The Grid: Electrical Infrastructure for a New Era

by Gretchen Bakke

Today, the tension between individual power production (private plants) and utility-supplied electricity (central stations) is once again becoming the battleground upon which the future of our grid—the form and scope of its infrastructure—is being waged.

The most diabolical outcome of a return to a system of private plants, which could easily happen in the next couple of decades in sunny places like Arizona, Hawaii, and southern California (and to some degree has already happened in Germany) is that it threatens universal access to quality electrical power.

Most, however, agree that the idea of a “mass market” or “consumer culture” came about in part because utility company entrepreneurs needed new ways to make a profit from electricity. GE (originally Edison General Electric) started out as a power company; it was only with time that it became an appliance company renting, and then later selling, people stuff that needed to be plugged in to work.

AC had a strong advantage over DC, an advantage that with time facilitated the streamlining and ordering of the tangle of wires, companies, currents, voltages, and rates of oscillation. For unlike direct current, alternating current can travel; it was outpacing its rival’s single sad mile from its first moment on the market. The singular advantage of alternating current is that low voltages, made at the generator, can be “stepped up” to much higher voltages by means of a transformer—a simple device made of two sets of tightly coiled copper wires that almost, but don’t quite, touch. Higher voltages can go farther than lower voltages. It has, if you will, a higher quotient of desire, it “wants” harder, and thus is propelled farther. The transformer is a simple if genius means by which this “stepping up” and “stepping down” of voltage is accomplished without any loss in efficiency. It only works, however, if the current traveling through it “alternates,” which is to say, moves in a series of rapidly reversing waves.

With alternating current, in contrast, a rotating polarity at the generator causes the “direction” of the positive charge to switch. The free electrons, still passionate in their struggle to regain atoms of their own, thus also shift: surging first forward, then stopping, then surging backward.

In the early days of the grid there were several types of alternating current—single phase, dual phase, and polyphase; the differences between these, while important, can be simplified for our purposes to the fact that dual phase and polyphase send multiple waves though the wires and single phase sends just one.

If Edison’s Manhattan grid, in 1884, made and transmitted direct current at 110 volts over about a mile before its usefulness diminished to zero, Westinghouse and Tesla’s early alternating current system, in 1886, made electricity at 500 volts but transmitted it at 3,000 volts.

the rotary converter—“a single armature for changing direct current first into polyphase and then the reverse.” Like the parallel circuit, this little thing has remained mostly unlauded in the face of more luminous undertakings. And like the parallel circuit it was a missing link without which the evolution of electrical infrastructure was not progressing very well.

By 1895 the plant itself was complete and was supplying power locally, to tiny Niagara Falls; in November 1896, point-to-point transmission began to Buffalo, where the availability of constant power almost immediately began attracting large manufactories making things like abrasives, silicon, and graphite on an industrial scale. Perhaps most important to America’s future, it was in Buffalo, with the force of Niagara’s own power, where the manufacture of aluminum first became a profitable enterprise. Finally we had a light, strong metal for our airborne and land-bound engines; the era of the automobile was officially begun with air travel soon to follow.

Rural people had virtually no access to electricity until the passage of the Rural Electrification Act in 1936 during the darkest days of the Great Depression.

In 1956 the Niagara Falls generating station fell off the side of the cliff at the falls’ edge, where it had been perched.

1882. This was also the year that saw the creation of the Standard Oil Trust, a business entity that brought 90 percent of the world’s oil production and refining under the control of a nine-person board, headed by John D. Rockefeller.

American Telephone & Telegraph (AT&T).

The thrust of the 1935 Public Utility Holding Company Act was, as its title makes clear, to make it illegal for any company to hide their debts in “holding companies”—special shell corporations that made the actual worth of an enterprise impossible for investors to determine.

the secret to making a fortune off of electricity was not simply to have lots of customers but to have lots of different kinds of customers in order to provide sufficient demand to run a large, centralized generating station 24/7.

A short fourteen years later Insull’s Edison had doubled the Pollyanna’s estimate with

Instead of many little generating stations, with many owners, running intermittently, he wanted one that he owned and which ran all the time. In order to do this he needed to acquire “load” for each time period during the day. He needed streetcar companies to buy from him at dusk and dawn, residential customers for the late evenings and early nights, municipal street lights for nighttime, businesses for the late afternoons and early evenings, and most important of all, industry for midday.

One of the reasons that electric cars have received such public praise is that they can be programmed to charge almost exclusively at night and thus provide that rarest of beasts—substantial midnight load.

Insull, of course, gets no credit for the cars, but many of the other things we use electricity for at night we can thank him for zealously promoting, including a rate structure that rewards nighttime electricity use, but also home refrigerators and hot water heaters which, until the rise of the conservation movement in the 1970s, were phenomenally hungry appliances, and even today remain—with air-conditioning—the most electrically intensive items in a home.

to ensure sufficient industrial load, Samuel Insull started selling “off-peak” power (the middle of the day and the middle of the night) to industrial customers at 0.5¢ per kilowatt-hour—a price that helped persuade factories and other industrial concerns running private plants to make the switch to grid-provided electricity.

Of the many strange financial logics that adhere to the electricity business, two gave Insull the most pause. Both of these, it would turn out, had the same cause. First was that the lower the price he charged for electricity, the more money he made. Second, and related, was that his costs remained relatively constant regardless of how much electricity he sold.

the more “units,” or kilowatt-hours of electricity he sold, the more the interest cost per unit fell because this cost was being spread across a larger number of units.

to deal with the oddities of electrical power production and sale, this one remains with us today: industry still pays substantially less per kilowatt-hour than do residential and commercial customers, while relationships with industrial customers are privileged and cultivated in ways that seem, from the outside, to be fairly nonsensical.

Insull’s greatest coup: he used government regulation to protect his interests from competition and to insure long-term, low-interest construction loans.

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. Unlike the trusts held by Standard Oil or U.S. Steel that attempted to control the entire U.S. market there were many electric companies—they simply never overlapped.

In 1892 the Pearl Street Station ran at 2 percent efficiency—which is to say, it transformed about 2 percent of the potential energy in the coal it burned into electricity—twelve

in the early sixties, when it became clear that technological improvements no longer promised increased plant efficiency; this was primarily a problem of physics. The second law of thermodynamics, and its corollary Carnot’s theorem, dictate that temperature ratios limit the amount of work any given fuel can be expected to do in a heat engine. A traditional power plant is exactly such an engine: it turns fuel into heat. This heat is then used to convert water into a furious jet of steam directed at the blades of a turbine which, with their spinning, turn a shaft. This shaft then pokes into a giant electromagnet, and as the shaft spins inside the magnet, it produces an electric current. A system like this, that converts a fuel—any fuel, coal, plutonium, oil, gas, biomass, or trash—into heat, is going to top out at about 50 percent efficiency. This is an inevitable law.

There is another problem that limits the thermodynamic efficiency of a plant—the fragility of the metals from which boilers and turbines are forged. Technologically, we can now build a steam plant that works at 40 percent efficiency. We had some of these already in the 1960s. Practically speaking, this means superheating water to over 1,000 degrees Fahrenheit while upping the pressure to an awesome 3,200 pounds per square inch to convert this water straight into dry, unsaturated steam without boiling it. The construction of a machine robust enough to perform this task 24/7 for thirty years has turned out to be both fraught and expensive. The closer a steam plant comes to 40 percent efficiency, the more routine maintenance it needs, the more often it breaks down despite the constant upkeep, and the more costly the high-tech alloys necessary to endure this onslaught. Sooner or later even these fancy crafted metals will fatigue and give way. By the mid-1960s it had become clear to utility men that a plant run at just over 30 percent efficiency was both the most reliable and the most cost-effective way to make electricity.

The truth of this has not changed in the fifty years since. In 2012, the best fossil fuel power plants in America ran at 42.5 percent efficiency—but this number is only for a few natural gas combustion (no-steam) turbines. The newest steam plants operating in the United States between 2007 and 2012, whether fueled by coal or plutonium or petroleum, came in right around 34 percent efficiency.

for a traditional power plant, 48 percent efficiency—not 100 percent—is the maximum achievable

Unfortunately for utility companies, Carnot’s theorem was not the only surprise that awaited them as dawn broke over the 1970s. They had been encouraged to switch from burning coal to burning oil in the 1950s and ’60s—a costly retrofitting of power plants that was en vigor as the first OPEC oil embargo hit in 1973. The drastic fuel shortage that ensued saw prices rise more than 70 percent almost overnight and the notion of the shortage, as much as the reality of it, hit mainstream America like a sledgehammer.

From start to finish, a power plant begun in the late 1960s took seven years to come online, while one started in the late 1950s had taken only five. Much of this increased time to completion was due to the incessant layering on of environmental standards after the Environmental Protection Agency was formed in 1970.

what Marin County did in 2010. Many residents of Marin—a dry, half-empty, hyperwealthy, lefty stronghold in the sun-beaten hills north of San Francisco Bay—wanted the right to produce more of their power locally from renewable resources, or in their terms, to “locally curate” their energy while also managing their prices, rate structures, and customer relations for themselves. In essence, what they wanted was to get out from under the thumb of PG&E—the colossus of Northern California, which has never been known for having a light touch when it comes to community relations.

In addition to an admirably thorough public information campaign, PG&E sponsored a ballot measure that would change California law to require a yes vote by two thirds of all the residents in a community in order for that community to “aggregate” and then defect from their existing utility. The wording is important. PG&E’s measure sponsored not a two-thirds majority of the votes actually cast in an election—already a difficult task—but a two-thirds majority reckoned in terms of the total population of an aggregating area. Given that voter turnout in the United States rarely tops 60 percent, even in hotly contested races, the success of this ballot measure would have virtually ensured that no community in the state would ever manage to gather the necessary votes to secede from their utility.

And when PG&E lost this ballot measure, despite having outspent Marin County 430 to 1 (Marin managed to raise slightly less than $100,000 for their part of the campaign), the borders of California’s utility map were redrawn with a new player, Marin Clean Energy, standing guard over their own small patch of land within which they can decide what constitutes power.

In many ways it is more correct to say that Samuel Insull, and not Thomas Edison or Nikola Tesla or even George Westinghouse, made America’s grid. He normalized and rendered profitable the central stations without which we would have no grid at all, just a bunch of factories, municipal buildings, and homes with little electricity plants in their basements. He imagined electric light and power as products for the masses not the few; he made it seem natural that the electricity business could only work as a monopoly, and he ushered in an era in which one of the most powerful things one could do with money, and to make money, was to use information to manipulate public opinion and influence public investment.

a minor sub-clause of a sub-act of an omnibus bill called the National Energy Act that only just squeezed through Congress after significant cajoling and administrative arm twisting. It passed in the House by a single vote (207–206) in the autumn of 1978. What this clause said was simply that the utilities would need to buy, and move to market, electricity produced by any facility with an output of less than 80 MW (about a tenth of what might have been produced by an average nuclear power plant at the time).

they would be obliged to pay a nonmiserly rate for it. This rate would be set according to what were called “avoided costs”—that is, the money it would have cost the utility to make that precise amount of electricity for themselves.

Even though few realized the implications at the time, section 210 of the Public Utilities Regulatory Policies Act (PURPA for short) effectively broke the utility’s total control over everything that ...

At the end of his lone term in office we had our nation’s first ever National Energy Plan (the National Energy Act was its legislative form), a Department of Energy instead of the more than fifty unrelated government offices previously charged with overseeing national energy policy, a Strategic Petroleum Reserve to help smooth wildly vacillating oil prices caused by our national dependence on foreign oil, and the National Renewable Energy Laboratory, whose mandate was to explore and make feasible renewable and small, decentralized power options.

Carter may have championed less rather than more, but before his legislation began to force change upon the status quo, acts of conservation or efficiency were without reward. One could use less power, but because of the tiered rate structures that charged the most for the first few kilowatt-hours used in any given billing period—a system put into place by Samuel Insull—these efforts were only minimally reflected in the dollar amount owed on the bill.

PURPA actually left their monopoly powers well enough alone, but summarily retracted their powers as monopsonies.

What is less common knowledge is that the monopoly has an echo on the consumer side of the business world called a “monopsony,” which is the sole customer for a product.

Monopsony powers had been granted to the utilities almost by accident. 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. This second clause notably used the market to force small power producers to be more cost effective than the utility. To make any money they had to make electricity for less than the utility’s “avoided costs”—a fuzzy term that could be (and was) interpreted to include everything from the cost of fuel to the amount of new generation a utility wouldn’t have to build because of the electricity they were newly obligated to buy from other sources. PURPA was, in other words, a smart bit of anti-monopsony regulation.

In the United States in the 1970s there were still two types of electricity producers that were not part of the national grid. First were the cogeneration plants, like the New Hampshire trash immolation facility. These produced so much excess heat that running their steam through a small electric generator had no appreciable effect on the factory’s other tasks. Second were the hippies and other do-it-yourself small power innovators.

The U.S. Department of Energy’s current goal is that 20 percent of America’s electricity come from cogeneration plants by 2030. If its nesting efficiencies suited the prevailing attitudes of the 1970s, cogeneration also maintains a solid fan base among electrical engineers because its double use of the same heat increases plant efficiency to over 50 percent, leaving Carnot’s theorem in the dust. Existing means for increasing power plant efficiency cannot be made to do better than cogeneration does by its very nature.

PURPA also made it explicit that alternative renewable power projects would also be granted the right to sell their power to the local utility. As long as these generators remained smaller than 80 megawatts and produced electricity for less than the avoided costs of the utility then they would, just like the cogeneration plants, be guaranteed a buyer and a fair price for their electric power.

The utilities quickly found themselves with a plethora of new problems. Never before had they had to deal with variable generation, never before had they had to deal with distributed generation, and never in the seventy years of their existence had they lost control over the production side of their business. At issue wasn’t that they suddenly had to integrate a massive amount of new power but that they weren’t getting to decide how much, where, or when relatively small amounts of electricity would come streaming onto their power lines. They just had to pay for it and distribute it when it got there.

there was some fear on the part of the Federal Energy Regulatory Commission (or FERC, founded in 1977) that the utilities would take the project of doing the math on the single “avoided costs” parameter of the transition as a means to stall implementation of the entire bill indefinitely.

If each small power producer was treated to a long bureaucratic process before receiving a viable contract, then PURPA would fail; the letter of the law having become a tool in the demolition of its spirit.