electricity to the contiguous United States: the Eastern Power Grid (also known as the Seven Interconnected Regions Power Grid), the Western Power Grid, and the Electric Reliability Council of Texas Power Grid. As of 1998, there were more than 200,000 circuit miles of high-voltage transmission lines in the three power grids.

Electric service producers operate several types of generating stations in order to meet customers' constantly changing energy demands. Three classes of power plants are base-load, intermediate-load, and peak-load stations. Base-load plants meet the normal minimum demand of a company's customers. They are usually the largest and most efficient of a company's generating units. Intermediate-load plants handle increases in demand that are less than the highest, or peak, demands. They perform as transitional power providers and can function as standby units when unexpected problems arise. Peak-load generating stations are used to meet short-term, high demand. Peaking units are usually quick starting but the least efficient.

Electricity is created by electric generators that convert mechanical energy into electric power by rotating a magnet within coiled wires. The mechanism that causes the magnet to rotate is called a "prime mover." Different kinds of prime movers are used to generate electricity in different circumstances. Most generators are turbines that are spun when a liquid or gas is forced against their blades. Steam, hot air or combustion gases, and water are the most common prime movers.

Steam turbines produce most of the electricity generated in the United States. The steam required to operate the turbines is created through burning fossil fuels, such as coal, petroleum, and gas, or through nuclear fission. Steam turbines generally operate in base-load power stations. Gas turbines and internal-combustion engines are most frequently used as peaking units. A type of gas turbine that operates in conjunction with a steam turbine is called a combined-cycle generating unit and is typically used for intermediate-level generation. Hydroelectric-generated power is created when flowing or falling water is used to spin a turbine. Hydroelectric units can serve as base-load or peaking...