All the energy that leaves the generating stations is not reflected in the bills sent to customers. The difference is attributable to two issues. The first is called unaccounted-for energy. This energy is not metered by the local utility and is usually due to theft of service.

In some underdeveloped countries this category can be as much as 50% of the energy generated. The second is the losses in the system directly related to the electric characteristics of the delivery system. They are an important consideration when selecting new electric power policies, when locating new generating plants, when deciding what generator to run to supply the next increment of load, when deciding on the voltage level and conductor sizes for new transmission and when deciding on the amount of voltage support to provide.

Losses occur in both lines and transformers. Line losses are directly related to the square of the value of the current (I2R).The greater the amount of electricity the delivery system carries, and the greater the distance the greater the amount of energy lost as heat.

Transformer losses are of two types: no-load loss and load loss. No-load losses are related to hysteresis and eddy-current loss in the transformer core and are independent of the current. Transformer load loss is related to I2R.

The no-load losses vary as the third to fifth power of the voltage and increase significantly when voltages are outside of design range.

Transformer manufacturers consider the amount of losses as one element of the requirements when designing a transformer. Typically, the cost of anticipated losses is a tradeoff with the capital cost to purchase the transformer.

Losses can be reduced by increasing the size, and hence the cost, of a transformer. Rustebakke2 reports that the total losses at rated transformer output amount to approximately 0.3–0.6% of the rated kiloVolt-Amperes of the unit.

On most power systems load losses are 60% to 70% of total losses with transformer no load losses being from 30%–40%. In recent years, as the wholesale electric power market has been deregulated; new dispatch procedures and the increased flow of electricity on the bulk transmission system over longer distances without a commensurate increase in transmission capacity has caused an increase in transmission losses.

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