Electricity Basics

Historically, Pepco, like most other integrated electric utilities, performed three functions to provide you with electricity: generation, transmission and distribution. With customer choice, the cost of generating electricity – which represents almost half of your electric bill – is open for competition. Electricity suppliers that are licensed and approved by the District of Columbia Public Commission can offer competitive prices for generation services. Even if you choose another supplier for generation services, Pepco will continue to distribute electricity to your home or business.

		Generation - is the production of electricity at a power plant. Like any other product you buy, electricity must be made. In the District, electricity suppliers who produce electricity compete for your business and rates are based on market prices. You can choose who generates your electricity.
		Transmission - is the movement of large amounts of electricity from where it’s produced to where it's distributed. Similar to food or clothing, electricity is made in large quantities and must be shipped. While other consumer products travel by rail or trucks to distribution centers, electricity travels over high-voltage transmission lines to local distribution systems.
		Distribution - is the delivery of electricity to your home through a local distribution system. Electric utility companies distribute electricity to homes through power lines, transformers, substations and other equipment. In the District, Pepco is the sole distributor of electricity and rates are determined by the D.C. Public Service Commission.

The part of Pepco that is responsible for the transmission and distribution of electricity remains a regulated utility under the authority of the District of Columbia Public Service Commission and the Federal Energy Regulatory Commission, the agencies that oversee utilities and regulate utility rates.

Generation, Transmission and Distribution

The diagram below demonstrates how the three key functions of electricity service interact with each other. Remember, it is the generation component that is open for competition.