| Distribution companies don't purchase energy from transmission companies. You were probably thinking of Regional Transmission Organizations (RTOs), which are not the same thing as transmission companies. That said, it's not accurate to say that distribution companies purchase energy from RTOs either. RTOs (and ISOs, which are similar) are non-profit organizations that ensure transmission grid reliability and fairness by operating markets in which generators and distribution companies bid or buy energy [1]. The market mechanisms have been designed to also incorporates network balancing and congestion control. RTOs/ISOs are the benevolent, omniscient regional gods in charge of coordinating dispatch for the purposes of ensuring transmission grid reliability. They facilitate sales, they don't sell directly. Transmission companies, on the other hand, are for-profit organizations that build and maintain transmission lines. Their profits are constrained by regulation to be a certain percent return on equity [2], and they need to get permission from the RTO/ISO that monitors their region before making any operational changes to their transmission lines. One more difference is in their scale. There are only ten RTOs/ISOs in North America, and they tend to cover very large regions of the continent. There are many transmission companies, and they tend to cover smaller regions. For example, where I live in Southeast Michigan, the RTO/ISO is the Midcontinent Independent System Operator (MISO), and the transmission company is ITC [3], a spin-off from DTE Energy after deregulation forced DTE to pick two from their generation, transmission, and distribution capabilities (they kept generation and distribution, because post-deregulation that's where the money is). However, MISO's entire coverage area includes 52 transmission companies [4]. Basically, under deregulated energy markets transmission is treated as a public utility and the transmission grid is treated as common infrastructure. The grid is operated by non-profits and private companies who are required to be financially independent from generation and distribution interests. That's why the notion that distribution companies buy energy from transmission companies gives the wrong impression of how the system works, though I can see where the confusion could come from. [1] https://en.wikipedia.org/wiki/Regional_transmission_organiza... [2] http://archive.jsonline.com/business/lower-profit-recommende... [3] https://en.wikipedia.org/wiki/ITC_Transmission [4] https://www.misoenergy.org/StakeholderCenter/Members/Pages/M... |
(And, even more happy to be able to pull an expert lurker into the fray).