There are many detailed articles and in fact entire books written about how electricity is generated and transmitted to houses and businesses. Heck, entire college courses cover this concept. If you are looking for extreme details on this, please check out your local library. Read on if you are looking for the basics.
Lets talk about what exactly electricity is before we start talking about how it is delivered to your house. Think of electricity as water flowing through a pipe or garden hose. The water is really electrons in the metal that makes up the wire. The hose is the wire that transports the water (electricity). There are all kinds of fancy definitions, but that is the basics.
Electricity is transported on high voltage power lines after leaving the power plant. It is more efficient to transport high voltages so the voltage on the lines is very high. Power lines form a huge system or grid that attaches everybody’s house and business to the power plants. In the United States, virtually the entire country is attached to the same grid. Texas is almost separate, but there are still a couple ties into the rest of the grid. All power plants add electricity into the system so if one plant goes down, there is still electricity because the other plants just put a little more in.
The power lines deliver voltage to transformers (usually a series of transformers) to change (step down) the voltage to 120V for you to use in your house. Power comes to one point at your house before being split up to go to all your outlets and lights. This one common point is either a fuse box or a breaker box depending on how old your house is.
Traditionally, one electricity company took care of delivering energy to your house and you didn’t have to worry about picking your company. This was nice because it was one less thing to worry about. However, it can lead to higher costs for you.
A new electric distribution model has emerged in the last few years. It is a deregulated business model where multiple companies (one such company is ambit energy) sell electricity and have to compete for customers. In this model, one company or set of companies owns the power plants while a different set of companies is responsible for selling the electricity. Some states like Texas, New York, and Illinois allow non-monopolistic companies to essentially buy electricity from the power plants and sell it to consumers. In the place of large companies, small companies even individual people become Energy Consultants and are making a ton of money. Instead of a few big companies making a lot of money, this allows a lot of smaller companies and individuals to make money.
There is another trend out there that could change the way electricity is generated, or at least the amount that is delivered. residential solar power is starting to save people a ton of money by generating their own power.
If you want to learn more about how electricity is made, check out my Hubpage on the subject.