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Electricity distribution is the penultimate stage in the delivery (before retail) of electricity to end users. It is generally considered to include medium-voltage (less than 50 kV) power lines, electrical substations and pole-mounted transformers, low-voltage (less than 1000 V) distribution wiring and sometimes electricity meters.

In the early days of electricity distribution, direct current DC generators were connected to loads at the same voltage. The generation, transmission and loads had to be of the same voltage because there was no way of changing DC voltage levels, other than inefficient motor-generator sets. Low DC voltages were used (on the order of 100 volts) since that was a practical voltage for incandescent lamps, which were then the primary electrical load. The low voltage also required less insulation to be safely distributed within buildings.

The losses in a cable are proportional to the square of the current, the length of the cable, and the resistivity of the material, and are inversely proportional to cross-sectional area. Early transmission networks were already using copper, which is one of the best economically feasible conductors for this application. To reduce the current and copper required for a given quantity of power transmitted would require a higher transmission voltage, but no convenient efficient method existed to change the voltage level of DC power circuits. To keep losses to an economically practical level the Edison DC system needed thick cables and local generators. Early DC generating plants needed to be within about 1.5&_160;miles (2.4&_160;km) of the farthest customer to avoid the need for excessively large and expensive conductors.

The adoption of alternating current (AC) for electricity generation following the War of Currents dramatically changed the situation. Power transformers, installed at power stations, could be used to raise the voltage from the generators, and transformers at local substations reduced it to supply loads. Increasing the voltage reduced the current in the transmission and distribution lines and hence the size of conductors required and distribution losses incurred. This made it more economical to distribute power over long distances. Generators (such as hydroelectric sites) could be located far from the loads.

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