Yes Energy News and Insights

The History of US Power

If you haven’t already, make sure to read the other blog posts in this series. This post will review the history of US power.  

Learning Objectives

Readers will learn:

  • What vertically integrated utilities are

  • How natural power monopolies developed

  • Why cooperative utilities were built

  • About FERC’s role in the development of ISOs

  • The important regulatory acts that led to the current ISO/RTO structure

In order to understand competitive North American power markets, it’s useful to review what preceded them. In this post we’ll review what electricity production and delivery looked like in the early and mid-20th century as well as the policies that helped shape competitive markets.

Vertically Integrated Utilities and Natural Monopolies

History of US power infographic timeline
 
Vertically Integrated Utility infographic

 

 

Electricity in the US was originally delivered through vertically integrated utilities.  These for-profit utilities owned and controlled generation, transmission, and distribution.  With little to no competition, natural monopolies developed and utilities were able to charge high prices for electricity.  

To combat this, some city, county, and state governments created not for profit and public utilities, called municipal utilities, which owned generation and distribution assets for the local community.  In rural areas, where it was more difficult to get electricity, not for profit cooperatives were formed, which primarily owned distribution assets. 

Independent System Operators (ISOs) and Competitive Markets

Following these acts, markets began opening up to competition in some areas of the country, giving rise to electric marketers and independent system operators (ISOs). In these deregulated markets, FERC oversees fair trade practices. 

This is a brief overview of the history of power in the US. Look out for more information on power markets and trading in the following weeks.


Next Steps

Already working as an industry professional? Yes Energy provides historical and real-time market data for all of the ISOs in North America.  Request a demo to learn more. 

For more information on the terms in this blog post, check out the Yes Energy Glossary.

Resources we found helpful when putting together Power Markets 101 are available here.

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