Electricity after Insull.

AuthorMunson, Richard
PositionSamuel Insull's innovations

Professional engineers were asked recently what they thought was the twentieth century's greatest technical feat. Some suggested the automobile or the internal combustion engine. Some argued for the airplane or the computer chip. Yet the vast majority concluded that the last century's most significant accomplishment was to generate and harness an invisible stream of electrons.

We care about electricity, in part, because it is a superior energy form--clean at the point of use, capable of performing many tasks, and easily controlled. Such attributes have increased its share of total energy use over the past three decades from 25 percent to nearly 40 percent. Electricity powers our high-tech economy, and its precision and flexibility make it critical to future growth.

We also care about electricity because its generation and delivery is a huge business. Electric utilities hold assets exceeding $600 billion and have annual sales above $260 billion. They are this nation's largest industry, roughly twice the size of telecommunications and almost 30 percent larger than the U.S.-based manufacturers of automobiles and trucks.

But we also care about electricity simply because it is so critical to our lives. In a hit movie from the 1950s, entitled The Day the Earth Stood Still?, the alien tried to impress upon the U.S. military his seriousness and his clout, he decided on the one thing that would stall modern society--he turned off electric power for half an hour.

When power now gets turned off--as it did for 50 million folks during the blackout of summer 2003--we can no longer watch television, microwave dinners, obtain cash from ATM machines, pump water through sewage treatment plants, or check emails.

Although we've known about--and been entertained by--static electricity for more than 2,000 years, it's been only a little more than a hundred years that we've harnessed this unique form of energy. In that short period, electricity has changed our lives. Electric lights lengthened our days. Electric-power elevators and streetcars heightened and enlarged the cityscapes. Motors transformed industrial societies.

The shape of the electricity enterprise results from a combination of technologies, public policies, and individual leaders. Today's predominant model--based on centralized generators controlled by regulated monopolies--emerged in the early 20th century from a mixture of new steam turbines and a few politicians and executives who wanted states to regulate key businesses.

Prospects for the electricity industry flickered at the dawn of the 20th century. Motors electrified only one factory in 13 since manufacturers were reluctant to abandon their steam-powered, belt-driven systems for unreliable generators. Incandescent bulbs illuminated only one lamp in 20 as most homeowners favored the less expensive and more pleasant glow of gas lamps.

Even most power entrepreneurs believed electricity would remain a luxury item used only by the wealthy. Both General Electric and Westinghouse preferred the immediate profits of selling isolated generators to individual buildings or factories rather than the uncertainties of marketing electricity from centralized generators.

Samuel Insull had a different vision. In 1892, Thomas Edison's secretary rejected General Electric's $36,000-per-year job in favor of a $12,000-per-year position managing the Chicago Edison Company, one of 40 struggling electricity-generating firms then in the Windy City. His company had just one power plant and served only a fraction of the present-day Loop.

Insull understood that Chicago Edison would grow only if he could take advantage of emerging power-generation technologies, which meant he had to integrate and optimize the demands of disparate...

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