Electrical transmission of energy involves problems quite distinct from its development. A great water-power, or a location where fuel is cheap, may offer opportunity to generate electrical energy at an exceptionally low cost. This energy may be used so close to the point of its development that the cost of transmission is too small for separate consideration.

An example of conditions where the important problems of transmission are absent exists in the numerous factories grouped about the great water-power plants at Niagara and drawing electrical energy from it. In such a case energy flows directly from the dynamos, driven by water-power, to the lamps, motors, chemical vats, and electric heaters of consumers through the medium, perhaps, of local transformers. Here the costs and losses of transmitting or distributing equipments are minor matters, compared with the development of the energy.

If, now, energy from the water-power is to be transmitted over a distance of many miles, a new set of costs is to be met. In the first place, it will be necessary to raise the voltage of the transmitted energy much above the pressure at the dynamos in order to save in the weight and cost of conductors for the transmission line. This increase of voltage requires transformers with capacity equal to the maximum rate at which energy is to be delivered to the line. These transformers will add to the cost of the energy that they deliver in two ways: by the absorption of some energy to form heat, and by the sum of annual interest, maintenance, and depreciation charges on the price paid for them. Other additions to the cost of energy delivered by the transmission line must be made to cover the annual interest, maintenance, and depreciation charges on the amount of the line investment, and to pay for the energy changed to heat in the line.

Near the points where the energy is to be used, the transmission line must end in transformers to reduce the voltage to a safe figure for local distribution. This second set of transformers will further add to the cost of the delivered energy in the same ways as the former set.

From these facts it is evident that, to warrant an electrical transmission, the value of energy at the point of distribution should at least equal the value at the generating plant plus the cost of the transmission. Knowing the cost of energy at one end of the transmission line and its value at the other, the difference between these two represents the maximum cost at which the transmission will pay.

Three main factors are concerned in the cost of electric power transmission, namely, the transformers, the pole line, and the wire or conductors. These factors enter into the cost of transmitted energy in very different degrees, according to the circumstances of each case. The maximum and average rates of energy transmission, the total voltage, the percentage of line loss, and the length of the line mainly determine the relative importance of the transformers, pole line, and conductors in the total cost of delivered energy.

First cost of transformers varies directly with the maximum rate of transmission, and is nearly independent of the voltage, the length of the transmission, and the percentage of line loss. A pole line changes in first cost with the length of the transmission, but is nearly independent of the other factors. Line conductors, for a fixed maximum percentage of loss, vary in first cost directly with the square of the length of the transmission and with the rate of the transmission; but their first cost decreases as the percentage of line loss increases and as the square of the voltage of transmission increases.

If a given amount of power is to be transmitted, at a certain percentage of loss in the line and at a fixed voltage, over distances of 50, 100, and 200 miles, respectively, the foregoing principles lead to the following conclusions: The capacity of transformers, being fixed by the rate of transmission, will be the same for either distance, and their cost is therefore constant. Transformer losses, interest, depreciation, and repairs are also constant. The cost of pole line, depending on its length, will be twice as great at 100 and four times as great at 200 as at 50 miles. Interest, depreciation, and repairs will also go up directly with the length of the pole lines.

Line conductors will cost four times as much for the 100- as for the 50-mile transmission, because their weight will be four times as great, and the annual interest and depreciation will go up at the same rate. For the transmission of 200 miles the cost of line conductors and their weight will be sixteen times as great as the cost at 50 miles. It follows that interest, depreciation, and maintenance will be increased sixteen times with the 200-mile transmission over what they were at 50 miles, if voltage and line loss are constant.