The Changing Structure of the Electric Power Industry 2000: An ... - EIA

On October 29, 1929, the U.S. stock market crashed,
creating losses of $16 billion for that month�a staggering
amount of money in 1929�and leading to the Great
Depression. The social and economic well-being of the
Nation was severely shaken, but the electric power
industry was able to stay adrift of the devastation, and
local operating utilities remained solvent. Figure 1
shows that, although the rate of growth in the industry
did wane at times during the Depression, the U.S. electric
utility industry’s capacity, generation, revenues, and
sales experienced a healthy growth pattern from 1932
through 1980. Table 1 shows the percentage change
between various electric power industry statistics for the
years 1932 and 1945, which also demonstrates the robust
condition of the industry during that time.
Figure 1. Annual Statistics for the Total Electric
Utility Industry, 1932-1980
6
100,000
50,000
20,000
10,000
5,000
2,000
1,000
500
200
100
Total Installed Capacity
(Nameplate) in Hundreds
Of Megawatts
Total Revenue From
Sales in Millions of
Dollars
Generation in Billions
Of Kilowatthours
Energy Sa les in Billions
Of Kilowatthours
50
1932 1936 1940 1944 1948 1952 1956 1960 1964 1968 1976 1980
YEAR
Source: Electric Utility Systems Engineering Department of
the General Electric Company, Electric Utility Systems and
Practices, ed. Homer M. Rustebakke, 4 th ed., Chapter 1, “The
Electric Utility Industry” (New York, NY: Wiley & Sons, Inc.,
1983), p. 4.
In the years immediately following the onset of the Great
Depression, Congress took actions designed to alleviate
some of the most acute problems, e.g., unemployment
and the plight of farmers. Two of these actions directly
and advantageously affected the electric power industry:
the development of Federally owned power and the
creation of the Rural Electrification Administration
(REA). (See inset on page 7.)
During the 1920s and the early years of the Depression,
the public became disenchanted with privately owned
power and began to support the idea of Government
ownership of utilities, particularly hydroelectric power
facilities. This disenchantment was chiefly the result of
abuses heaped on utilities, and ultimately on their
customers, by holding companies, 9 causing the price of
electricity to increase. Government-owned hydroelectric
power facilities could produce power cheaply and sell it
to publicly owned utilities for distribution. This concept
was a controversial political issue at the time, with
strong arguments on both sides. Many believed that private
power did not employ fair operating practices and,
therefore, Government-owned power was wholeheartedly
supported. Others were opposed to the Government
entering the electricity business because they
believed that the Government was exploiting hydroelectric
sites. Nevertheless, the Federal Government did
become heavily involved through the construction and
ownership of several massive hydroelectric facilities.
During the presidency of Franklin D. Roosevelt (1933 to
1945), a number of these facilities were built and publicly
owned power took a strong hold. President Roosevelt
began his New Deal campaign, which was designed to
help the American public by providing jobs, and
ultimately hope, during the long years of the
Depression. As part of the program, he proposed that
the Government build four hydropower projects and,
within a year after his proposal, his administration
began to implement the projects. Large Bureau of
Reclamation dams began serving the western States:
9 For further details, refer to the subsequent section on The Public Utility Holding Company Act of 1935.
Energy Information Administration/ The Changing Structure of the Electric Power Industry 2000: An Update
� Hoover
� Grand
� The
Dam began generation in 1936, followed
by other large projects.
Coulee, the Nation’s largest hydroelectric
dam, began operation in 1941.
U.S. Army Corps of Engineers flood control
dams provided additional low-priced power for
preferred customers.
Under the Tennessee Valley Authority Act of 1933, the
Federal Government supplied electric power to States,
counties, municipalities, and nonprofit cooperatives,
soon including those of the REA. The Bonneville Project
Act of 1937 pioneered the Federal power marketing
administrations. By 1940, Federal power pricing policy
was set; all Federal power was marketed at the lowest
possible price, while still covering costs. From 1933 to
1941, one-half of all new capacity was provided by
Federal and other public power installations. By the end