US Electricity History

Early history
The history of electricity industry was started by the first Thomas Edison’s power plant in 1882. Wisconsin and New York tried to regulate the industry in 1907. Furthermore Federal Power Commission (FPC) was established in 1920 to regulate surplus power from federal irrigation and water control projects. FPC then became Federal Energy Regulatory Commission (FERC) in 1977.  

In 1935 Public Utility Holding Company Act (PUHCA) was issued along with growing concern on natural monopoly and market power. PUHCA expanded FPC authority included all wholesale sales of electricity. It also transformed multi-state, complex holding companies into simple corporate structures regulated by states and confined acquisition of assets.Vertically integrated utility characterized the early history of the industry.

1950's to 1960's
First nuclear power plant was built in 1957. Because of its lower costs per kWh, it was predicted that nuclear would play important role as demand doubled from 1964 to 1980.In 1965 Great northeast blackout occurred and resulted 30 million people without light. It lead to creation of ten North American Electricity Reliability Councils (NERC).

1970's
Oil embargo in 1973 significantly affected electricity industry.  Increasing oil prices (tripled) led to rate increase totaling $4.5 billion. In addition, demand for electricity dropped and then it turned out to scrapping 113 nuclear power plants and 67 coal-fired power plants.In the same year Otter Tail case brought about new issues regarding open access in transmission and antitrust law application in regulated industry.

To address above issues the first regulatory attempt on restructuring the industry began as Public Utility Regulatory Policy Act (PURPA) 1978 issued. PURPA mandated that utilities buy at avoided costs power generated from qualifying facilities which refer to co-generators based on renewable energy.

1990's
During the 1990’s further steps had been taken. Energy Policy Act (EPA) 1992 acted and stipulated: (1) to create exempt wholesale generators (EWG); and (2) to allow power suppliers to use market pricing rather than cost-based pricing.

Furthermore FERC issued order 888 and 889 in 1996. The orders mandated that  (1) required utilities to open transmission grids to all generators on a nondiscriminatory basis; (2) un-bundling of rates for generation, transmission and ancillary services; and (3) created ISOs.

The next, FERC Order 2000 in 1999 encouraged all transmission owners to voluntarily join regional transmission organizations (RTOs). This order explained four minimum characteristics of RTO: (1) Independence; (2) Appropriate geographic scope and regional configuration; (3) Operational authority for all transmission facilities under the RTOs control, and (4) Exclusive short-term reliability authority.Also it stated eight minimum functions of RTO:
(1) Transmission tariff development and administration that will promote efficient use and expansion of transmission and generation facilities
(2) Develop congestion management procedures
(3) Develop and implement loop flow and parallel path procedures
(4) Serve as the provider of last resort for all ancillary services
(5) Operate a single OASIS (Open-Access Same-Time Information System) for all transmission under its control
(6) Monitor markets to measure market power and market design flaws and propose remedies
(7) Plan and coordinate necessary transmission upgrades and additions, including coordinating its efforts with State regulators, and
(8) Develop mechanisms to coordinate its activities with other regions.

2000's
FERC Standard Market Design (2002)
(1) Same set of rules for all users of the grid administered by a fair and independent entity
(2) Market rules that protect against market manipulation
(3) Customer protection through market power mitigation measures and oversight
(4) Clear transmission pricing and planning policies for grid expansion