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Electricity 101

​​​​Electricity, like the printing press or the Internet, is what is known as a "general purpose" technology—an innovation that revolutionizes society and forms the foundation of modern life as we know it. When you think of all the ways we use electricity every day—riding an elevator, heating our food, charging our phones—it becomes difficult to imagine a world without it. But what, exactly, is electricity? And how has it come to play such a central role in our lives? 

Defining Electricity

Electricity is very difficult to define, and can refer to anything that has to do with the presence and movement of charged atomic particles called electrons. These particles are able to transfer energy from one atom to the next, which is the way we most commonly think of electricity: the flow of energy via wires from its source into our homes, businesses, hospitals, schools and more. Rather than being the source of our energy, we can say electricity is the means by which we transmit energy. 

Where does Electricity come from?

Electricity is a naturally occurring phenomenon that people have learned to harness through a series of creative inventions. For modern commercial usage, electricity is generated at power plants by burning nonrenewable fossil fuels such as coal, natural gas, and petroleum, or by capturing the energy of renewable sources such as the wind, sunshine, and water. Each of these processes converts energy from its original source into usable electricity, which is carried away from the power plant along high-capacity transmission wires and into the network of power lines known as the electric grid.

Before it reaches our homes, the electricity first travels to neighborhood substations and then along smaller distribution lines to electrical transformers (either underground or high on telephone poles), which reduce the strength, or voltage, of the electricity to a level that is safe to use for our everyday needs. When you plug a device into an outlet, you are tapping into the electric grid – electricity flows into one prong, through the device, and out the other prong, completing a circuit that provides the energy your phone charger, microwave, or television needs to function. 

The History of Electricity

Before electricity, lighting was provided by candles and gas lamps, our food was stored in iceboxes, and fireplaces were the main source of heat in our homes. Although people have been aware of electric forces since Ancient Greece, the term "electricity" was only first used in 1600. Since then, many familiar names – Benjamin Franklin, Thomas Edison, Nikola Tesla – have contributed to our understanding of electricity, making it impossible to give credit to just one or two inventors. Benjamin Franklin, in his famous 1752 kite experiment, discovered that lightning is a naturally occurring source of electricity. Italian physicist Alessandro Volta invented the electric battery in 1800, providing us with the first controlled, usable source of electricity. Throughout the 19th century, many important scientists contributed to our knowledge of electricity – the work of Michael Faraday led to the invention of the electric generator, Thomas Edison’s light bulb led to the first widespread commercial use of electricity, and Nikola Tesla’s experiments with alternating current allowed electricity to be transmitted across vast distances. 

Building on all of these innovations, electricity started playing a greater role in everyday life. Cleveland, Ohio became the first city to use electric lamps for public lighting in 1879, and that same year San Francisco’s California Electric Light Company, Inc. became the first company to sell electricity to customers. Small electrical stations capable of powering a few blocks were in place in many American cities by 1890, and by the time America’s first alternating current power line – the same kind of power line we use today – opened in 1893 between Folsom and Sacramento, California, the country’s electricity industry was rapidly expanding. Pepco began supplying electricity to the Washington, DC area in the 1920's, and by 1950 nearly all Americans, both urban and rural, were plugged into the electric grid.

Energy Basics

​Supplying and Distributing Electricity​

Supply: How it's Produced

More than two and a half centuries have passed since Benjamin Franklin and others proved lightning was a form of electricity. Electricity is a form of energy that starts with atoms. An atom has three parts: protons, neutrons, and electrons. At least one electron travels around the center of the atom at great speed. Forcing electrons to flow from atom to atom creates electricity. In the United States, this process is typically performed at power plants. There are many ways to generate electricity such as burning coal, nuclear reaction, or through renewable methods such as solar, wind and more.

Distribution: How it's Delivered

Electricity from the power plant is brought to you along a network of power equipment and lines. Electricity leaves the power plant on high power transmission lines on tall towers to substations and is brought to homes and businesses by transformers that manage the voltage and service lines that carry the current.

The Future of Electricity

Just because electricity is now a common feature in our lives doesn’t mean that innovation has stopped – or even slowed down. 

The introduction of smart grid technology into the traditional power grid is allowing customers to better track and manage their electricity usage and costs with features such as smart meters that improve efficiency, sustainability, and reliability. We are committed to building the most advanced and reliable power grid. Our Blueprint for the Future ​outlines how we plan to harness the full potential of smart grid and related technologies, passing on savings and benefits directly to our customers. 


Just as the commercial use of electricity started with light bulbs and later expanded to many other devices and appliances, transportation is electricity’s 21st century new frontier. Battery-powered electric cars, currently being produced by more than ten major automakers, can be plugged into typical electrical outlets to recharge. These vehicles produce drastically lower emissions than gas-fueled cars and, as the cost of gas continues to climb, present a much cheaper alternative for both individual customers and our national economy. It is estimated that the cost of powering an electric car for the same distance as a gallon of gasoline could be less than one dollar. We recognize the enormous potential of electric cars and have moved ahead with implementing an innovative Plug-In Vehicle Charging Pilot Program and are gradually converting our service fleet to electric vehicles. 

Cars are not the only mode of transportation benefiting from innovations in electricity. Rail transport, especially in the dense Northeast Corridor from Washington to Boston, stands to improve in speed, safety, and reliability as advanced electric wires are installed that deliver greater amounts of energy to train engines in a more efficient manner. Imagine Washington to New York City in 1.5 hours – with electricity, it’s possible.

Renewable Energy

Although 91% of electricity in America still comes from nonrenewable sources, advances in solar, wind, geothermal, biomass, and hydropower are quickly making renewable energy a more realistic option. Electricity from abundant nonrenewable resources has traditionally been less expensive to produce, but as the global demand for electricity increases, renewable resources promise to revolutionize the energy industry into one that has minimal impact on our environment, is less susceptible to changes in the price of resources such as petroleum and provides a reliable, infinite source of electricity for a growing population. 

We are committed to increasing the amount of renewable energy sources used to generate electricity for our customers. Today, that percentage is small due to the lack of available renewable resources. However, we are committed to seeing that percentage grow – up to 20% by 2020 in some states – because renewable energy has the potential to provide us with cleaner air, a more diverse energy portfolio and less dependence on foreign fossil fuels. 

Using progressive investment in tested and reliable renewable energy solutions, we aim to reduce our use of fossil fuels in the near future, as well as the greenhouse gasses that generating energy from fossil fuels produces, all while keeping energy affordable and dependable for our customers.

Energy Terms

Producing and delivering the energy that powers our homes and businesses often involves introducing new terms. We've listed and defined many of those to help you navigate the energy process along with us.
Cogeneration Production of heat energy and electrical or mechanical power from the same fuel in the same facility.
Demand The level at which electricity is delivered to users at a given point in time. Electric demand is measured in kilowatts.
Department of Energy (DOE) A federal agency that manages the programs of research, development, and commercialization of various energy technologies and associated environmental, regulatory, and defense programs. The DOE promulgates energy policies and acts as a principal advisor to the President of the United States on energy matters.
Distribution The process of transforming high-voltage electricity to lower voltages and then physically delivering it to the electricity users.
Distribution System The substations, wires, and lines that convey electricity from high-powered transmission lines to ultimate consumers.
Electricity A property of the basic parts of matter. A form of energy having magnetic, radiant, and chemical effects. A current of electricity is increased by an increase in the charged particles.
Energy The capability of doing work. The resources that make a technology operational. The term "energy" is also used to mean electricity supplied over time. It is expressed in kilowatt-hours.
Environmental Protection Agency (EPA) A federal agency established under the Clean Air Act Amendments of 1970 to undertake all administrative and regulatory functions related to the prevention, control, and abatement of air pollution.
Fossil Fuel Oil, coal, or natural gas. Fuel that was formed in the earth in prehistoric times from remains of living organisms.
Grid The electric transmission and distribution system that links power plants to customers.
Interchange The agreement among interconnected utilities under which they buy, sell, and exchange power among themselves. This can provide for economy and emergency power supplies.
Kilowatt Hour A kilowatt hour measures the quantity of electricity generated or consumed in one hour.
Load Management Steps taken to reduce power demand at peak load times or to shift some of the load to off-peak times.
Lumens/Watts A measure of the efficiency of a light bulb. The number of lumens output per watt of power input.
Megawatt A unit of electric power equal to one million watts or 1,000 kilowatts.
Nuclear Energy Power obtained by splitting heavy atoms (fission) or joining light atoms (fusion). A nuclear power plant uses a controlled atomic chain reaction to produce heat. The heat is used to make steam to run conventional turbine generators.
Peak Load The highest electrical demand within a particular period of time.
Transmission The process of conducting the flow of electricity at high voltages from the points of generation to the locations of groups of electricity users.
Turbine Generator A device that uses steam, heated gases, water flow, or wind to cause a spinning motion that activates electromagnetic forces and generates electricity.

Understanding the Cost of Energy

There are four main areas that make up the cost of your energy:

  • Generation
  • Distribution
  • Transmission
  • Surcharges
Generation means the production of electricity. You will pay electricity suppliers for the generation of electricity. We will charge you for the Standard Offer Service (SOS) based on the rate at which we buy electricity for our customers. Or, you can choose another energy supplier and pay them directly. 

Distribution is everything needed to deliver electricity safely and reliably to your electric meter. It covers the cost of maintaining, expanding and improving our electric system. 

Transmission is the cost of transmitting electricity from power plants over high-voltage lines and towers to the distribution system. While we own some transmission facilities, all transmission in the region is regulated by a regional transmission operator (RTO). 

Both the distribution and transmission costs are regulated.

Surcharges refer to taxes and other charges that we are required to include on your bills. Some examples are Delivery Tax, Environmental Surcharge and Gross Receipts Tax. The funds are collected by the company and passed through to the appropriate government agency. 

To see the breakdown of your dollar, check out the graphics for our Maryland and our DC customers.

You can also learn more about how rates are determined by reading our Rates 101 information.
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