The IRS tagline is "Helping You Make Informed Decisions." One of the informed decisions a business owner must make is over their industry listing within the North American Industry Classification System (NAICS). The NAICS provides a breakdown of various industry sectors, and this gives Uncle Sam an idea of how many particular businesses are within a given sector.

Of course, constant revisions are made within the NAICS, and a huge manual is supplied to help business owners label their business with an industry code. The energy business is no exception, so this manual helps us define various subsectors of energy for diversification of our portfolios - these are labeled as Utilities. Industries in the Utilities subsector provide electric power, natural gas, steam and water supplies, and sewerage removal through permanent infrastructures of plants, lines, mains, pipes, and other forms of distribution. Let's take a look at the utility services provided and the systems required to perform the service:

1. Electric Power Generation: This generalized subsector includes all businesses engaged in generating, transmitting, and/or distributing electric power. The first breakdown includes operations of power systems, transmission systems, and - finally -distribution systems. If we're interested in this subsector, we might be just as intrigued by cables and pipes as we are by the various production plants. The next subsector, which we'll include here, is the establishment that owns the power plant. This is different from actual operations. How different is negligible, dependent on the plant. Do research, find out if the operation of the plant varies from the actual establishment that owns the plant. The owner establishment of the facility may be involved in diverse areas of electric energy production, such as waterpower (i.e., hydroelectric), fossil fuels, nuclear power, solar power, and/or waste management.
   
   
2. Hydroelectric Power Generation: This form of power generation is more specific. These power plants use tremendous amounts of water to drive a turbine, creating energy. This energy is transmitted through various means to distribution centers.
   
   
3. Fossil Fuel Electric Power Generation: These facilities use fossil fuels, such as coal, oil, or gas, in internal combustion or combustion turbine conventional steam process to produce electric energy. The energy is then transmitted to distribution centers. We'll get into consumption rates of these three forms of energy a bit later.
   
   
4. Nuclear Power Generation: This is fairly straightforward. These businesses include those plants using nuclear power to produce electrical energy.
   
   
5. "Other" Power Generation: This subsector is all encompassing, except for those already mentioned. This includes, solar, wind, and tidal power into electrical energy. We'll cover these forms more in depth in a bit.
   
   
6. Electric Power Transmission: This subsector is more specific, as this entails companies solely engaged in forms of transmitting electric power to distribution centers, other electric facilities, or directly to consumers. They often regulate voltage, and sometimes even transform power. These facilities are dependent on the type of power used for energy.
   
   
7. Electric Power Distribution: By any other name, this includes lines, poles, meters, wiring, and/or brokers and agents. These are the power dealers, and the end of the line, so to speak.
   
   
8. Natural Gas Distribution: This is very similar to #7. Natural gas obviously deserves its own distribution system, as it's entirely different than the distribution of other power sources. This category includes meters, mains, and other forms of natural gas distribution, including agents and/or brokers.
   
   
9. Water Sewerage Plants: You might ask what this category is doing under Utilities?I know I did. This subsector involves establishments primarily engaged in operating water treatment plants and/or operating water supply systems. The water supply system may include pumping stations, aqueducts, and/or distribution mains. The water may be used for drinking, irrigation, or other uses. Of course, we need power to work these plants, and some industries are looking into the possibility of using these plants to generate more power.
   
   
10. Sewerage Treatment Facilities: This is more defined than #9. These plants are used specifically to treat and dispose of waste. I don't know about you, but something in me doesn't want to know where they put the final product...
    
    
11. Steam and Air Condition Supply: This category includes companies and businesses responsible for generation and distribution of steamed and cooled air. You might be surprised that this supply source is often used in other industries as a form of energy. The steel industry uses steam for some processes, and there are other industries using steam for experiments in celluloid fiber industries. We won't cover this in depth, but take a look at how your favorite products are manufactured, and see which form of energy they use in the process.

Ok - now we know the various categories ready for our investment dollars. Which one do we choose? In order to make a wise investment choice, we need to investigate some of these subsections a bit further.

First, we can break the subsectors above down into three categories: Plants, Transmission Systems, and Distribution Plants or Methods. Once we do this, we can choose among the different forms of power. If we're interested in sewerage, then we can decide if we want to invest in sewerage plants, transmission systems, or disposal (distribution) methods.

The sewerage plants will have various owners who may or may not be involved in other businesses. The transmission system may involve vehicles in the transportation sector. The disposal? Ok - I broke down and investigated this end of the deal. This is actually a viable form of investment, as there are methods in use to recycle various forms of waste. Some of these methods include the generation of more energy. If you're curious, go to any search engine and type in "waste disposal management."

If we want to keep those home fires burning, we may be using something other than wood by mid-century. Next week we'll take a look at various power source consumption levels and how these consumer-use rates may affect future investments.

Until then,
Linda Goin