The Death of the Electric Utility Industry

"The reports of my death are greatly exaggerated"- Mark Twain.

Like Mark Twain, the US electric utility industry will no doubt be surprised by my predictions that their death is coming soon. This is no apocalyptic prediction and certainly no veiled monkey wrench threat; so, DHS don’t get your knickers in a knot.

What I am talking about is the age old cyclical nature of technology and the natural evolution of things from disbursed to central and back to disbursed again. I am sure entropy is at work in this, or chaos theory or at least a corollary version of my mother’s plea to, “put all your toys in one box”. But, I knew that keeping my toys spread out through the house was more efficient. I could get them quicker and if one broke I didn’t have to go all the way back to the toy box to get a new one.

Hang with me just a little longer this is really cool stuff and what you are about to learn will help you for the rest of your life.

The popular press and media hype about renewable energy versus that bad old kind of energy made from coal and hydrocarbon fuels leads many people to believe that if those greedy bastards at the electric utility company would just use wind and solar instead of coal, our electric bills would drop with green house gas emissions. Then Al Gore could retire and quit using all that jet fuel to travel around the world telling everyone about global climate change.

It must be a fossil fuel baron’s conspiracy keeping the world from clean air and cheap power right? After all the sun shines everywhere and that damned spring wind makes everyone insane part of the year and Wyoming residents crazy all year long. You just have to watch our vice president for awhile to see the proof of that, but I digress.

If you want to call yourself an American, or an Environmentalist or an Industrialist or a true blue techie, you have to know the history of electricity generation. I’m not going to launch into the details of the knock down drag out contest between the Alternating Current philosophies of Thomas Edison and the Direct Current philosophies of Nikola Tesla, but read those links and find out what the limitations where of each system because that same argument is coming back to haunt the electric utility industry.

It’s no secret that distributed distribution (e.g. home light plants and individual municipal electric generation) systems generally went the way of the dinosaur. Efficiencies for power production and air quality have long been assumed to be best with a central location for power production. Why else do you think all of those investor owned, cooperative and municipal utilities got together to power the industrial world from central power plants? Check it out yourself. If you live in or near a city that existed before the 1940’s, I’ll bet you that they had their own, light plant or power plant. When large central station transmission lines came to the neighborhood most of these municipalities dropped their power generation facilities and started buying the bulk of their electricity from a wholesale power supplier. Doing this reduced their costs and their headaches. It also made the air in your city cleaner.

Yet as construction costs, electricity demand, and environmental concerns grow, it will be these big central power suppliers that will disappear like an extinct reptile. No- wait; I like electric utilities, really. Without them we would have all been in the dark and powerless. Yet today, their desperate fight for survival is due to the fact that the big money and the big expense, is still in central station electricity generation. And, it’s the “big expense” part of the equation that spells the death knell for electric power generation as we know it.

Of course the electric utilities argue that alternate energy is not capable of powering our society. They are right and they will continue to be right for another 15 to 50 years or until society changes and that is where it gets interesting. Society is changing and the change is accelerating in a way that will make distributed power generation king again, dethroning King Coal and its entire kingdom. Remember, “The stone age did not end because we ran out of stones and the Oil (fossil fuel) Age will not end because we ran out of Oil (fossil fuels). – Don Huberts, Shell Hydrogen.

My next Blog entry will begin to explain how I think this is going to happen.