High Purpose

Since the 1930s, the electricity industry in the United States has seen good times and bad. One fact remains inescapable, however. Throughout its history, shareholder-owned electric companies have delivered the power that has underpinned the ascent of the United States to economic preeminence in the world and vastly enriched its citizens. 

When Thomas Alva Edison installed the world’s first central generating plant on Pearl Street in New York City in 1882, the gross domestic product of the United States was $12.2 billion. In 1933, in the middle of the Great Depression, it was $56.4 billion. In 2006, it was more than $13.8 trillion. The development of modern conveniences powered by electricity in themselves created many of the industries and products that America has bestowed upon the world, and through which the country has amassed enormous wealth.

In the early years, the basic shape of the industry, an amalgam of investor-owned electric companies, municipal utilities and large-scale public power projects, emerged, and persists to this day. And many issues that we deal with today and consider for the future of the industry and the economy find their roots in 1933, the year Edison Electric Institute came into being.

The Regulatory Compact At the onset of the 1930s, the United States was beginning a long recovery from the boom and bust of the previous decade, and the electricity industry was no exception.  For the first 40 years of the industry, private utilities invested in bigger and better turbines and transmission facilities to connect more and more customers.  Edison protégé Samuel Insull developed the ideas of the “demand meter” and the holding company system, and pushed the industry to work under state regulation, under which utilities would provide reliable electric service, regulators would set customer rates to pay for it, and the rates would include a return on equity for investors.


Read the entire article.

© 2008 Edison Electric Institute