History of the US Grid — The Regulatory Landscape

In our previous post, we discussed the “battle of the currents…” with Westinghouse, Tesla, and Edison battling for control of the future of power delivery in the US. But as those giants of the industry began to gain control over a rapidly sprawling grid — the government began to take notice of the forming monopolies and began to form regulatory structures which influence much of what we do today.

As the US expanded westward, the grid began to supply electricity over considerably greater distances, the federal government began to establish oversight into the generation and transmission of electricity. By the end of 1914, 43 states had regulatory commissions with oversight of electric utilities. Congress enacted the Federal Power Act in 1920 to coordinate hydropower development; it was later amended in 1935 to include electric utilities, and the Federal Power Commission was created in 1930 to oversee both.

By 1932, eight large holding companies controlled nearly three-quarters of investor-owned utilities. Given that many holding companies crossed state lines, Congress passed the Public Utility Act in 1935 which was intended to enact “just and reasonable power prices,” and served as a further effort to prevent monopolies in power delivery. The Act created the Public Utility Holding Company, the first federal regulation of the electric power industry that allowed the creation of vertically-integrated utilities in monopoly service areas. The Federal Power Act gave the Federal Power Commission authority over transmission. But the siting of generation, transmission, and electrical rates remained under state control. This was the first step towards creating what we now know as the Federal Energy Regulatory Commission, or FERC, in 1977 which continues FDR’s mission of reasonable power rates today.

By 1950, coal and, to a much lesser extent, natural gas, was the main generation sources for a growing country, while the growth of the industry and increasing demand helped push power prices down. 1965 saw the first major US power blackout as much of the US fell into darkness, leaving 30 million in the Northeast US and Canada without electricity for up to 13 hours. Up to this point, the number of miles of high-voltage transmission lines tripled from 10 years earlier to more than 60,000 circuit miles. (Remember, we have 200,000 miles in 2022. It’s been suggested we need 200,000 more to accommodate the energy transition.)

In 1977, FERC was established to ensure continued regulation of fair pricing for ratepayers, some 40 years after the Federal Power Act gave precedence for it. In 1978 the Public Utility Regulatory Policies Act (PURPA) was passed, requiring utilities to buy power from companies that were not utilities — independent power producers (IPPs) — who needed access to the grid. This created non-utility power generators and a need for more access to the transmission system.

Wholesale electricity competition was further strengthened in 1992 when Congress passed the Energy Policy Act, which reformed PUHCA by allowing all generators to connect to the transmission grid at the same price the utility would charge itself for access to the grid. The Act also authorized FERC to order “wheeling” (the transport of) third-party power over utility lines. The legislation also allowed new, non-utility power generation plants to sell electricity to utilities at market prices. Perhaps most importantly, the 1992 law was the first real effort to incentivize clean energy.

In 1996, to meet continued population growth and demand, FERC passed Order 2000, which called for the formation of regional transmission organizations (RTOs), a strengthened and more focused version of independent system operators (ISOs). RTOs coordinate, control and monitor multi-state grids while promoting economic efficiency and reliability in power delivery.

‍

Today, the grid is seeing the greatest metamorphosis since Pearl Street Station started sending power a century ago. As the country decarbonizes, the energy industry and regulators (FERC, Congress, RTOs/ISOs, Utilities, Transmission Operators, and more) are considering a broad range of reforms and innovations to meet the demands of a new energy system.

Most relevant for LineVision is FERC Order 881, which requires that utilities use advanced line ratings on transmission systems. There is also a Notice of Proposed Rulemaking (NOPR) at FERC regarding interconnection and various ways to help address and clear the interconnection queue, which currently consists of over 1.4 terawatts of wind, solar, and energy storage assets waiting to be connected to the grid.

It will be impossible to connect all of those assets — or even give them a proposed date for interconnection — without new transmission or by installing grid-enhancing technologies. In an era of 100-year storms annually, rapid electrification of society and massive new sources of electric generation including utility-scale renewables, and dependable and resilient power grids are an absolute necessity. That’s why it’s vitally important that grid operators leverage the best-in-class technologies to wring as much capacity as possible out of our grid.

The United States has the means and access to the technologies that can make this happen, like LineVision. We simply have to use them.

Written by George Katilus IV, Marketing Associate at LineVision

‍