Mankind began accomplishing tasks by hand, later learning to transfer the motion of animals, water and wind. Time moved forward and by the early 19th century steam, hydraulics, direct heating and cooling, light and particularly gas were in use; giving the upstart innovation of electricity staunch competition. The production and delivery of gas launched the consolidation of the components of the modern energy industry. Gas was found in practically every US and European city, initially produced on the user’s property, gas became the dominant form of household energy, requiring large gasifiers as the economic scaling to pipe gas through their municipalities. It didn’t take long before the institutional arrangement of electric utilities changed and usage of electric arc lighting became predominant over the use of gas lamps, focusing on the facts they produced poorer light and such wastes as unutilized heat, gases such as hydrogen and carbon monoxide, making rooms hot and smoky.
In the dawn of “the grid” there was disagreement (known as the War of the Currents) between America’s electricity pioneers George Westinghouse and Thomas Edison as to what method would be the best to deliver electricity to the population. Edison modeled after the gas lighting industry and implemented the first electric utility system which supplied energy as opposed to gas burners. It was through the combined work of Westinghouse and the ingenious innovation of Nikola Tesla electric utilities took advantage of economies of scale and moved to centralized power generation, distribution, and system management.
Before going to America in 1883, Tesla joined Continental Edison Company in Paris where he designed dynamos. Tesla came to the United States in 1884, accepting an offer to work for Thomas Edison in New York. Tesla set about improving Edison’s line of dynamos while working in Edison’s lab in New Jersey. It was here that his divergence of opinion with Edison over direct current versus alternating current began. Tesla introduced a system for alternating current generators, transformers, motors, wires and lights in November and December 1887. The downfall of direct current mass distribution was the fact it could only be effectively transmitted for a maximum distance of two miles. Edison fought a losing battle to protect his investment in direct current equipment and facilities. 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.) [Borberly, A. and Kreider, J. F. (2001). Distributed Generation: The Power Paradigm for the New Millennium. CRC Press, Boca Raton, FL. 400 pgs. – Mazer, A. (2007). Electric Power Planning for Regulated and Deregulated Markets. John, Wiley, and Sons, Inc., Hoboken, NJ. 313pgs.]