The Grid

• Early development of electricity figured that one generator was needed per source of light.

• Light was initially the target of development as it was the physical property most evident and could be seen as increasing production (as in the case 1878 of Sierra Nevada mines).

• Edison developed the notion of circuits in parallel where the current is ‘split’, what was considered indivisible, is divisible.

• Arc lamps, developed by Charles Bush were the first lighting systems. They were placed in serious and produced a ‘ghastly’ glow. This was better than nothing though.

• With Edison’s parallel circuits the power is split out between the lamps which would reduce their brightness and also allow redundancy if lamps blew out.

• When Edison’s first public grid flickered to light in 1882 it was little more than a sixth of a square mile. By 1884, it had expanded to a full mile and held more than eight thousand bulbs, each a little circle of golden dimness with a lumen count equivalent to a contemporary 15-watt bulb. These eight thousand bulbs were wired in parallel, connected one to the next by a network of more than a hundred thousand feet of wire, which ran through conduits buried under New York’s cobble. The entire network was powered by six 27-ton 100 kW Jumbo Mary-Anns, as Edison’s dynamos were called for their admittedly “leggy” form.

• Edison’s grid would have had a generator every mile or so with, in his vision, carts of coal travelling between them.

• Arc lamps were the main lighting installations though in these early days.

• in England, where an Edison-style grid (lots of dim lights run on a parallel circuit) was very late to flourish, arc lighting was the preferred method of electric illumination well into the 1920s

• The voltage provided by a generator (like a dynamo) was inflexible. This meant that private grids would be set up based on the use for power (streetcar vs lighting). This create a lot of competition for out of the box grids which Edison promoted.

• From the 1880s well into the 1900s electricity production was actually tending toward becoming the sort of individualized system we use today to make hot water or cool air.

• Edison’s plants had very limited range.

• There’s no reason that hot water and cold air cant like electricity be produced more centrally and distributed. It’s clear that electricity also tried to take the path that we have now for these systems early on in its development.

Private vs Public

• The starting point for electricity was private ownership of plants and in general, it being an exclusive product.
• Samuel Insull is given a large amount of credit here for taking the reins off of Edison and pushing innovation in the electricity production market.
• He figured out that you need a 24/7 demand to gain maximally off the ‘interest’ or ‘rent’ that you’re paying just to keep your capital running.
• The more load you can capture, the more margin you can make over the day to day operation costs.

• The factories were the one piece of the puzzle that could make this scheme work. They were the only customers which could be counted on to use a tremendous amount of power during daylight hours; without factories, no vision of a single on-all-the-time grid could be profitable.

• He also did things like charge less for off-peak times and charge less to commercial users (something I think is the opposite in Ireland?).
• Insull ‘lured’ in customers with both cheaper prices, but also stories to increase electricity usage.
• Utility companies, following Insulls model found

• As Hirsh discusses in detail in his history of what he calls the “utility consensus,” the move toward government regulation as a survival strategy for the utilities had the good fortune of coinciding with the progressive politics of the 1910s. The main aim of the progressives was to rout out crooked politicians whose rule was grounded in relationships of patronage rather than systematized good government. Progressives and utility company managers thus found each in the other an ally, and what was born of their alliance was an agreement to monopoly; if the utilities accepted to be heavily regulated, the government at the state and federal levels agreed to grant them a guaranteed service area, within which no other electric utility would be issued a charter to function.

The stagnation

• There was a notion that you could consistently grow the customer base and build more infrastructure.
• All the way up to the 1970’s it seemed that America’s demand for electricity just kept increasing and utilities were able to keep providing through technological progress (like efficiency increases).
• This logic broke in the 1970’s with the increase in fuel prices, due to the oil crisis and power plants becoming more expensive linked to nuclear power (?).

• In 1973 any industry that had the capacity to use coal instead of oil was making the switch, a move that also drove the price of domestic coal through the roof.

• For the first time in their history, utilities had to raise the price they charged for electric power, shattering another seemingly natural law of the utility business.

• Simultaneously, the shortages of the 1970s that pushed electricity prices up also produced a new relationship between Americans and their patterns of consumption. “Conservation” and “efficiency” became the watchwords of the 1970

• These kind of daily consumption pattern changes paired with the rising costs associated with power plant production due to the establishment of the EPA and an increase in the price of labour and materials.
• These were blows to the engrained laws of the industry that it would always grow, producers just needed to focus on building more.

• More than any fact of physics or markets or culture, regulation in the form of long-term loan guarantees coupled with assured profit on investment had enabled electric companies to weather the intense infrastructural costs of building ever bigger, more powerful electricity factories and ever more expansive power networks. Regulation had also protected them from competition, ceding each absolute control over the production and distribution of electric power within given service areas. The reason for this long-standing state support was that electricity was deemed that peculiar kind of public good whose price is driven up rather than down by competition and whose availability is disturbed rather than assured by multiple, competing providers. In the 1970s, however, it slowly became clear that the supposed deleterious effect of competition was less a natural law than a bureaucratically enshrined functional reality.

• How will this notion that competition might be good for electricity play out?

Concern about Systems that powered people in the 1970’s

• Bakke paints this picture of an America that by the 1970’s after, basically one generation had no working knowledge of a kerosene lamp, latrine or ice box and had replaced it with an even more confusing system of high tech electricity transmission.
• The interfaces were switches, sockets and buttons, what business of the public was it to know how that worked. Also, due to the regulation of power plants, you wouldn’t know the difference between an oil powered vs coal powered or a telephone line vs a transmission line.

• The problem was that all of these systems beyond the scope of daily understanding had consequences, and by the 1970s these consequences had become almost impossible to ignore.

• People became frustrated with there inability to stop smog in LA or deal with the higher price of gas due to the oil embargoes. This manifests itself in nuclear protests (especially after three mile island) and in electricity consumption dropping.
• It’s from this that American’s look to political power to do something about it. Reducing your consumption still caused you to pay high prices (because the first hours of use in the day was the most charged, an Insull innovation).

• The impossibility of transforming a budding environmental consciousness into effective action against entrenched industries was not just an issue for individuals, but also for states and other communities attempting to enact their own responses to environmental degradation. California, for instance, had passed a bill into law, in the 1960s, that would mitigate pollution and encourage renewable forms of electricity production but could not enforce it because of the ways in which federal regulations protected big polluters from attempts at state reform.

The Act that breaks the back of monopolies

• The utility companies also had a monopsony on the market. Firstly, no start up could set up their own distribution infrastructure because they wouldn’t be given licenses and then any power generated by a household or cooperative could only be bought by the utilities who could just set the price which would just be set at a low price so no valid business would get into the area.

• This was what PURPA reversed: The utilities could still be monopolies, but they couldn’t be monopsonies anymore. The utilities now had to buy power from entities making small amounts of electricity in their territory; and they had to pay the same rate for this independently produced power as it would have cost them to make it themselves.

• The section seems to have started as a congressman wanted the cogeneration power from a waste burning facility in New Hampshire to be used in Boston.
• At the time cogeneration was about 3% of US power supplied but with this new act is started to climb. In 2015, this figure is 12% and hopes to be 20 by 2030.
• Electricity had never really been priced before, it was set by regulators. The ‘avoided costs’ that industrial producers now had to pay was complex to calculate and included the time of day, future planning and marginal costs of fuel.

• Once the initial requirements of figuring “avoided costs” were met by state regulatory agencies, often in conversation with the utilities, went about “offering” contracts in very different ways. In some states, such as Vermont and New York, the same price per kilowatt-hour was offered to any and all new electricity providers regardless of the utility doing the buying; in New York this was called the “six-cent” law as it paid out a flat, invariable, 6¢ per kWh for all early PURPA era contracts. In other states, like Virginia, non-utility providers bid for contracts. For example, in 1986, when Virginia Power wanted to add 1,000 kilowatt hours of generation, for use by 1990, they held an open auction, received 5,000 kilowatt hours’ worth of bids from fifty-three different companies from which they selected seven that promised 1,178 new kWh. This system of competitive bidding would become the most revolutionary of the many variants tried out by different states as it allowed for something like free-market competition to actually, and at long last, enter the governance of the grid. Once awarded the contract, these new, small power entrepreneurs “built out” the promised generation facilities, and on the appointed date, they began contributing a predictable kilowattage to the grid.

• I’m unsure about the ‘offering of contracts here’ but in California a set of offers for generation called ISO’s were given to start up generators. ISO4 allowed payment above avoided costs for the first ten years and then lower after. This promoted more unknown generation technologies like wind and solar to develop such that:

• All in 80 MW chunks. “By 1990, California had become home of 85% of the world’s capacity of electricity powered by the wind and 95% of the world’s solar power electricity.”

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• Letting go of the regulatory ‘yolk’ is part of the reason for the lack of dynamism with grid system development.

  • The utilities could be regulated, wisely or foolishly, but they would not be asked to learn adaptability, flexibility, or creativity themselves; instead they would be told what to do and they would be expected to do it. One result of this is that as the holes PURPA rent in the system have grown larger over the decades, the electrical utilities in their hamstringed attempts to reinvent themselves all too often remain an impediment in the task of reimagining and remaking our grid.

• Or to put an science tint to it:

  • Or as Fred Pickel, an industry insider during this period, explained to me, deregulation in California failed because it betrayed “an engineering mentality. They tried to set up commercial systems in too much detail and in the process they started up an administrative process in which it takes two years to change a rule.”

Chapter 5

• The Energy Policy Act at the beginning of the 2000’s, pushing for more distributed electricity generation made it more economically viable for utilities to start transporting, delivering and metering electricity rather than generating it.
• An example, For FirstEnergy, an Ohio based energy company, they reported fixing about 75% of issues in 2001 leaving 25 percent to roll over to 2002. The next year, they completed just 17% leaving close to 11000 issues unfixed for 2003, the year of a blackout (the biggest in US history causing a noticeable dip in GDP for that year).

• The reason a bulb illuminates when you flip on a light switch is that you have just lowered the resistance on the circuit, from total (when the switch is off) to near zero (when the switch and lamp are on). There is no need to “communicate” with electricity in any other way—our grid, indeed the whole of our world, might be thought of as a symphony of varying resistances, each beckoning or shunning electric current in its own way.