Participants in the Energy Sector

Industry 101

Commodity – “A kind of thing produced for use or sale, an article of commerce, an object of trade,” as defined in the Oxford English Dictionary. In the context of the utilities market, commodities electricity, gas, and water are considered commodities. However, a utility company may also offer services such as sewage, waste management, and broadband internet services. This section, provides an outline of the various commodities and services that utility companies offer.

The development of technology in the past few decades has made electricity ubiquitous in residences. Even with the advancements of home electricity generation technologies, electricity at home is still generally supplied by utilities. Electric utilities often participate in both electricity generation and distribution. One thing that differentiates electric utilities from other utilities is demand management. Since storage of electricity is generally difficult and costly, electric utilities may provide related services and programs to assist the timing of a customer’s electricity usage.

The second major contender in the energy sector is natural gas. On the industrial side, natural gas is commonly used to generate electricity. On the residential and commercial side, it is mostly used for cooking and heating. In the United States, natural gas is deregulated in many states, so gas utilities tend to rely on suppliers for the sourcing and delivery of natural gas. In Georgia for example, natural gas is a deregulated market. A utility such as Gas South does not distribute gas to the consumers. Atlanta Gas Light is the distribution company that owns the gas pipelines, connects and disconnects gas service, but Gas South is the provider bills the customer.

Water and sewer service operate on very different grounds and are often billed to the customer separately. Water utilities provide clean drinkable water in large quantities, while sewer utilities handle the disposal of waste water with a complex network throughout cities. The cost of each type of service is based on its complexity. Clean water is delivered to the consumer in pressurized pipelines from a central location – elevated storage tank and booster stations –  and has regulations regarding the cleanliness of the water. A sewer utility must collect and treat waste water in accordance with pollution and safety regulations and develop sewer plans for sewer systems. Due to the non-pressurized system, this is a more challenging problem than water distribution.

Waste management, sometimes known as solid waste management, is the process of collecting, transporting, treating, and disposing of waste. In the modern era, waste management is not as simple as pure disposal, but includes sustainability such as recycling, composting, and re-use. Aside from undesirable landfill disposal option, it is common for utilities to offer recycling programs, divert reusable products to charities, encourage the reduction of junk mail, or promote backyard composting methods to their customers.  A good waste management utility will consider the waste management hierarchy thoroughly to minimize pollution in land, air, and water and to conserve natural, economic, and energy resources where possible.