The Power Game

The New York State electricity market is no longer a regulated monopoly. Consumers now have a range of choices when it comes to electrical power providers. This ongoing series will examine the reasons behind and the impacts of the new energy market on New York State residents and the possible implications for the future of the power industry in the entire Upper Delaware region.

Electric boom to powerful bust

By CHRIS CONROY

Having had its ups and downs since the first major power generating station at Niagara Falls had gone online in 1895, the electric generation business in the United States faced some of its most daunting challenges, and highest peaks, in the second half of the 20th century.

After President Franklin Roosevelt’s reforms in 1935, the power industry grew steadily. Under federal initiatives such as the Tennessee Valley Authority, electricity became more and more common. As the infrastructure spread far and wide, different power authorities found themselves meeting at the edges of territories.

From early experience, those in the industry were aware that different power companies could link their systems where the lines met. Linked systems meant that power companies could now trade power with each other if the need arose. This gave companies the ability to compensate for a neighbor’s usage spike or take advantage of “unused” energy generated by another station. It also meant that customers could generally expect more consistent electric service. Even if the main power generator in one system were to go down, electricity from surrounding areas could be fed into the affected grid, generally keeping the flow consistent.

America was getting completely wired.

After World War II, the country saw great advances in technology. This brought on a greater demand for electricity. In fact, usage in the U.S. rose by 14 percent between 1946 and 1947, pushing the limits of the generating capacity of the companies at the time. The transition from a wartime economy to a peacetime one made it difficult for some power companies to keep up with this heavy demand. By the end of 1947, this situation was all but resolved as demand dropped to a more reasonable 8 percent per year growth scale, where it remained for the next 26 years.

A booming economy coupled with technological advances and pushed on the public by a new electrically dependent medium called television soon introduced an entirely new realm of consumer goods to the marketplace. This was the age of electricity. Everything was electric and, as the ads often inferred, you needed it to keep up with the times.

It was during this time that nuclear energy, the destructive power of the bombs dropped on the Japanese cities of Hiroshima and Nagasaki, was first harnessed for the purpose of electrical power generation. In December of 1951, the first experimental reactor came online at the National Reactor Testing Station in Idaho. It produced enough power to light four 150-watt bulbs. By 1955, the entire town of Arco, Idaho, was being supplied with power gained from a nuclear reactor. The technology promised cheap and clean energy for all. While that promise was never kept, over 100 reactors were eventually brought into service through the late 1970s.

On the way to the bust

Electricity had ingrained itself in the American lifestyle. There was little doubt it was there to stay. By the 1960s, however, the question, “Where are we going to keep getting it from?” began to be asked more frequently. New power plants of all varieties were being built, but their environmental impact was beginning to garner public notice. Coal, oil and even natural gas plants all produced considerable pollution. Hydropower was more environmentally friendly, but there were comparatively few locations that could generate it. Even the growing number of nuclear power plants were being eyed suspiciously by groups concerned with thermal pollution and disposal of nuclear waste products.

The 1960s also saw the globalization of the power industry’s main supply chain. A group of oil-producing nations, taking note of the increased demand for their product, banded together to form the Organization of Petroleum Exporting Countries. More commonly known simply as OPEC, the organization began charging increased royalty fees for the delivery oil to purchasers. Initially, this wasn’t much of a problem as the prices charged were well within the abilities of the U.S. power companies to accept without impacting their profit margins.

The golden age of electricity came to an abrupt end early in the 70s. By 1973 the technological limits of power plants had been reached. No matter how much they were pushed, only about 40 percent of the energy used in a plant produced electrical energy. What proved to be even more troublesome was the fact that the best fuel to use in a power plant was imported oil. It burned cleaner than most domestic oil, making it easier for companies to meet the guidelines set forth in the 1970 Clean Air Act. With a decrease in the mining of coal, a fossil fuel that the U.S. had more of than any other country, the dependence on oil grew.

According to a statement issued in 1974 by the Environmental Protection Agency (EPA), “In 1971-72, 69 percent of the total increase in demand for energy was supplied by oil.” That translated to an increase of about 1 million barrels per day per year. By 1973, much of that oil was imported. The EPA said in the same 1974 statement, “Between August 1972 and August 1973, we increased our crude oil imports direct from Arab nations from .38 million barrels per day to 1.1 million barrels per day.”

The EPA asserted that the demand for oil left the country vulnerable to economic action. That action came in 1973 with the Arab oil embargo. The embargo was a protest action against countries that supported Israel in the Arab-Israeli War that had begun on October 6 of that year. Even though the embargo was lifted by early 1974, the price charged per barrel of oil more than quadrupled, rising from $2 per barrel in 1972 to about $12 per barrel in 1974.

Prices for gas and electricity skyrocketed. Regulatory agencies, long used to just passing rate decreases, were unable to cope with the sudden need to actually regulate.

President Richard Nixon began to petition for less reliance on imported oil, recommending a series of emergency measures that he felt would make the country energy self-sufficient by 1980. This could be done, he suggested, through development of alternative sources of energy and more energy efficient practices. When the Watergate scandal ended his administration, his suggested policies faded from public and political view.

The industry was in trouble and the entire country was so plugged in that everyone felt it.

Next time: Recovery and the beginning of the electronic age, making the world more dependent on electricity than ever.