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Energy Supply Handbook 2014

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Page 10 of 347

INDUSTRY INSIDER 9 UTILITY WEEK ENERGY SUPPLY HANDBOOK 2014 The electricity industry in Great Britain consists of five main activities: generation, transmission, distribution, supply and interconnection. Electricity generation Generation is the conversion of primary and renewable energy sources into electricity. Companies producing electricity in power stations operate under generation licences in an increasingly competitive market. Electricity transmission Transmission is the bulk transport of electricity from power stations to the companies responsible for distributing it to end users. The transmission network in England and Wales is owned and operated by National Grid. In Scotland transmission is handled by ScottishPower and Scottish and Southern Energy. Other parties known as Offshore Transmission Operators (Oftos) have entered the arena to own the links between offshore wind farms and the onshore network. Distribution Distribution is the process of delivering electricity from the transmission network to customers, across the low-voltage grid. For details of these distribution network operators (DNOs) see maps at the end of the Energy Supply Handbook. In addition, Ofgem (the gas and electricity regulator) has issued new Independent Distribution Network Operator licences. IDNOs do not have a distribution service area and will own and operate electricity distribution networks which will predominantly be network extension connections to the existing distribution network. Each regional network has developed over a number of years, and reflects the size of the region it serves as well as the dispersal of population and the physical terrain. One important difference is that circuits are generally buried underground in urban areas, but are carried overhead in rural areas. Each licensed distributor owns and operates the distribution network within its own authorised area. Interconnector An Interconnector licence allows the licensee to participate in the operation of an interconnector, which transmits electricity between the Great Britain high voltage network and that of another country. Supply Supply is the process of buying electricity in bulk and selling it on to customers. Suppliers pay for electricity to be transmitted across the transmission and distribution networks to their customers. They publish prices, read meters, issue bills, process payments and deal with customers' enquiries. Most supply companies will offer supply contracts for both gas and electricity How the gas industry works Shippers contract with the off-shore producers to bring gas on shore and suppliers buy gas from shippers to deliver, via a high pressure and low pressure networks, to domestic and business customers. How tHe electricity and gas industry works

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