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| About Western Products Organizational chart Strategic planning History 30 years 25 years Utility industry develops Financial information Power projects 2006 Annual Report Frequently asked questions | 1927 to 1969: Industry technology improves, creates regional interconnection |
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by Jeff Hein Note: This is the fourth of a series about the history of the U.S. electric utility industry. Hein developed this material as part of his master's thesis research.) Once the Public Utility Holding Company Act of 1935 was in place, it took a relatively short period of time before the generation sector realized improved efficiencies of scale. With larger generators, electricity could be generated at greater efficiently and less cost. At the same time, transmission voltages increased to reduce losses. Larger, central, state-of-the-art generating stations, located nearer fuel supplies and connected to high-voltage transmission lines, began replacing the smaller generating stations connected to lower voltage sub-transmission and distribution lines. This configuration resulted in the cheapest electricity possible while improving reliability and the use of resources.
From 1927 to 1967, electricity prices dropped from 55 cents per kWh to 9 cents (adjusted to 1992 terms). As a result of this system, the U.S. electric system evolved from many locally operated, geographically smaller grids, into a highly interconnected one where interstate transmission lines connected many different utility systems. Each utility served its respective customers with its own generation, through purchases with neighboring utilities or by wheeling power from utilities further away. Utilities used contract path pricing for all electrical energy transactions. Individual utility control areas still played a very important role in daily operations and system scheduling electricity to and from neighboring utilities.
The 1935 Federal Power Act and individual state laws controlled how the utility industry operated through regulatory oversight, primarily at the state level, and to lesser extent, the Federal level. Reliability of the electric system was now both a regional and local control area concern. Northeast blackout reveals weakness The great Northeast Blackout of 1965 uncovered a weakness in the U.S. and Canadian interconnected electric grid. A disturbance in one section of a large interconnected grid could interrupt service across a wide geographical area. The blackout interrupted electric service across 80,000 square miles (eight states) in the Northeastern United States and large parts of Canada. This blackout started with a single 345-kV transmission line relaying failure near Toronto.
From that experience, Congress determined that a regional coordinating body should be created to ensure electricity supply reliability over a large geographic area. The North American Electric Reliability Council, or NERC, was formed on June 1, 1968, under the Electric Power Reliability Act of 1967. Today, NERC is responsible for overall reliability, planning and coordination of electricity supply in North America. NERC is a non-profit volunteer organization comprised of 10 regional councils, which represent smaller regions of North America. Through this model, North America's interconnected electric power system became the most reliable system of its kind in the world. This is essentially how utilities operated before conservation, deregulation and restructuring legislation appeared. (Note: Hein was a substation engineer in Western's Engineering group at CSO.) |
