Industry 101 | Participants and Roles in the Electric Market: Electricity Distribution

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The next stage after generating and transmitting electricity is distribution to the consumer. As seen earlier, electricity would have to be stepped up to very high voltages of 44 kV–765 kV for efficiently transmitting electricity over long distances. But, very few practical uses of electricity at this high voltage exist. Electricity would have to be stepped down to 110 V–600 V to be used for common household appliances and 2.4 kV–35kV for commercial and industrial customers.Electricity Distribution This section deals with the various physical components involved in receiving the high voltage electricity from the transmission lines and making it suitable to use for commercial and residential purposes.

The distribution process begins at the distribution substation, shown as section 3 in the figure shown here. The distribution substation receives the high-voltage electricity from the transmission lines and brings down the voltage to 2kV to 35 kV based on the requirements in the service area. Commercial and industrial consumers with high energy demands get electricity directly from the substation. These consumers have distribution transformers set up on their premises to reduce the electricity to the desired voltage needed for their systems. Electricity leaves the substation via feeder lines connected to form a distribution system and reaches the distribution transformers situated close to a consumer’s premise. The consumer then connects to the distribution transformer using a service drop and receives electricity through the meters installed at their location.

Distribution Substation

Distribution SubstationA distribution substation is tasked with the main responsibility of converting transmission level voltages to distribution level voltages. Most substations are also tasked with additional functionalities such as voltage regulation and fault isolation. It is common for companies to rely on SCADA (supervisory control and data acquisition) for remote supervision and control, rather than having manned substations.

Components found in a distribution substation:

  1. Power Transformer (step-down) – A step-down transformer converts transmission voltages to primary distribution voltages (2.4kV-35 kV).
  2. Circuit Breaker – A circuit breaker is used to open and close circuits. These components automatically trip if a short circuit occurs and can also be manually operated.
  3. Surge Arrester – A surge arrester protects the transformer and other electrical components from voltage surges. These are located on either side of a power transformer and are connected at the top to a line conductor and at the bottom to the ground.
  4. Disconnect Switch – A disconnect switch is used to electrically isolate circuits. These are used to ensure worker safety and make maintenance activities possible.
  5. Busbar – A busbar is a large rigid aluminum conductor that links circuits together. It is capable of conducting a substantial current of electricity and is comparable to the working of a distribution panel at home which channels electricity across different circuits.

Distribution Feeder Circuits

A feeder in a distribution network is considered to be the one that occupies the “between space.” These are the connections that leave the distribution substation from a circuit breaker and connect the distribution transformers – near the consumer’s premise on the other end.

Ideally, the voltage across feeder lines is expected to be consistent with the voltage coming out of the distribution substation. However, this is not practical in the real world, causing a noticeable voltage drop. To overcome this problem, feeder lines are often installed with capacitors to accommodate for the loss.

Distribution TransformerDistribution transformer photo

A distribution transformer is the final component in converting the primary distribution power from the feeder lines to low voltage (120V or 240V in most countries) suitable for use with common household electronic items.

Distribution transformers run at 50 – 70% efficiency. Power transformers are much bigger and are used for high voltages (> 33kV) and run at 100% efficiency.

Distribution transformers are usually classified based on their mounting location:

  1. Pole Mount – The transformer is mounted on a utility pole. This is a common sight in older residential neighborhoods and rural areas.
  2. Pad Mount – The transformer is mounted on concrete pads and locked in steel cases. These are more commonly seen in more recently developed areas.

Service Drop and MeterPad Mount

With electricity now in the desired voltage for household consumption, the house or business unit connects to the distribution transformer using a service wire. This service wire is called a service drop.

The service wire is connected to a meter that is installed at every service location through which electricity enters the premises.


A utility might adopt multiple network designs to provide electric service to its customers. The choice of design is a trade-off between the cost and criticality of power supply in that region. The three most common distribution network systems are radial distribution, loop distribution, and interconnected.

Radial Distribution SystemRadial Distribution System

This network topology has one power source for a group of customers. The architecture closely resembles a tree structure where power from a single source radiates out into progressively lower voltage lines until the destination homes and businesses are reached. This is the most common distribution system used in North America and many other parts of the world.


  1. The main advantage of this design is its cost value and simple design


  1. The biggest drawback of this design is the lack of reliability on the network. A problem at a single source or feeder can impact a large number of consumers.
  2. The consumer closest to the power source will be heavily loaded and the consumer farthest away will be subjected to serious voltage fluctuations when the load on the distributor changes.

Loop Distribution SubstationLoop Distribution System

In this system, the primaries of distribution transformers form a circuit starting at the substation busbars, make a loop through the area to be served, and return back to the substation. Electricity can be made to flow in either direction with the help of switches, and fault isolation is feasible.


  1. Fewer voltage fluctuations at consumers’ terminals.
  2. More reliable network, since every distributor is fed by two feeder lines instead of one, as is the case with radial distribution.


  1. More challenging design system and higher implementation cost.


Interconnected SystemInterconnected System

This system is similar to the loop distribution system, but has two or more power sources.


  1. Highest reliability.
  2. More efficient load balancing because of multiple power sources.


  1. High infrastructure costs due to the complex design and switches involved.



Distribution networks require huge initial set-up costs to have the infrastructure necessary to deliver electricity to the customer. The costs include setting up overhead and underground power lines, poles, transformer stations, and related maintenance activities on this infrastructure.


The main goal of every utility is to ensure maximum availability of electricity to all its customers and have minimum unplanned downtime. This requires maintenance activities which involve costs.

  1. Reactive Maintenance – Traditionally, utilities spend excess amounts of time scheduling emergency maintenance activities to fix defects after a fault has occurred. In most utilities around the world, this remains the most common type of maintenance. This type of maintenance usually leads to decreased equipment life and inefficient utilization of staff resources.
  2. Preventive Maintenance – This type of maintenance involves setting fixed periodic schedules to perform maintenance on equipment to prolong its runtime. This includes basic activities such as lubrication and filter changes.
  3. Predictive Maintenance – With advancements in technology, information from the distribution networks can be captured to provide increased visibility and predict failure of equipment. This can be done by capturing measurements from equipment over a period of time and triggering an alarm if they fall over or below a threshold. Maintenance is then scheduled for the equipment to fix it before an actual failure occurs.


With renewable energy becoming more affordable, energy consumers are also serving as energy generators. The traditional design of having energy generation at the top of the power systems and load at the bottom is now challenged by having a two-way flow of electricity at the consumer end. It is the task of the distribution companies to adapt to this new design change and include a model that promotes more efficient and clean use of electricity while at the same time satisfying its customers.

Cost RecoveryMonthly Bill Statement

Operation and planning activities need to be recovered from the customer. This cost is usually reflected on the customer’s utility bill as Distribution Charge or Delivery Charge.

Since the distribution infrastructure is usually built and operated by a monopolistic entity, the rate determined for recovery is set by a regulating authority to ensure it is fair to the customers.


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