For most of the industry’s history, electric power in the US had largely been provided by vertically integrated utility companies that handled every part of the electricity supply: generating it, transmitting it, distributing it to customers, and managing the overall system. Utilities were granted monopoly status in their area of operations, and in return had their rates regulated by state public utility commissions. Most utility companies were private enterprises known as investor-owned utilities (IOUs), though there were several other models, such as municipally-owned utilities, rural co-ops, or the federal Tennessee Valley Authority.
I think there’s a typo in the last paragraph. The northwest states are the ones that haven’t joined an ISO/RTO. ISO-NE is going strong!
What a complicated mess, we should go back to some sort of quasi public monopolies. Nobody knows how to complicate things like the US--tax code, medical insurance, utilities, no metric system, etc., etc.
This was really informative and is going to be useful to me personally, since I'll be starting an internship at an ISO in a couple days. Maybe you were planning on doing this already, but I am interested in a comparative analysis of the grid -- i.e. how are other countries running their grids? Anyway, thanks so much for this informative series!
A must read: “Shorting the Grid, the hidden fragility of our electric grid” by Meredith Angwin. It’s hard to think of the grid as deregulated with the thousands of pages of complex rules and layers of agencies and commissions. What a mess. Rather than a dream, I would call deregulation a nightmare. On top of that, subsidies for wind and solar distort the “market”, destabilize the grid and increase costs.
This is fascinating. Thanks for sharing!
I was hoping for something optimistic at the end, like, here's what should happen...but it never came.
The biggest issue in the current market is traditional sources were stored fossil fuel energy and dispatchable in nature (i.e. they could be scheduled to run with differing lead times). Now we have added intermittent renewable sources that are not stored energy and thus not really fungible with existing sources yet they receive the same market price despite the lack of fungibility. This is hurting reliability and distorting market price signals. Either intermittent sources should receive a different price than stored energy sources or intermittent sources need to be paired with some low carbon storage solution to make them fungible with traditional stored sources of energy. Decarbonization is a worthy goal, we just have a bit of a free rider problem that needs to get worked out so that markets can do their part.
> The first crack in the monopoly status of utilities came in 1966, when the Minnesota town of Elbow Lake voted to establish its own municipal utility company and stop relying on Otter Tail Power Company, a small utility company Instead of getting its power from Otter Tail,