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The Rise and Fall of the American Electrical Grid

The American electrical grid can no longer be relied upon to supply the public with the power it needs to get through the day. In 2020, California saw brownouts caused by an overinvestment in renewables and an underinvestment in reliable power.1 The Golden State pays 80 percent more in electricity prices than the rest of the country.2 Texas’s blackouts during the Uri ice storm a year later killed seven hundred Texans and cost the state hundreds of billions of dollars.3 In July of this year, the Texas regulator warned of potential energy shortages and asked residents to turn off major appliances to conserve energy.4 Blackouts now look to become more, not less, frequent in much of the country.

The reasons for these incidents involve complex interactions between policy, physical infrastructure, politics, and culture. To understand how the grid fell into its current, fragile state, it is necessary to track how these shifts have altered its structure over its long history.

The Progress Machine

At its advent, electricity meant progress. But what did progress mean? For many Americans, it meant a radical improvement of living conditions. Before electrification, in 1934, the average family without indoor plumbing “had to devote over 300 hours a year to retrieving water and carrying it a cumulative distance exceeding 350 miles.”5 With electricity, irons no longer scalded women’s hands, children could read books from the library late into the night, factories could leave behind the dangerous systems of leather belts that kept their machines running. New Dealer and Texas congressman Sam Rayburn knew what electrification would mean for his rural constituents: “I want my people out of the mud and I want my people out of the dark.”6

Electricity also linked the world with telegraphs, ticker tape, phono­graphs, and more. By the 1920s, radio became commercially available and quickly yoked the nation into a more homogeneous national culture. Traction compa­nies, some of the first to sell electricity, built amusement parks featuring electrified attractions pebbled with lightbulbs to balance their loads on nights and weekends.7 Electrification enabled such a radical departure from normal life that it inspired a deep sense of awe and wonder. When the Brush Company set up several three‑thousand-candle arc lights on the Wabash, Indiana, courthouse in 1880, the Wabash Plain Dealer reported the public’s response: “Peo­ple stood overwhelmed with awe, as if in the presence of the super-natural. The strange weird light exceeded in power only by the sun rendered the square as light as midday. . . . Men fell on their knees, groans uttered at the sight, and many were dumb with amazement.”8 Electricity made progress palpable, undeniable, and seemingly inevitable.

But progress also meant technocracy—the machines did not buy, sell, design, build, and oversee themselves. If some of the founding fathers had believed progress to mean “a more just, more peaceful, and less hierarchical republican society based on the consent of the governed,” by the end of the nineteenth and the beginning of the twentieth century this vision had been largely replaced by “a politically neutral, technocratic idea of progress whose goal was the continuing improvement of technology.”9 No industry marked that transition more clearly or more profoundly than electricity. Its economies of scale, division of labor, necessary systemization, and overall intricacy required technocratic management for its overall success. In discussing the development of this new technocracy, historian David Nye observes that the electric utility industry’s growth exemplified the confluence of several developments: “the rise of managerial capitalism; the sustained sponsorship of indus­trial research . . . and the growth of national professional associations to keep members of an industrial group in constant contact and allow them to act in concert.”10

A new managerial class thus arose in American society in parallel with the growth of its industrial behemoths in manufacturing, chemicals, oil, railroads, and electricity. In the electricity industry, managers and engineers were among the most organized, motivated, and tightly allied groups.11 These were men who “believed that they could create a new world, but that they also knew how to control it.”12 Technological achievement and technocratic management nourished a spirit of opti­mism and progressivism in the industry.

The political and economic structure of the electricity industry solidified along with its new classes and its new ideology.13 After chaotic early years, the industry achieved regulated monopoly status, a move championed by industry visionary and Thomas Edison protégé Samuel Insull. Regulated monopoly status meant that utility companies owned the generators, the transmission wires, and the distribution systems—the three fundamental components of every grid—and that they did not compete against one another. Within these territorial monopolies, reg­ulation was meant to serve the financial interests of both utilities and consumers: “Rate making accounted for embedded costs incurred in constructing capital facilities. Prevailing regulation leveled the impact of rate changes on risk-averse retail customers, imposed on incumbent utilities an obligation to serve, and protected capital investment through assured cost recovery.”14

The industry called this the “regulatory compact.” If they kept prices low and electricity reliable then they were guaranteed profits, while charging customers for new power plants. Public utility commissions were mandated to keep utilities true to the compact’s terms. But this arrangement also created a perverse incentive: utilities made more by spending more. As one utility executive joked, “This is the only industry I’ve ever seen where you can increase your profits by redecorating your office.”15

The postwar utility industry thus embodied both the merits and flaws of the Hamiltonian vision of political economy. In its managerial class, it had realized Hamilton’s dream of an elite who saw its own interests as fused with those of the state. Further, this new elite had by private means raised the nation’s powers for the common good, as Hamilton had hoped. But if Hamilton’s gambit had also left the door open to a crooked batch of oligarchs that chafed against the American instinct for liberty, the managers and regulators of the electric industry repeated this error.16 Yet it would take decades for real backlash to build.

The Utility Consensus

The American consensus in the postwar era was built on the drive for greater consumption. Labor, business, and government agreed that the best way to stave off depression was to reconvert the American wartime economy to civilian production on a massive scale. Consumption thus possessed a civic—almost theological—weight in the decades following World War II. In a 1952 report, President Truman’s Materials Policy Commission reflected this consensus when defining its first principle: “We share the belief of the American people in the principle of Growth. Granting that we cannot find any absolute reason for this belief, we admit that to our Western minds it seems preferable to any opposite, which to us implies stagnation and decay.”17

Its second conviction, the free enterprise system, and its third, the shared destinies of non-Communist countries, are likewise reflections of the postwar belief in economic growth and consumption. Some, like historian David Potter, have argued that Americans are a “people of plenty,” that material abundance is simply intrinsic to the “national character” of America.18 The postwar utilities agreed. Indeed, they saw themselves as the prime mover of this economic growth.

In 1954, Electrical World, an industry trade publication founded in the 1880s, celebrated “Light’s Diamond Jubilee.” The cover featured a portrait of Thomas Edison in profile, gazing toward the future, before a background image of the rings of an atom swirling around a light bulb nestled in the palm of a hand. In an interview celebrating Edison, the editors asked Charles E. Wilson, former president of General Electric and director of defense mobilization, if he still thought selling power was the future of the industry’s success. Wilson responded that working in the power industry was a “selling job.” He argued that the industry was “doing a wonderful job of selling ‘living electrically.’ We’ve an American genius for developing new things for the home to use electricity and selling them to people. I think one of the things that made America was this spirit of ‘keeping up with the Joneses.’”19

A few pages later, Walter Sammis, veteran utility president and head of the Edison Electric Institute, said that the “electric industry has given people more comfort, more labor-saving devices, better health and better entertainment than in any other country.” And Sammis was opti­mistic about continuing progress and growth in the industry’s future: “It’s just going to get bigger and better all the time.”20

Such overflowing confidence was natural, given the state of the industry, which was in the middle of a decades-long period of around 7 percent annual growth. Increase was so regular, and thus load growth was so easy to predict, that one utility manager joked, “if you had a straight edge, you were a load forecaster.”21

Utilities’ success rested on two main pillars: their vertically integrated, regulated monopoly status and their special relationship with equip­ment manufacturers. Utilities could not compete against one another, but they could pit vendors like General Electric and Westinghouse against each other. Inspiring vendor competition became the lynchpin of the “grow-and-build” strategy developed by Samuel Insull. Utilities believed new technology would provide greater efficiency at less cost, so they encouraged greater consumption of electricity to increase demand for power plants. This in turn allowed them to pick larger, more cutting-edge units from the vendors who were competing to provide them. Historian Richard Hirsh explains how the electrical utility industry benefitted from these economies of scale: “Because the new units generally had greater output ratings and were more thermally efficient, providing economies of scale and lower operating costs, and because the cost of the new equipment would be spread over a greater number of users (and kilowatt-hours), the expense of providing electricity declined as utilities produced more of it.” Thus, growth drove down prices for customers: more demand meant more units meant more electricity meant lower costs. Hirsh notes that the “genius” of Insull’s strategy lay in linking “the interests of the utility companies, its investors, and equipment manufacturers with those of consumers.”22

At this time, the industry adhered to a “design by experience” approach to increasing power plant size, which worked part and parcel with Insull’s grow-and-build business strategy. Design by experience showcased the practical conservatism of engineers within the utility system. First, utilities would commission a novel technology of a given size. Once it had been tested in the field, they would commission something slightly bigger and better based on the previous model. Over time, gains in efficiency and output accumulated in tandem with engi­neering experience. This approach to expansion kept the industry on a progressive footing toward ever-greater size and technological heights, while making sure that its ambitions never outstripped its capabilities.23

The results were astonishing. In the first sixty years of the industry, the thermal efficiency of power plants rose nearly tenfold and the consumer prices of electricity fell dramatically: “the average resident paid about 22 cents in 1892 for a kilowatt-hour; in 1932, that same unit cost 5.6 cents—75% less. Adjusted for general cost of living increases, the price declined 86%.”24 While the leaps were less remarkable in the postwar era, the industry still delivered huge amounts of cheap energy to a power-hungry nation; the country saw a ninefold increase in elec­tricity consumption between 1940 and 1970.25 And utilities’ relationship with appliance manufacturers created a virtuous cycle: new devices that improved everyday life meant more demand for electricity, which meant more money for utilities and manufacturers alike.

Utilities self-consciously promoted the idea of growth and rarely missed an opportunity to remind American consumers of the indispensable role their management played in delivering the American way of life. The 1950s saw America at the zenith of its transition from a nation based on the idea of “freedom through small-scale production” to one seeking “prosperity through mass consumption”—that is, from a vision of liberty to a vision of equality, however flawed.26

Beset on All Sides

But starting in the mid-’50s, cracks were beginning to show. First, while still at its apex, the industry no longer shepherded the top college graduates into its flock. Students had begun to migrate from the mature and unexciting world of electrical utilities toward fields that electricity had helped make possible: aerospace and electronics.27 One writer in Electrical World lamented that, despite all the good work utilities had historically done for engineering departments, “the glamor industries—electronics, aerospace, computers—are always stealing the engineering recruits away.”28 That observations like this regularly appeared in Elec­trical World even into the 1980s speaks to both the duration and severity of the industry’s human capital problem.

Another problem that reared its head was replacement of the “design by experience” approach to technological development with “design by extrapolation.” Manufacturers no longer waited for experience “to ac­crue while observing how earlier machines operated in the field,” but instead “made abrupt jumps in design to the next stage.”29 Suddenly, engineers ran into unforeseen difficulties that demanded expensive redesigns or repairs and encountered diminishing returns on turbine efficiency which frustrated the traditional grow-and-build model. It did not help that utilities had begun to distance themselves from the research and development process, leaving them yet more vulnerable to surprises.30 The problem, as the president of Pennsylvania Power and Light saw it, was as simple as it was vexing: “We hoped the new machines would run just like the old ones we’re familiar with, and they sure as hell don’t.”31

But the leap to the extrapolation method didn’t happen on its own. Ever-rising demand was bringing water into the boat. In 1955 the industry saw a staggering 17 percent growth in sales from the previous year. The immediate postwar decade saw an average annual growth rate of 10.8 percent. Even as growth moderated in the late ’50s and ’60s, there were still big spurts in several years.32

The explosion of demand in the late 1960s pushed utilities to the limits of their talents. Utilities typically thought a decade ahead; their project lead times were lengthy, and they were not able to react quickly to rapid market changes. In addition, the industry had to rely on the timetables of capital-intensive and often sluggish suppliers: “coal mining companies needed to develop new mines, railroads to expand coal transportation capacity, and natural gas companies had to extend gas pipelines into new regions.”>33 Perhaps they could have adapted had demand not galloped so far ahead of their capacity. But as it was, the boom in electricity consumption wreaked havoc on the grid; shortages and unreliability came in bursts.

At the same time, manufacturers struggled to meet increasing demand from utilities. “While the companies ordered equipment from manufacturers, a large backlog of requests for huge turbine-generators from other companies, combined with delays occurring during construction of the plants, meant that some firms could not meet demand.”34 Brownouts ran up and down the East Coast during oven-hot summers, damaging utilities’ credibility as capable managers and driving up the demand for more generating units. After the 1965 Eastern Interconnection Blackout, utilities had to form power pools and mind a 7–10 percent rule of thumb for capacity margins in order to maintain service reliability. But these power pools also increased the size of the power systems and so allowed smaller utility companies to commit to large units that they previously would have been unable to acquire.35

The Clean Air Act of 1970 also incentivized a shift from domestic to foreign oil, which at the time was less sulfur-intensive and thus less polluting than domestic oil.36 Meanwhile, nuclear optimism left genera­tors with less coal in reserve.37 Thus, when OPEC began its oil embargo in 1973, it caught utilities at the worst imaginable time. Inflationary pressure was already hammering the economy, but rising fuel costs and collapsing demand for electricity “occurred while the industry was implementing an expansion program geared to meet historical growth rates.” Utilities took a scythe to planned expansion projects, which they wrote off as sunk costs. “Between 1974 and 1978, 184 large generation plants (250 MW or greater) were canceled, representing over 155,000 MW of new capacity, or about one-quarter of all electric capacity.”38

The industry had found itself vulnerable, exposed, and overextended. Utilities faced a powerful legitimacy crisis and frightening balance sheets.39 Their grow-and-build strategy no longer delivered, and they had never contemplated an alternative. So the stage was set for a new consensus, forged on a contending vision of America, with different ideas about the structure of America’s electricity system—and of society as a whole.

The Countercultural Turn

Theos J. Thompson, a commissioner at the Atomic Energy Commission, expressed his faith in technological progress in the beginning of 1970: “Devotion to the idea of progress—that is social change and technological change leading to improvements in our quality of life—is one of the most fundamental precepts of the American philosophy of life.”40 Thompson spoke these words at a symposium focused on Project Plowshare, a government program which involved detonating nuclear bombs underground to release natural gas. The project failed. It detonated its last bomb in Colorado in the spring of 1973, the year the idea of “progress” as technological prowess began to die.41

Hot on the heels of the tumultuous 1960s, amid the nationally syndicated horrors of the Vietnam War, America hurtled into stagflation, the collapse of the Keynesian consensus, and an energy crisis that shattered the received expectations of American life. A miasma of doubt and impotence set in. Christopher Lasch, writing at the close of the 1970s, summed up the pervasive sense of deflation and bafflement: “Those who recently dreamed of world power now despair of governing the city of New York.”42

Yet in the midst of these crises, a new vision for the country was forged. After nearly a century of relentless technological and industrial optimism, a counterculture emerged against the centralizing and alienat­ing technocracy that governed American life. Figures like Charles Reich, Theodore Roszak, Rachel Carson, Barry Commoner, Timothy Leary, Paul Ehrlich, and Amory and Hunter Lovins called into question “the depth and extent of the mechanization and systematization of America. They tried to comprehend, for the individual and society, the deeper meaning of the spread of technological systems.”43 These thinkers and the movement that emerged with them turned away from the vision of technological progress which guided men like Theos J. Thompson and demanded a return to the older idea of republican progress proffered at the nation’s founding.

The results of their social investigations proved surprisingly unani­mous. They drew from a common, if neglected, fund of American values: Jeffersonianism, small-producerism, and a deeply rooted hostility to consolidated power. Many of these thinkers reinvigorated antihuman, Malthusian ideas as well.44 They warned that the industrial behemoths commissioned by the utilities had “embrittled” the nation’s energy security through their dependence on foreign oil and their general energy intensity.>45 More fundamentally, they bridled at the idea of energy abundance, believing that society should be reshaped to decrease energy use.46 Their remedy for the industrial and political problems posed by modern technology often featured a “Green Republic”—a “decentralized utopia” of organic, smallholder energy production sys­tems that were reduced to a more “human scale.”47 And they longed for a return to the recent past of agrarian life in harmony with nature. This unconsciously suburban dream was informed by a genteel and sentimental pastoralism that conflated the natural world with childhood innocence.48

This is not to say their targets were blameless. Oil spills, suffocating smog, highly mechanized warfare, hobbled energy sovereignty, sky­rocketing prices, and the other negative consequences, real or imagined, of industrialization inspired powerful feelings of resentment and betrayal in the American people. This sentiment was perhaps best expressed by the actress Betty Furness, known as “The Lady from Westinghouse,” who had been the face of the company’s line of home appliances:

You gave us nylon but didn’t tell us it melts. You gave us insect spray, but you didn’t say it would kill the cat. You gave us plastic bags, but didn’t warn us that it could, and has, killed babies. You gave us detergents, but didn’t tell us they were polluting our rivers and streams. And you gave us the pill, but didn’t tell us we were guinea pigs.49

The utilities, caught up in this cultural backlash with the rest of corporate America, responded the way any insular group of elites accustomed to getting its way responds: they dug in. And not out of ideology or instinct alone—outsiders had crossed the moat and were now interfering with the fundamentals of their business. Commentary by industry leaders of the time revealed this new defensiveness. A trade publication described a fifteen-month hearing in Wisconsin concerning rate structures as a “murder trial.”50 And Theodore J. Nagel, senior vice president of the American Electric Power Service Corporation, delicate­ly argued that the public did not have the expertise to understand the utility business:

A specialized technical activity such as power system planning cannot be carried out in an open forum or in the atmosphere of a town hall. This means that the entire intervention process needs to be circumscribed by certain rules, so that its duration and scope are limited and the issues raised are relevant to the matter at hand. The alternative can be nothing less than confusion and chaos.51

Vendors resented the public backlash as well. Gordon Hurlbert, president of Westinghouse’s Power Systems Company, urged utility executives to fight back against “all the stop-progress deep thinkers” and “uneducated and uninformed dolt[s]” who tried to rein in utilities and stop the development of the fast breeder nuclear reactor. Hurlbert advocated a scorched-earth, “Nuclear Power or No Power” strategy and urged utility executives to go on the rhetorical offensive: “We are men who know that there is a direct relationship between available, affordable energy and the economic health of the nation—and the world. We know that kilowatts can be converted to bread and heat and infinite forms of useful work. But we have sat quietly while that same energy has been decried as a polluter, a luxury, and a rip-off.”52

Just shy of two weeks after Hurlbert published this jeremiad, the Three Mile Island incident happened. And though no one was harmed and the other reactor at the plant ran without incident until 2019, the fumbling callousness with which the industry responded depleted what little political capital it had in reserve. Whatever the merits of Nagel and Hurlbert’s arguments, the tide of public opinion turned toward counter­culture intellectuals and away from utility elites.

In July of 1979, Jimmy Carter addressed the American people from the Oval Office. Fresh off a period of reflection, during which he spoke with private citizens, labor leaders, and business leaders, as well as thinkers like Christopher Lasch and Daniel Bell, Carter gave his infamous “Crisis of Confidence” speech.53 The president laid out what he saw as the fundamental issue facing the country: not the energy crisis per se, but an “erosion of our confidence in the future” that was “threatening to destroy the social and the political fabric of America.”54 Americans had always believed in progress, that tomorrow would be better than today, and that their children would see advances that they could only dream of. But, Carter said, too many Americans now worshiped “self-indulgence and consumption,” and this valorization of consumption had reached the point where “human identity is no longer defined by what one does, but by what one owns.” Yet consumption had failed to satisfy our yearning for meaning: “We’ve learned,” Carter told America, “that piling up material goods cannot fill the emptiness of lives which have no confidence or purpose.”55

With these words, Carter rejected nearly fifty years of civic consumerism and invoked older ideals of self-sufficiency and thrift in opposition to growth and abundance. And the American people resented him for it. But Carter tried to walk the walk: the changes made to the electricity system during his tenure would redound for the next half-century.

Less Is More

The ideological shift that took root in the 1970s focused on energy conservation, efficiency, and smallness. Amory Lovins, a wunderkind coal consultant and energy analyst, served as the leader of the energy efficiency and conservation movement and maintained a close relationship with Malthusian, antinuclear environmental groups like Friends of the Earth, the Natural Resources Defense Council, and the Sierra Club. In the wake of the energy crises of the mid-twentieth century, Lovins believed that America’s electricity grid was reliable, but not resilient.56 Utilities may have dumped tons of money into gargantuan oil, coal, and nuclear power plants, but they all failed during the 1965 blackout, hurt consumers during the OPEC crisis, and remained vulnerable both to systemic shocks and to the interests of the small elite that controlled them—to “cartels, mistakes, oligopolies, unions, saboteurs, bureaucrats, acts of God, and Acts of Congress.”57 Unions especially seemed to trouble him.

Instead, America needed to redesign its electrical grid in order to return more control to local communities. Biomass facilities, wind turbines, and solar farms would provide America with the decentralized resilience it so sorely lacked. Such “a transition to a benign, resilient, and sustainable energy system” would “take a long time—perhaps 50 years,” he admitted. But the real danger lay in not embarking upon it soon enough: “The alternative—the ever-more-electrified, centralized, large-scale and vulnerable system that we have been unthinkingly weaving into our lives—would insure ever larger, more frequent, and less repara­ble failures.”58 Our real problem was too much energy, he insisted. We needed, instead, to return to an “elegant frugality” that valued energy conservation over production.59 The most valuable form of energy in the world, to Lovins, was energy unspent. Lovins was a persuasive and relentless promoter of his own ideas, which caught on and quickly became part of the new consensus.60

These prescriptions also dovetailed with the general direction of national policy at the time toward smaller-scale electrical production. President Carter had met with Lovins in 1977 and signed the Public Utility Regulatory Policy Act (purpa) in 1978, a watershed moment in utility history.61 The most consequential aspect of the purpa was Section 210, a seemingly small provision in the legislation involving “qualifying facilities” (QFs), which were industrial companies that pro­duced electricity as a byproduct of industrial operation. Rather than waste this excess electricity, Carter wanted to harness it to improve overall energy efficiency. Section 210 permitted QFs to avoid Securities and Exchange Commission registration and to access preferential fi­nancing terms, allowed them to be paid “a utility’s incremental cost of building a new generator,” and helped them compete against established utility monopolies by opening wires to QFs.62

Utilities tried to resist, but it was too late. Independent generators fought any legal challenges from the utilities, of course, but the strongest pressure came from heavy industry, which sought lower energy costs and a larger, more competitive set of suppliers. They successfully lob­bied for the option to “enjoy the inexpensive power” from “inde­pendent genera­tors and avoid the high costs of utilities’ over-budget reactors.” As a result of their efforts, “industrial electricity costs fell 35 percent by 1994 from their 1982 peak.”63 Once in place, Section 210 saw American cogeneration capacity nearly quadruple between 1979 and 1992.64 The utilities now found themselves exposed to competition, however small.

Conflict over utilities and utility markets was not confined to the federal level. One standout tribune for the new consensus was Jerry Brown, who won the governorship of California at the age of thirty-seven in 1975. A dynastic product of an oil-rich family with ties to the mass-murdering, CIA-backed Indonesian national oil industry, Brown had the antinuclear, energy-skeptic bona fides any counterculturalist could dream of.65 He was an ardent opponent of the Diablo Canyon and San Onofre nuclear plants and he allegedly popularized E. F. Schumacher’s phrase “small is beautiful” in American politics. “Believing that new technologies did not always improve living standards, Brown also created a state Office of Appropriate Technology for stimulating approaches toward ‘more individualism’ and ‘more self-independence.’” He appointed “activist politicians, economists, and scientists as the original five commissioners of the [California Energy Commission],” a governmental outgrowth of environmentalists’ response to the OPEC embargo that Ronald Reagan had reluctantly signed into law.66

Brown also seized on the opportunities purpa presented. At the time, the Golden State expected so much electricity demand by 2000 that it supported the construction of new generators able to produce an additional 150,000 megawatts of power. To make sure QFs—particular­ly solar, wind, and biomass plants—supplied some of this demand, Brown’s appointees blocked legacy utilities from building many larger plants and drew up contracts with QFs.67 In doing so, they laid the foundation for major changes that would alter California and the nation over the coming decades, especially as electricity restructuring gained momentum.

The Grand Experiment

In 1973, courts decided what would become a landmark case in antitrust law and would make way for the introduction of competition into electricity markets. Otter Tail Power Company had refused to wheel power from federal hydroelectric dams to communities in the Dakotas and Minnesota. On behalf of these communities, the Department of Justice filed suit against Otter Tail and was ultimately victorious. The Supreme Court ruled that Otter Tail’s distribution monopoly stamped out competition and had violated the Sherman Act; Otter Tail had to serve these communities with electricity from municipal power whether it wanted to or not. Utilities recognized this as a threat to their grip on transmission wires and fought the decision, but they failed.68 With the door to competition cracked open, a vision of more competitive electricity markets would materialize over the following decades. In the late 1970s, purpa inched the opening still wider, but the real changes were to unfold nearer to the end of the century.

By the Reagan years, growth-phobia had simmered down from the boil of the 1970s. Utility elites had also internalized some of the conservationist shifts in policy and vision from that decade.69 But while growth had returned, the aversion toward “bigness” remained, as did the resistance to the “Fordist” era of major corporations. The new consensus anchored itself in open markets, marginal price theory, globalization, and devotion to the discipline that competition allegedly enforces. Lean, mean, and just-in-time were the new aspirations. The idea of progress was back, but it flew exclusively under the banner of free enterprise. It was in this milieu that a comprehensive vision for competition in energy markets arrived.

The deregulation movement that emerged in the late 1970s had met with success in the airline, railroad, and trucking industries, and Reagan administration economists wanted to know if the same could be possible for electricity.70 Two economists from MIT, Paul Joskow and Richard Schmalensee, heeded the call and published their seminal work Markets for Power in 1983.71 Their general premise was that utility monopolies could be unbundled: power plants could be divorced from wires and poles (which they still considered a natural monopoly) and would then bid into an electricity spot market to supply the grid with energy. What Joskow and Schmalensee imagined in theory would in broad strokes become reality after subsequent reforms of the industry.

Over the course of the 1990s, from the Energy Policy Act of 1992 to a series of orders by the Federal Energy Regulatory Commission (FERC) encouraging the formation of competitive electricity markets, America would begin to restructure its electricity system. Eventually, large swaths of the country would merge into Regional Transmission Organizations (RTOs).72 The RTO functions as a day-ahead auction house wherein plants bid to satisfy demand; generally, the clearing price gets set by the highest bid and then goes to all the other accepted bidders. The exception to this comes “when the transmission grid in an area of high consumer demand is unable to receive imports from elsewhere, in which case a higher price prevails in that congested area.”73 RTO auctions are overseen by Independent System Operators (ISOs), nonprofit organizations that act as the grid’s traffic controllers and serve as neutral arbiters, lacking traditional utilities’ natural preferences for their own generation. ISOs do not make energy policy; it is their duty to take the various policies from the Federal Energy Regulatory Commission and the states while maintaining reliability.

The drive for deregulation featured a bipartisanship rarely seen in Washington. It was supported, on the one hand, by greens like the Natural Resources Defense Council’s Ralph Cavanagh and the Rocky Mountain Institute’s Amory Lovins and, on the other, by economists like Paul Joskow, Fred Schweppe, and William Hogan.74 Disagreements abounded between these groups, including disagreement about the ultimate purpose of reform: the greens wanted more wind and solar on the grid; the economists wanted greater economic efficiency and thus lower prices. But both saw spot markets as a vital tool for dissolving the market power of utilities.75

But the major player in this reform was Enron, which relied on a combination of open markets and market opacity to make its arbitrage services profitable. Enron spent millions on lobbying and political campaigns in support of deregulation; lobbyists on its payroll included former FERC commissioners and White House counsels. The company was the largest donor to George W. Bush’s entire political career, and Enron CEO Kenneth Lay was “the only executive who got a private audience with Vice President Cheney to discuss energy policy.” Electricity deregulation happened not only because there was sufficient consensus, but because Enron had the political and financial muscle to make it happen.76

Yet the policy vision for deregulation was built on sand. Energy policy historian Steve Isser comments that the argument for electricity retail markets was made “with little analysis.”77 The primary evidence mustered came from overly sunny reports churned out by Koch-funded NGOs. Supporters also relied on a perhaps willfully shallow understanding of the UK’s experience with electricity deregulation and as­sumed one-to-one institutional parity between Britain and America. Finally, argues Isser, the electricity deregulation movement seemed to assume that natural gas would stay cheap forever—it did not.78 Jeremiah Lambert points out that FERC also ignored the crucial differences between gas and electricity deregulation: unlike gas, electricity must be used in milliseconds; transportation is difficult, storage even more so. “Electricity prices are also more volatile and, at times of peak load or scarcity,” Lambert writes, “open to manipulation by aggressive market actors.”79 But deregulation prevailed regardless.

The proving ground for this stew of policies was California, which featured the perfect confluence of interests to make it a pioneer in restructuring. In the mid-1990s, the California Public Utility Commission and the state legislature embarked on the project of creating a competitive electricity market. The result was a system in which all the players—from the utilities to the greens to Enron—got what they wanted. A witness at congressional hearings years later would describe the market design adopted by California as “a recipe for disaster.” Paul Joskow deemed it “the most complicated set of wholesale electricity market institutions ever created on earth and with which there was no real world experience.”80 The California market was spoiling for exploi­tation and that’s exactly what it got.

Toward the end of the 1990s, Enron started to test the California market for weaknesses. Demand for electricity was inelastic—people prefer turning the light on to blackouts—which created opportunities for sellers to drive up the price. Around the same time, Enron’s tricky accounting maneuvers and failed investments began to catch up with it: the company had lost nearly $12 billion. Ken Lay thus saw in the California market a moneymaking opportunity that he couldn’t afford to pass up. Led by Tim Belden, Enron’s West Coast traders began to unleash a series of colorfully named arbitrage exploits—“Ricochet,” “Fat Boy,” “Get Shorty,” and “Death Star”—to extract as much money from the California market as they could. As a result, Belden’s trading unit saw its revenues rise from $50 million in 1999 to $800 million in 2001.81

The situation exploded in 2000, when a spring heat wave hit California. The ISO, however, could not demand that merchant genera­tors fire up plants to maintain reliability, and the resulting supply problem created a profitable window for Belden’s raiders. As the ISO declared escalating states of emergency and found itself in the painful position of having to buy electricity at any price just to keep the grid running, Belden’s team made Enron nearly a quarter of its profits that year. The gains were so outlandish that the company buried them in its books to dodge potential backlash. Meanwhile, California saw rolling blackouts and watched its electricity costs increase by $20 billion over the course of a year. Enron was siphoning vast profits from the California grid without ever having owned a single power plant in the state.82

Years later, FERC found the time to investigate what had happened in California and discovered that “withholding generation, strategic bidding, and the artificial escalation of natural gas prices were the big culprits.”83 The California experience had cooled the fever for deregulation, and many other states halted their transition to competitive elec­tricity markets. Traditional utilities still exist within and without RTOs. But while FERC has grown some teeth since the Enron days, and things have been relatively serene for a number of years, concerns still hang in the background.84 In an interview in 2019, Joskow noticed that the massive buildout in renewables was “free riding” on the fossil fuel fleet. These fossil plants “were getting paid enough to cover their operating costs, but not much in the way of covering what would have been their ongoing capital costs. They’re exiting the market slowly. At some point, enough will exit the market where this issue is going to have to be confronted,” he said. “The current structure is unlikely to work.”85

The Tunnel at the End of the Light

In May of this year, FERC commissioner Mark Christie said that the country was “headed for a reliability crisis.”86 A report from the North American Electric Reliability Corporation declared that the central and upper Midwest, Texas, and California were staring down the barrel of blackouts.87 As of early July 2022, these blackouts have yet to materialize, but grid fragility in the Midwest appears especially entrenched.88 What Joskow feared in 2019 has come to fruition and it was, in large part, the markets that brought us here.

In the hope of forcing an energy transition, many states have committed themselves to massive renewables buildouts. The spot mar­kets have been conducive to this effort (80 percent of the renewables in America sit in RTO areas) because they were designed to onboard smaller generators.89 With America awash in cheap natural gas since the shale boom, reliability problems were largely solved by just-in-time natural gas’s ability to ramp up supply when renewables dropped off the grid. On the whole, fossil fuel industry groups like the American Petroleum Institute (API) have been more honest and enthusiastic about this collaboration than green organizations such as the Sierra Club and the Natural Resources Defense Council, probably because it would undermine the latter’s credibility and call into question their electricity market boosterism.90

But the impact of heavily subsidized renewables coupled with cheap natural gas forced traditional, reliable plants out of the market and made the entire system more reliant on a single fuel source—natural gas—for reliability.91 Renewables, which can bid into the negative, force down the clearing price in day-ahead markets and make it difficult for bigger power plants to compete.92 In some cases, renewable energy trade groups and the API have bragged about this dynamic.93 They see it as a David-and-Goliath story: small generators take on the corrupt monopoly utilities and their big power plants, chopping them down with greater efficiency and competition. This narrative conveniently ignores the ways in which green policy initiatives have incentivized utilities to ditch their low-cost, reliable, and depreciating power plants in favor of renewables and natural gas, and have thus made David and Goliath brothers beneath the skin.94

Part of the difficulty in maintaining reliability within markets is that ISOs cannot demand that power plants weatherize, store fuel, or remain on deck to keep the system going.95 That would bolster the “market power” of traditional plants which provide the baseload power that ensures reliability. In other words, it would be market favoritism. Instead, arcane and kludgy seasonal capacity auctions have been con­trived in the hope of solving reliability issues, with limited success and with great resentment among everyone involved. In the case of the Midcontinent Independent System Operator (MISO), where the fragili­ty is particularly acute, the independent market monitor said that recent capacity auction results to get the region through the summer are “the outcome we’ve been worried about for a decade.”96 MISO is now facing serious capacity shortfalls that leave the region, especially its northern half, vulnerable to blackouts.

Capacity prices cleared at a mere $5 per megawatt per day during MISO’s 2021 Planning Resource Auction.97 A year later, however, the price soared to $236 per megawatt per day.98 Large fluctuations like this make it nearly impossible for anyone to make long-term decisions about keeping their power plants running. Eventually, it is easier for nuclear and coal plants to close up shop. MISO has lost 3,200 megawatts to plant retirements in the last year, and it expects increasing shortfalls in the coming years: 1,230 megawatts this year; 2,600 next year; and 10,900 by 2027—a shortfall as great as the electricity use of the entire state of Minnesota.99

To add more uncertainty, in MISO’s capacity auctions, wind gets accreditation at about 15 percent of its installed capacity and solar at 50 percent. This allows MISO to add wind and solar into its “firm” category of energy. But wind and solar are neither reliable nor dispatchable. So MISO is now reliant on six gigawatts of “phantom firm” capacity that may or may not actually be there when they need it most.100

New York’s Independent System Operator (nyiso) faces a similar problem. The state has aggressively pursued the green vision for de­carbonization: close profitable nuclear plants, phase out fossil fuels, and build out renewables. But on July 1 of this year, nyiso announced that the system was “already close to minimum reliability requirements” and warned of potential systemic risks: “While the state’s bulk electric system meets current reliability requirements, risks to reliability and system resilience remain.”101 Nyiso’s Power Trends report for 2022 revealed that the New York grid’s installed reserve margin dropped from 20.7 percent to 19.6 percent over the last year. The grid operator also pointed out that in order to reach New York’s climate goal of a carbon-free grid by 2040, 10 percent of the state’s generation will have to come from resources that “are not commercially available at this time.”102

Texas, California, and ISO–New England all face the same issues, and all of these regions are also building out massive amounts of wind and solar.103 Meanwhile, electricity prices in RTO areas are rocketing upward all over the country, in some places by as much as 233 percent.104 Electricity markets are no longer delivering cheap kilowatts, though there is significant doubt that they ever saved customers money in the first place. In Shorting the Grid: The Hidden Fragility of Our Electric Grid, Meredith Angwin surveys the literature on prices in RTO areas and finds that all of these works note an increase in price in RTOs, though few argue that RTOs were to blame. None of the literature she consulted, however, argued that RTOs saved money for the customer.105 A report from the Massachusetts Attorney General’s Office revealed that the residential market for electricity has not saved customers in the state money.106 Even worse, the difficulty of keeping up with renewables is wearing out the component parts of traditional power plants at a time when their shoulder season for repairs has begun to disappear, due to the advent of hotter springs.107 And the lack of system-wide thinking has left RTO areas vulnerable to what Angwin calls the “fatal trifecta”: an overdependence on imports, just-in-time natural gas, and renewables.108

What began as a drive to make room for the little guy and reduce prices through decentralization has instead resulted in a byzantine sys­tem of rules and regulations overseen by the federal government and negotiated by insiders far from the public eye. Deregulation has thus ironically succeeded at entrenching unaccountability. The grid is now more fragile, more expensive, and more opaque. And whatever gains in emissions reductions the overcommitment to renewables has achieved since 2005 have been overwhelmed by this year’s global coal resurgence.109

It is not clear how the grid can be fixed. The rules governing it grow more arcane by the day. Various universities, utilities, NGOs, major financial institutions, politicians, and industry interests have too much at stake to turn back now. FERC wants to create more and bigger electrici­ty markets.110 And those who deal in quick fixes, like delusional trans­mission buildouts, hypothetical black-box modeling, or various other wonkish tabletop role-playing games, ceased being honest brokers long ago. The political force that could meet the challenge of fixing the American grid would have to be both powerful enough and competent enough to achieve its aims.

If there were such a political force, it would start by terminating the investment and production tax credits given to wind and solar, which would clear up price signals and halt the accumulation of entropy on the grid. Next, it would allow more straightforward capacity planning, valuing overall system integrity more than artificial market fairness—including, but not limited to, storing fuel on-site. At the state level, it would only allow utilities to recover the accredited capacity of any plant, which would disincentivize them from investing in unreliable resources that cannot perform most of the time. Such policy changes would mark at least the beginning of a move toward a more reliable electricity grid.

Yet those who once dreamt of ruling the nation now despair of gov­erning Kenosha, Wisconsin. Instead, we look across the Pacific to Aus­tralia, a nation which is further along this trajectory than we are and which has shut down its spot market operations due to the same per­verse dynamics,111 and wonder, “How much more pain is required?”

This article originally appeared in American Affairs Volume VI, Number 3 (Fall 2022): 56–79.

Notes
1 Michael Shellenberger, “Why California’s Climate Policies Are Causing Electricity Blackouts,” Forbes, August 15, 2020.

2 Laurence Du Sault, “Here’s Why Your Electricity Prices Are High and Soaring,” CalMatters, March 12, 2021.

3 Robert Bryce, “Texas Blackouts, EU Crisis Are Stark Warning to the US” (PowerPoint presentation, Steamboat Institute Energy and Climate Summit, Steamboat Springs, Colo., March 11–12, 2022).

4 Emma Newburger, “Texas Grid Operator Tells Residents to Curb Power as Heat Hits Record Highs,” CNBC, July 11, 2022.

5 John L. Neufeld, Selling Power: Economics, Policy, and Electric Utilities Before 1940 (Chicago: University of Chicago Press, 2016), 204.

6 Quoted in Robert Bryce, A Question of Power: Electricity and the Wealth of Nations (New York: Public Affairs, 2020), 42–43.

7 David E. Nye, Electrifying America: Social Meanings of a New Technology (Cambridge: MIT Press, 1990), 11.

8 Quoted in Nye, Electrifying America, 3.

9 Leo Marx, “The Idea of ‘Technology’ and Postmodern Pessimism,” in Does Technology Drive History?: The Dilemma of Technological Determinism, ed. Merrit Roe Smith and Leo Marx (Cambridge: MIT Press, 1994), 241, 243.

10 Nye, Electrifying America, 174.

11 Nye Electrifying America, 141–42.

12 Thomas P. Hughes, American Genesis: A Century of Invention and Technological Enthusiasm, 1870–1970 (Chicago: University of Chicago Press, 1989), 8.

13 Nye, Electrifying America, 174. Richard F. Hirsh, Power Loss: The Origins of Deregulation and Restructuring in the American Electric Utility System (Cambridge: MIT Press, 1999), 23.

14 Jeremiah D. Lambert, Energy Companies and Market Reform: How Deregulation Went Wrong (Tulsa, Okla.: PennWell, 2006), 10.

15 Quoted in Richard Munson, From Edison to Enron: The Business of Power and What It Means for the Future of Electricity (Westport, Conn.: Praeger, 2005), 109.

16 Jay Cost, The Price of Greatness: Alexander Hamilton, James Madison, and the Creation of American Oligarchy (New York: Hachette, 2018), 44.

17 The President’s Materials Policy Commission, Resources for Freedom, vol. 1, Foundations for Growth and Security (Washington, D.C.: U.S. Government Printing Office, 1952), 3.

18 David M. Potter, A People of Plenty: Economic Abundance and the American Character (Chicago: University of Chicago Press, 1958).

19 Interview with Charles E. Wilson, Electrical World 141, no. 14 (April 1954): 99.

20 “What Light’s Diamond Jubilee Means to the Industry,” Electrical World 141, no. 14 (April 1954): 105.

21   Richard F. Hirsh, Technology and Transformation in the American Electric Utility Industry (Cambridge: Cambridge University Press, 1989), 128.

22 Hirsh, Technology and Transformation, 21.

23 Hirsh, Technology and Transformation, 38

24 Hirsh, Technology and Transformation, 46.

25 Bryce, Question of Power, 58.

26 Eric Miller, Hope in a Scattering Time: A Life of Christopher Lasch (Grand Rapids, Mich.: Eerdmans, 2020), 13; Lizbeth Cohen, A Consumer’s Republic: The Politics of Consumption in Postwar America (New York: Vintage, 2003).

27 Hirsh, Technology and Transformation, 114–20.

28 H. A. Cavanaugh, “The Management Report,” Electrical World 198, no. 9 (September 1984), 33.

29 Richard F. Hirsh, Power Loss: The Origins of Deregulation and Restructuring in the American Electric Utility System (Cambridge: MIT Press, 1999), 56.

30 Hirsh, Technology and Transformation, 131–35.

31 Quoted in Hirsh, Technology and Transformation, 87.

32 Hirsh, Technology and Transformation, 56.

33 Steve Isser, Electricity Restructuring in the United States: Markets and Policy from the 1978 Energy Act to the Present (Cambridge: Cambridge University Press, 2015), 33–34.

34 Richard Hirsh, “Energy Crises of the 1970s,” Smithsonian Institution, 2002.

35 Hirsh, Technology and Transformation, 57.

36 Hirsh, “Energy Crises.”

37 Emmet Penney, “Who Killed Nuclear Energy and How to Revive It,” American Affairs 6, no. 2 (Summer 2022): 82–98.

38 Isser, Electricity Restructuring, 35.

39 Penney, “Who Killed Nuclear.”

40 Theos J. Thompson, “Improving the Quality of Life—Can Plowshare Help?” Symposium on Engineering with Nuclear Explosives, January 14–16, Las Vegas, Nevada: Proceedings, vol. 1, 1–4.

41 “Project Dubious,” Time, April 9, 1973, 89.

42 Christopher Lasch, The Culture of Narcissism: American Life in the Age of Diminishing Expectations (New York: Norton, 1979), xiii.

43 Hughes, American Genesis, 447.

44 Roman Felli, The Great Adaptation: Climate, Capitalism, and Catastrophe (New York: Verso, 2021), 17–52; Penney, “Who Killed Nuclear.”

45 Amory B. Lovins, “Energy Strategy: The Road Not Taken?,” Foreign Affairs 55, no. 1 (October 1976): 65–96.

46 Emmet Penney, “Energy Lysenkoism,” Compact, May 24, 2022; David E. Nye, Consuming Power: A Social History of American Energies (Cambridge: MIT Press, 1999), 227–28; B. Wolfe, “Is the Energy Debate Really about Energy?,” IAEA Bulletin 24, no. 4 (December 1982): 28–32.

47 Hughes, American Genesis, 447.

48 Christopher Lasch, The True and Only Heaven: Progress and Its Critics (New York: Norton, 1991), 84–86; Leo Marx, The Machine in the Garden: Technology and the Pastoral Ideal in America (New York: Oxford University Press, 1964), 5. Fred Stafford and Matt Huber, “In Defense of the Tennessee Valley Authority,” Jacobin, April 4, 2022. William Tucker, “Environmentalism and the Leisure Class,” Harper’s (December 1977): 49–80.

49 Quoted in Cohen, Consumer’s Republic, 349.

50 Quoted in Hirsh, Technology and Transformation, 153.

51 Quoted in Ralph L. Keeney, Siting Energy Facilities (New York: Academic Press, 1980), 187.

52 Quoted in Hirsh, Technology and Transformation, 152–53.

53 Richard Cohen, “Carter’s New Theme No Sudden Inspiration,” Washington Post, July 19, 1979.

54 James Carter, “Crisis of Confidence,” July 15, 1979, Miller Center of Public Affairs, University of Virginia.

55 Carter, “Crisis of Confidence.”

56 Amory Lovins, “Resilience in Energy Strategy,” New York Times, July 24, 1977, 17; Penney, “Who Killed Nuclear.”

57 Lovins, “Resilience.”

58 Lovins, “Resilience.”

59 Quoted in Wolfe, “Energy Debate.”

60 Hirsh, Power Loss, 144; Lambert, Power Brokers, 231–32.

61 Hirsh, Power Loss, 142.

62 Munson, Edison to Enron, 105–6; Richard Hirsh, “The Public Utilities Regulatory Policies Act,” Smithsonian Institution, 2002.

63 Munson, Edison to Enron 106–7.

64 Munson, Edison to Enron, 109.

65 Vincent Bevins, The Jakarta Method: Washington’s Anticommunist Crusade and the Mass Murder Program that Shaped Our World (New York: Public Affairs, 2020); Michael Shellenberger, Apocalypse Never: Why Environmental Alarmism Hurts Us All (New York: Harper Collins, 2020), 209–13.

66 Hirsh, Power Loss, 94–95.

67 Munson, Edison to Enron, 108.

68 Lambert, Power Brokers, 134–37; Munson, Edison to Enron, 90.

69 Hirsh, Power Loss, 135–55.

70 Paul Joskow and Richard Schmalensee, “Electricity Markets,” interview by Francis O’Sullivan, MIT Energy Initiative Podcast, June 22, 2019.

71 Paul Joskow and Richard Schmalensee, Markets for Power: An Analysis of Electric Utility Deregulation (Cambridge: MIT Press, 1983).

72 Emmet Penney, “The Blackouts Are Coming,” Compact, June 17, 2022; Isser, Electricity Restructuring, 208–32.

73 Travis Kavulla, “There Is No Free Market for Electricity: Can There Ever Be?,” American Affairs 1, no. 2 (Summer 2017): 126–50.

74 Hirsh, Power Loss, 229–32; Lambert, Power Brokers, 148.

75 Joskow and Lovins famously traded barbs in the early 1990s; see Lambert, Power Brokers, 222–23.

76 Isser, Electricity Restructuring, 194–95.

77 Isser, Electricity Restructuring, 196.

78 Isser, Electricity Restructuring, 196–207.

79 Lambert, Power Brokers, 176.

80 Quoted in Lambert, Power Brokers, 182–83.

81 Lambert, Power Brokers, 186–91.

82 Lambert, Power Brokers, 191–94.

83 Isser, Electricity Restructuring, 285.

84 Isser, Electricity Restructuring, 323–54.

85 Joskow and Schmalensee, “Electricity Markets.”

86 Ethan Howland, “FERC Commissioners Respond to Elevated Power Outage Risks across Two-Thirds of U.S.,” Utility Dive, May 20, 2022.

87 North American Electric Reliability Corp., 2022 Summer Reliability Assessment, May 2022.

88U.S. Midwest May Have Summer Power Outages for Years,” Reuters, June 10, 2022.

89 Catherine Moorehouse, “FERC Should Expand Markets across the U.S., Former Chairs and Commissioners Say,” Utility Dive, June 3, 2021.

90 Emmet Penney, “Power Trip,” American Mind, July 6, 2021.

91 Michael Greenstone and Ishan Nath, “Do Renewable Portfolio Standards Deliver Cost-Effective Carbon Abatement?,” Becker Friedman Institute for Economics Working Paper No. 2019-62, University of Chicago, November 3, 2020.

92 Meredith Angwin, Shorting the Grid: The Hidden Fragility of Our Electric Grid (Wilder, Vt.: Carnot Communications, 2020), 262–78.

93 Penney, “Blackouts Are Coming.”

94 Isaac Orr, “U.S. Supreme Court Delivers a Major Win for the Reliability and Affordability of the Electric Grid,” American Experiment, June 30, 2022.

95 Angwin, Shorting the Grid, 59–79.

96 Peter Behr and Jason Plautz, “Grid Monitor Warns of U.S. Blackouts in ‘Sobering Report,’” EnergyWire, May 19, 2022.

97 Midcontinent Independent System Operator, “2021/2022 Planning Resource Auction (PRA) Results,” April 15, 2021.

98 Penney, “Blackouts Are Coming.”

99 Isaac Orr, “Why the Risk of Blackouts in Minnesota Continues to Grow,” American Experiment, June 14, 2022; MISO Energy, 2021/2022 Planning Resource Auction (PRA) Results, April 15, 2021.

100 I owe the term “phantom firm” to Isaac Orr at the Center of the American Experiment; Emmet Penney, “MISO Falls Short,” Grid Brief, April 19, 2022.

101 Robert Walton, “New York Must Balance Climate Mandates with Declining Reserve Margins to Ensure Reliability: ISO,” Utility Dive, July 6, 2022.

102 New York Independent System Operator, Power Trends 2022: The Path to a Reliable, Greener New York, 2022; Walton, “New York Must Balance Climate Mandates.”

103 S&P Global Market Intelligence, ISO Market Outlook 2022: The Growth of Renewables, April 2022. It should be noted that the Electric Reliability Council of Texas (ercot) does not fall under FERC’s aegis per the Federal Power Act, though it does suffer from similar dysfunctions as the RTO areas that are overseen by FERC.

104 Ethan Howland, “FERC to Monitor Gas, Power Markets for Manipulation as Forward Summer Electricity Prices Jump up to 233%,” Utility Dive, May 20, 2022.

105 ngwin, Shorting the Grid, 81–83.

106 Office of Massachusetts Attorney General Maura Healey, “Are Consumers Benefiting From Competition?: An Analysis of the Individual Residential Electric Supply Market in Massachusetts: 2021 Update,” March 2021.

107 Penney, “Blackouts Are Coming”; Sonal Patel, “Fending Off Forced Power Plant Outages,” Power, February 2, 2021.

108 Meredith Angwin, “Nuclear, the Auctions, and the Grid,” World Nuclear News, December 19, 2021.

109 Robert Bryce, “Soaring Global Coal Use Is Obliterating Emission Reductions Achieved in the U.S. Since 2005,” RealClear Energy, June 26, 2022.

110 Zack Hale, “Western U.S. Power Market Expansion Top-of-Mind for Current, Former FERC Members,” S&P Global Market Intelligence, December 2, 2021.

111 James Fleay, “What Killed Australia’s Electricity Market?,” Grid Brief, June 24, 2022.


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