The business of producing and supplying electricity can be complicated. But, at LakePoint Energy, we’re working to make it simpler by providing relevant energy information. Let’s start with the big picture.

  • Electricity is generated in power plants. These plants are operated by regulated electric utilities and unregulated companies.
  • In deregulated markets, consumers can choose the company that supplies their electricity. This electricity is sold to businesses by electricity suppliers, such as FirstEnergy Solutions, AEP Energy, Direct Energy and many more…
  • Regulated electric utilities continue to maintain the wires and poles that deliver the electricity from power plants to homes and businesses.

Traditionally, electricity was generated and supplied by the same company – the electric company. Today, customers can shop around for the best price for their electricity generation.

1311089978856How does electricity work? Electricity is typically produced at a power plant. The fuel source (most commonly oil, coal, natural gas, or nuclear material) is burned, and the heat is used to boil water. When water boils, the steam can physically propel electric generators. These generators are large magnets that spin with respect to coils of metal wire. Electricity and magnetism are related phenomena, so these moving magnets cause electricity to flow.

Electricity is actually moving electrons. The electrons can flow from atom to atom in metals, such as those used for power lines. Electricity can flow easily as long as the wires are connected in a loop, called a circuit. So the power lines that extend from the power plant into the community eventually lead all the way back to the plant.


How the grid works

When electricity is created by large generators at a power plant, it has voltage of approximately 25,000 volts. A volt is a measurement of the force in electricity that pushes electrons around a circuit.

Electricity travels more efficiently at higher voltages. The electricity coming from the power plant travels to a transformer that boosts the voltage up to 400,000 volts. This high-voltage electricity is then transmitted through long, thick cables made of a low-resistance material, such as copper or aluminum.

This high-voltage electricity travels over the wires to a substation where transformers change the electricity back to lower voltages. These substations provide electricity to factories and to your neighborhood.

When electricity from the substation arrives in your area, another small transformer, usually mounted on a utility pole, reduces the voltage even further to the lower levels used in your facility.

Natural Gas is usually measured by volume in the United States and is stated in cubic feet. A cubic foot of gas is the amount of gas needed to fill a volume of one cubic foot under set conditions of pressure and temperature.To measure larger amounts of natural gas, a “therm” is used to denote 100 cubic feet, and “mcf” is used to denote 1,000 cubic feet. To provide greater accuracy in comparing fuels, energy content is measured in terms of “British Thermal Units (BTU’s).” A BTU is the amount of heat required to raise one pound of water (approximately a pint), one degree Fahrenheit at or close to its point of maximum density.

One British therm (symbol thm) is a non-SI unit of heat energy equal to 100,000 British thermal units (BTU). It is approximately the energy equivalent of burning 100 cubic feet (often referred to as 1 CCF) of natural gas.

Since (Natural Gas) meters measure volume and not energy content, a therm factor is used by (Natural) gas companies to convert the volume of gas used to its heat equivalent, and thus calculate the actual energy use. The therm factor is usually in the units therms/CCF. It will vary with the mix of hydrocarbons in the natural gas. Natural gas with a higher than average concentration of ethane, propane or butane will have a higher therm factor. Impurities, such as carbon dioxide or nitrogen, lower the therm factor.

The volume of the gas is calculated as if measured at standard temperature and pressure (STP). The heat content of natural gas is solely dependent on the composition of the gas, and is independent of temperature and pressure.

One therm is equal to about 105.5 megajoules, 25,200 kilocalories or 29.3 kilowatt-hours. One therm can also be provided by about 96.7 cubic feet (2.74 m3) of natural gas. The therm sometimes has been confused with the thermie (see below). The names of both units come from the Greek word for heat.

A thermie (th) is a metric unit of heat energy, part of the meter-tonne-second system sometimes used by European engineers. The thermie is equal to the amount of energy required to raise the temperature of 1 tonne of water by 1 °C. The thermie is equivalent to 1,000 kilocalories, 4.1868 megajoules or 3968.3 BTU.


  • Therm (EC)      ≡ 100,000 BTUIT[1]

= 105,506,000 joules

≈ 29.3072222 kWh

The therm (EC) is often used by engineers in the US.

= 105,480,400 joules

≈ 29.3001111 kWh.

  • Therm (UK)      = 105,505,585.257 348 joules[3]

≈ 29.30710701583 kWh

Ten therms are a decatherm. Common abbreviations are as follows:[4]

Dth decatherm
MDth thousand decatherms
MMDth million decatherms


United Kingdom regulations were amended to replace therms with joules with effect from 1999. Despite this, natural gas is now usually retailed in kilowatt-hours, although the wholesale UK gas market trades in therms, with a typical forward transaction being for 25,000 therms/day (31 MW). In the United States, however, natural gas is commonly billed in CCFs (100 cubic feet) or therms.

Carbon footprint

According to the Pacific Gas and Electric Company emissions rate, burning natural gas produces on average 13.446 pounds (6.099 kg) of carbon dioxide per therm.