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Contents

Section 1 Utility Industries

Section 2 Electricity

Section 3 Natural Gas

Section 4 Water & Sewerage

Section 5 Telecommunications

Section 6 Supply Markets and Consumer Protection 

 

Description:  The purpose of this unit is to introduce the organisation of the main utility industries; their legislative and regulatory frameworks and the wholesale and supply markets for utilities.

Author:  Gates MacBain Associates


Section 1  Utility Industries




Aims and Objectives

At the end of this section you should be able to:
  • Provide an overview of the provision of utilities.


The Utility Industry is a group of organisations that provide and maintain the infrastructure for a public service and/or provide a service using that infrastructure. The term utilities refer to the set of services provided by these organisations consumed by the public these include:
  • Electricity
  • Natural Gas  
  • Water and Sewage
  • Telecommunications.
 Many of the utilities started life as private companies which were nationalised by the government (where they were known as Nationalised Industries) only to be Privatised some years later, a process which is the transferring of ownership from the public sector (government) to the private sector (businesses that operate for a private profit). 

An overview of the industry and the people it employs can be found on the Prospects website below. 


Utility Companies

These are the companies that are responsible for the provision of the utilities. This may mean their production or the distribution or both. 

Links to many of the utility companies can be found at the ‘ukwebstart’ link below. 

The ‘Energy & Utilities Alliance’ link below provides a site which outlines the interest and developments relating to the energy and utility organisations as well as other useful information and resources relating to utility provision. The site also contains a number of videos which can be accessed directly from the video link below.

Many utility companies have signed up to an agreement to reduce the waste produced by them, details of the agreement can be found at the ‘Reduction of Waste Agreement’ link below.  



Websites




Video / DVDs



Self-Assessment Task

  • Outline the organisation of the utility industry.




Section 2  Electricity




Aims and Objectives

At the end of this section you should be able to:
  • Explain the methods available for the generation of electricity and the process of how it is supplied to the consumer.


Electricity is a secondary energy source, which means that it comes from the conversion of other sources of energy, such as coal, nuclear, or solar energy: These are called primary sources. The energy sources we use to make electricity can be renewable or non-renewable. 

Electricity generation in the UK comes from three main sources – gas, coal-fired power stations and nuclear. 

A small but growing proportion of electricity is supplied by renewable energy. 

Renewable energy is energy which comes from natural resources such as sunlight, wind, tides, and geothermal heat. Further information on renewable energy can be obtained from the web link below. 
  • Gas accounted of 46 % of electricity supplied in 2008. Gas is also used to heat approximately 70% of homes.
  • Coal-fired power stations provide approximately 31% of the UK’s electricity.
  • Nuclear power provides about 14%  of electricity but most UK nuclear plans are due to close in the next decade
  • Renewable energy sources provided 5.5% of electricity generated in 2008.


The Electricity Industry in the UK has three key stakeholder areas.  They are: 
  • Generators - responsible for generating the energy we use in our homes and businesses. Generated electricity flows into the National Transmission network and through to the regional Distribution networks.
  • Distributors - are the owners and operators of the network of towers and cables that bring electricity from the National Transmission Network to homes and businesses. Even so, they are not the organisations that sell electricity to the end consumer.  This is carried out by organisations who make use of the distribution networks to pass the energy commodity to your property - the suppliers.
  • Suppliers - are the companies who supply and sell electricity to the consumer. The suppliers are the first point of contact when arranging an electricity supply to domestic, commercial and smaller industrial premises.
Details on these can be found from the National Grid web link below.   


Production of Electricity 

The way that electricity is generated is explained simply on the ‘Generating Electricity’ website below. You can also learn about the generating process from ‘Electricity Generation’ below. These look at a number of ways used for its’ generation though the way that it is done by steam is explained here. 
  • Steam is generated at the electricity plant by the burning of fossil fuels - or at a nuclear or hydroelectric plant.
  • The steam powers a turbine which spins a huge magnet inside a copper wire. Heat energy converts to mechanical energy which then converts to electrical energy in the generator.
  • Electricity flows from the power plant through wires to the step up transformer. The transformer raises the pressure so it can travel long distances - its raised as high as 756,000 volts
  • The electric current then runs through the power lines to the substation transformer where pressure is lowered to between 2000 and 13000 volts
  • Electricity is then taken through the lines to a pole transformer - or a transformer box if underground - and pressure is lowered again to between 120 and 240 volts
  • The electricity enters the building through a service box, where a meter is located to measure how much you use.

The meter will record the amount of electricity used which is recorded by the kilowatt (kW) this is the standard metric measure of electrical power and is equivalent to 1,000 watts. The kilowatt hour (kWh) - the actual rate of energy consumption - gives the ‘unit’. A heater rated at 1000 watts (W), for example, running for an hour would use one kWh.  

The Utility Company supplying the electricity will obtain their supply from the generating company via the Grid and then charge the consumer for their use basing the amount charged by the KWs used. 

National Grid owns and maintains the high-voltage electricity transmission system in England and Wales, together with operating the system across Great Britain, balancing supply with demand on a minute by minute basis.




Websites

  • Renewable Energy Wikipedia Link - this provides an overview and links to further study; it should not be quoted, referenced or taken as an authoritative source.
  • Electricity Generation   Wikipedia Link - this provides an overview and links to further study; it should not be quoted, referenced or taken as an authoritative source.
  • National Grid



Video / DVDs



Self-Assessment Task

  • Explain the methods available for the generation of electricity and the process of how it is supplied to the consumer.





Section 3  Natural Gas




Aims and Objectives

At the end of this section you should be able to:
  • Explain how natural gas is obtained and processed and the infrastructure needed to supply the consumer.


This is normally just referred to as Gas and has a number or uses such as cooking, heating and industrial uses. 

Gas is transferred around the country by a National Grid, the flow of which is controlled at the National Grid's System Control Centre. As the use of gas is not constant the National Control Centre monitors its use and balances the high pressure National Transmission System (NTS) while the Area Control Centre is responsible for ensuring sufficient supply is available to meet consumer demand.The Gas producers who operate the Offshore fields beneath the sea around the British Isles deliver the oil ashore where it is sent to the seven reception points (called beach terminals).   

After the gas is checked for quality, safety requirements and the calorific value (the amount of energy contained in the gas), it is transported through the mains pipeline using compressor stations. 

The National Transmission System (NTS) is the high pressure part of National Grid's transmission system which supplies gas to 40 power stations, a small number of large industrial consumers and the twelve Local Distribution Zones (LDZs) that contain pipes operating at lower pressure which eventually supply the consumer. 

As Gas moves through National Grid's transmission system at 25 mph it cannot be delivered instantly when demand increases. The National Grid ensures a balanced system by buying and selling gas and using stored gas to ensure that in most normal circumstances, demand can be met. 

Usually the system is balanced by gas bought on the open market through the 'On the Day Commodity Market (OCM)'. The National Grid also has gas in store (the so called Top-up and Operating Margins gas) to ensure the system is balanced and that supplies are maintained. 

National Grid provides the supplier with the gas that it sells to the consumer. 

Further details can be found relating to the regulatory framework and infrastructure relating to gas by clicking on the Gas Supply link below. 

An introduction to the whole process of the extraction and treatment of Natural gas is covered in the ‘Natural Gas – from wellhead to burner’ website listed below and enables you to follow the gas from exploration to marketing and although this is a USA based site it does provide an excellent overview of the whole process. 



Websites



Self-Assessment Task

  • Explain how natural gas is obtained and processed and infrastructure needed to supply the consumer.





Section 4  Water & Sewerage




Aims and Objectives

At the end of this section you should be able to:
  • Explain the infrastructure needed for the supply of water.


Water is taken from a variety of both natural and manmade resources including rivers and lakes and reservoirs and transported via pipes to the treatment works. Details of water treatments can be found in the constructionsite unit Water Treatment Systems a link to which is provided below. 

At the water treatment works the water is cleaned and then pumped through large pipes called trunk mains which can be up to 1.5 metres in diameter. Water can travel through the pipes naturally by gravity though in flat areas it will need to be pumped. 

These pipes are usually in pairs so that one can always transport water if the other is burst or is being maintained.  The pipes take the water to an underground service reservoir or a water tower. 

The reservoirs are covered with grass or gravel so that the water will stay clean. When the pipes lead to a water tower, the water is pumped to the top, then gravity will transport the water through smaller mains, flowing into the network of pipes to the consumer. 

All the water that then flows into our homes is of drinking water quality. In some areas it can take up to a week for the water to get from the treatment works to the consumer so more chlorine will be added to ensure that it is still pure when it reaches the consumer. 

Details of the water and Sewage utility companies can be found on the ‘Water UK’ website shown below.  

Water UK represents all UK water and wastewater service suppliers at national and European level. They provide a framework for the water industry to engage with government, regulators, stakeholder organisations and the public.  Their site provides an overview of the industry and provides links to other useful information including publications.  

The regulation of the industry is provided by ofwat, their website is reachable by clicking on the link below.  


Financial and Economic 

There is no competition between water companies for domestic customers as you cannot switch supplier. You have to use the company which supplies to your local area so the prices they can charge are regulated. In fact there are three areas in which the Water Industry is regulated: 
  • Financial and Economics
  • Environmental
  • Water Quality

More information on this can be obtained by visiting the ‘Water Industry Regulators’ linked to below.  

The following authorities monitor issues such as how much water companies charge and the service provided to its customers: 
  • Office of Water Service (Ofwat) regulate water services in England and Wales; Water Commissioner for Scotland regulate Scottish water supplies and Northern Ireland has no separate regulator.  
  • Consumer Council for Water (CCWater) represents domestic and business customers in England and Wales, with regard to costs, value for money and quality of service. They took over from WaterVoice on 1 October 2005 and CCWater is independent of both the water industry and the regulator. CCWater will also investigate customer complaints which have not been resolved by the water company. If you have complained to your water company but are not happy with their response you can contact CCWater.   



Websites



Constructionsite Units

  • Water Treatment Systems



Self-Assessment Task

  • Explain the organisations which ensure that the consumers’ interests are protected with regard to the supply of water services.




Section 5  Telecommunications




Aims and Objectives

At the end of this section you should be able to:
  • State the main areas relating to the provision of Telecommunications.


The main providers with regard to telecommunication are BT and Virgin. Each provides telephone, broadband and television. Details of the companies and the services they provide can be obtained from their websites linked to below.

Ofcom is the communications regulator who regulates the TV and radio sectors, fixed line telecoms and mobiles, plus the airwaves over which wireless devices operate. They are the independent regulator and competition authority for the UK communications industries, details of their services can be obtained from their website which is linked to below.   



Websites



Self-Assessment Task

  • Outline the services available with regard to the supply of telecommunications.





Section 6  Supply Markets and Consumer Protection




Aims and Objectives

At the end of this section you should be able to:
  • Explain the way in which the consumer is protected with regard to utilities.


The utilities are provided by a number of companies giving the consumer the choice of where they obtain their supplies from.  This came about on the de-nationalisation of the utility companies in order to provide competition resulting in better prices for the consumer.   In order to ensure that the consumer was protected a number of bodies were set up. In the Gas and Electricity Markets this body was Ofgem who protect consumers by promoting competition, wherever appropriate, and regulating the monopoly companies which run the gas and electricity networks. The interests of gas and electricity consumers are their interests taken as a whole, including their interests in the reduction of greenhouse gases and in the security of the supply of gas and electricity to them.

Details of Ofgem can be found at their websites. Details relating to the markets can be found by clicking on the ‘Markets’ tab along the top of their webpage though the site also contains a lot of other useful information.   


Legislative and Regulatory Framework for Utility Companies 

Legislation and Regulations are provided to ensure that the consumer and general public are protected from any risks with regard to the safe provision of utilities and from being over charged for the services they provide. This is policed by the industry regulators though one piece of legislation you should be aware of is The Utilities Act 2000.  


The Utilities Act 2000  

The main provisions of the Act:
  • a new principal objective for the Gas and Electricity Markets Authority to protect the interests of consumers, wherever appropriate, by promoting effective competition;
  • a requirement for the Authority, in performing its functions, to have regard to the interests of low income consumers, the chronically sick, the disabled, pensioners and consumers in rural areas;
  • powers for the Authority to impose financial penalties on utility companies for breaches of licence conditions and other specified statutory requirements;
  • the establishment of an independent Gas and Electricity Consumer Council with the job of seeking to resolve complaints, providing information of use to consumers, and advocating the interests of all consumers to the regulatory authorities, Government, utility companies and anyone else whose activities can affect the interests of consumers;
  • powers for the Council to publish utility information where this is in the interests of consumers and does not seriously and prejudicially affect persons to whom it relates;
  • a requirement for price-regulated gas and electricity utilities to disclose any links between directors' pay and customer service standards;
The explanatory notes relate to the Utilities Act can be found at the website below.  


Industry Regulators 

The Gas and Electricity industry is regulated by a number of organisations.  There purpose is to protect the interests of consumers, regulate competition between providers, and monitor social and environmental issues within the industry. Details of these can be found by clicking on the Gas & Electricity Regulators web link below and an understanding can be obtained from the ‘Utilities Industry Regulation Structure’ website. 

A number of price comparisons sites are available to assist consumers in obtained the best rate of their utility requirements.  


Cost and Availability of Energy 

The availability and cost of energy is the same as any resource and will depend on supply, demand and market forces. To ensure that you understand these you should read through the constructionsite unit Economic Principles relating to supply, demand and price which you should then relate to the energy market. As much of this country’s energy needs come from oil, you should be aware of the influence that the oil produces can have on the market and how they control production and price. 

In the UK the introduction of the competitive supply market back in 1990 has resulted in millions of customers changing supplier, with some domestic consumers realising significant savings on their energy bills. As a result of competition, UK energy prices have fallen considerably.  



Websites



Constructionsite Units



Self-Assessment Task

  • Explain the structure which is in place for the protection of the consumer.
  • Discuss the ways that the energy producers affect the market for their product and the consequences that has for individuals, companies and countries.






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