An Electric Revolution, Chapter Three: The Edison Paradox
Progress, however, came to a halt in the mid-1960s when both electricity demand growth and the economies of scale slowed dramatically, but Insull’s natural monopoly still continued to dominate. Guaranteed rate structures and a lack of competition bred several generations of change-averse utility executives, who saw little merit in keeping pace with technological breakthroughs. Top university graduates no longer viewed electricity as glamorous and promising. The combination of rising costs and artificially constrained prices created an economic shutdown on investments for service improvement. In fact, since the mid-1990s, the electric utility industry’s annual depreciation expenses have exceeded new construction costs.
The paradox of all of this is that Edison had much of it right, especially with his notion of distributed electrical generation for businesses and communities alike. Emerging technologies have now virtually eliminated the natural monopoly argument supporting the wholesale production and retail delivery of electricity. Stiff regulation and guaranteed profits were effective in growing the system, but they now limit a mature industry in dire need of renewal. While public electric utilities played a huge role in making America great, technologies and circumstances have made it the time to give power directly to the people.