Electricity is generated at central power stations and then transferred to loads

(i.e, Domestic, Commercial and Industrial) through the transmission and distribution
system. A combination of all these systems is collectively known as an Electric Power
System.

A power system is a combination of central generating stations, electric power

transmission system, Distribution and utilization system. Each one of these
systems is explained in detail in the next sections.

Basic Structure of an Electric Power System (Energy Supply System)

Electric power systems are real-time energy delivery systems. Real time means
that power is generated, transported, and supplied the moment you turn on the light
switch. Electric power systems are not storage systems like water systems and gas
systems. Instead, generators produce the energy as the demand calls for it. An electric
power system is a network of electrical components deployed to supply, transfer, and use
electric power. An example of an electric power system is the grid that provides power to
an extended area. An electrical grid power system can be broadly divided into the
generators that supply the power, the transmission system that carries the power from
the generating centres to the load centres, and the distribution system that feeds the
power to nearby homes and industries.

In 1881, in the Surrey town of Godalming, the world's first public electricity supply
illuminated the local streets. Godalming Power Station was driven by water, and was thus
also the first hydroelectric power station in Britain. The two Poncelet waterwheels at E. &
J. Pullman's Leather Works at Westbrook Mill were used to drive an alternator and an
exciter, both of which were manufactured by Siemens. The electricity generated was
taken by overhead cable to the High Street. There were two circuits. The first was 250
volts and 12amps. It supplied seven Siemens arc lamps in series: three at the mill and
four on posts in the town. The second circuit supplied 34 incandescent lamps at 40 volts.
Most were located in the town, except for seven at the mill and Mr Pullman's house.

Electric deregulation is the process of changing rules and regulations that control
the electric industry to provide customers the choice of electricity suppliers who are either
retailers or traders by allowing competition. Deregulation improves the economic
efficiency of the production and use of electricity. Due to competition in the electric
industry, the power prices are likely to come down which benefits the consumers.

The main objectives of the deregulated power market:

• To provide electricity for all reasonable demands.

• To encourage the competition in the generation and supply of electricity.
• To improve the continuity of supply and the quality of services.
• To promote efficiency and economy of the power system.

The structural components representing various segments of the electricity market are:

• Generation Companies (GenCos.)

• Transmission Companies (TransCos.)
• Distribution Companies (DisCos.)
• Independent Power producer (IPP)
• Independent System Operator (ISO)
• Power Exchange (PX)
• Retail Energy Service Companies (RESCos.)
 Figure 1. Deregulated power utility structure
In the deregulated electricity market, increased infrastructure utilization increases
capital returns and increased competition increases economic energy transactions.

In June 2001, Republic Act 9136, otherwise known as the “Electric Power
Industry Reform Act of 2001”, the EPIRA was enacted to institute reforms in the
industry. The major aspects of the reforms include the (1) restructuring of the entire power
industry to introduce competition in the generation sector, (2) change from government
to private ownership, and (3) introduction of a stable regulatory framework for the
electricity sector.

The EPIRA organized the industry into four (4) sectors, generation, transmission,
distribution and supply. The structural reforms resulted among others in the creation of
two (2) government-owned and controlled corporations (GOCCs), the Power Sector
Assets and Liabilities Management Corporation (PSALM) and the National Transmission
Corporation (TRANSCO).
 Fifteen years ago, Congress enacted the Electric Power Industry Reform Act
(Republic Act No. 9136, aka Epira), aimed to achieve reliable and competitively priced
electricity—a goal that has continued to elude us. Critics have called for its review or even
outright repeal due to its supposed ineffectiveness. But other countries that have yet to
move away from subsidized power are already pursuing their own versions of Epira, on
the recognition that their power pricing regimes cannot be sustainable.

Epira’s intent was straightforward: Remove monopolies in the power industry

through privatization of the National Power Corp.’s assets, and foster competition in the
industry to make it more cost-effective and efficient. With these, electricity prices should
go down. As of end-2015, only the Malaya Thermal Power Plant in Luzon, and Power
Barge 104 and the Agus and Pulangi hydroelectric plants in Mindanao remain
government-owned. But our electricity prices have stayed high and consistently among
the highest in the region. The law has been blamed for high prices and price volatility due
to the removal of government power subsidies, the layering on of profits due to the
unbundling of the different industry subsectors, and the introduction of the Wholesale
Electricity Spot Market (WESM). While intended as a venue for market competition to set
power prices, many see the WESM as a venue for alleged collusion among generation
companies (gencos) instead. The generation charge that is the WESM’s object is the
main cost driver and largest portion of the monthly power bills we all pay.

The EPIRA mandates government to promote the utilization of indigenous, new,

and renewable energy resources in power generation to reduce dependence on imported
energy. Renewable energy resources in the law refer to biomass, solar, wind, hydro, and
ocean energy, among others.

An interconnected power system is a complex enterprise that may be subdivided into

the following major subsystems:

• Generation Subsystem
o Generation subsystem includes generators and transformers.
• Transmission and Subtransmission Subsystem
 o Transmission lines also interconnect neighboring utilities which allow the
economic dispatch of power within regions during normal conditions, and
the transfer of power between regions during emergencies.
o Typically, the subtransmission voltage level ranges from 69 to 138 kV.
Some large industrial customers may be served from the subtransmission
system. Capacitor banks and reactor banks are usually installed in the
substations for maintaining the transmission line voltage.
• Distribution Subsystem
o The distribution system connects the distribution substations to the
consumers’ service-entrance equipment. The primary distribution lines from
4 to 34.5 kV and supply the load in a well-defined geographical area.
• Utilization Subsystem
o Power systems loads are divided into industrial, commercial, and
residential.
o Industrial loads are composite loads, and induction motors form a high
proportion of these loads.
o Commercial and residential loads consist largely of lighting, heating, and
cooking.