Electrical Grid - History

History

Since its inception in the Industrial Age, the electrical grid has evolved from an insular system that serviced a particular geographic area to a wider, expansive network that incorporated multiple areas. At one point, all energy was produced near the device or service requiring that energy. In the early 19th century, electricity was a novel invention that competed with steam, hydraulics, direct heating and cooling, light, and most notably gas. During this period, gas production and delivery had become the first centralized element in the modern energy industry. It was first produced on customer’s premises but later evolved into large gasifiers that enjoyed economies of scale. Virtually every city in the U.S. and Europe had town gas piped through their municipalities as it was a dominant form of household energy use. By the mid-19th century, electric arc lighting soon became advantageous compared to volatile gas lamps since gas lamps produced poor light, tremendous wasted heat which made rooms hot and smoky, and noxious elements in the form of hydrogen and carbon monoxide. Modeling after the gas lighting industry, Thomas Edison invented the first electric utility system which supplied energy through virtual mains to light filtration as opposed to gas burners. With this, electric utilities also took advantage of economies of scale and moved to centralized power generation, distribution, and system management.

During the 20th century, institutional arrangement of electric utilities changed. At the beginning, electric utilities were isolated systems without connection to other utilities and serviced a specific service territory. In the 1920s, utilities joined together establishing a wider utility grid as joint-operations saw the benefits of sharing peak load coverage and backup power. Also, electric utilities were easily financed by Wall Street private investors who backed many of their ventures. In 1934, with the passage of the Public Utility Holding Company Act (USA), electric utilities were recognized as public goods of importance along with gas, water, and telephone companies and thereby were given outlined restrictions and regulatory oversight of their operations. This ushered in the Golden Age of Regulation for more than 60 years. However, with the successful deregulation of airlines and telecommunication industries in late 1970s, the Energy Policy Act (EPAct) of 1992 advocated deregulation of electric utilities by creating wholesale electric markets. It required transmission line owners to allow electric generation companies open access to their network.