A Fine History of the Modern U.S. Electricity System

The history of the U.S. electricity industry over the past 100 years is convoluted and often confusing. For those who want to make sense of the course of events from the days of Samuel Insull’s iron-clad monopoly to current policy attempts to deal with global warming with a partially-competitive market, a new book by veteran Washington, D.C., energy lawyer Jeremiah Lambert is the best guide to date.

Lambert’s “The Power Brokers: The Struggle to Shape and Control the Electric Power Industry,” is a splendid overview of the history of the power business in the U.S. It is not for casual readers. Lambert delves deep into the legal, policy and economic weeds that general readers may find incomprehensible. PUHCA, PURPA, Order 888, QFs, “just and reasonable,” it’s all likely befuddling to the everyday reader.

But for those of us steeped in the intricacies and lore of electricity – and I’ve been covering these events and issues for more than 40 years – Lambert offers a sweeping and coherent history of how the industry has evolved from the hard vertical and horizontal monopolies of the early days of the 20th Century – the Insull model – to the mixed and often confounding market today, with half the country involved in competitive wholesale markets, and half remaining in state-regulated vertical monopolies. Mixed in are public power systems and government agencies that serve a significant part of the national load under far different structures and regulatory regimes.

Lambert hangs his narrative on real characters who personified the historical trends he describes: Insull and the days of unbridled monopoly; David Lilienthal and the New Deal focus on public power at TVA; Don Hodel and the chimera of nuclear power at the Bonneville Power Administration; Paul Joskow and the intellectual revolt against the natural monopoly religion; Ken Lay and the crass manipulation of unleashed markets; Amory Lovins and the green challenge to conventional generation; and Jim Rogers and the failed attempt to manipulate a utility response to global warming.

The people Lambert discusses are mostly manikins, convenient but lifeless models upon which to drape his trenchant economic and policy discussions. That’s fine, although at times a bit disconcerting.

The only manikin who comes to life in Lambert’s discussion is the odious Ken Lay, who created the Enron colossus and presided over its collapse, reminding those of us with a literary background of Edgar Allan Poe’s (1809-1849) short story “The Fall of the House of Usher.”

Lambert perceptively likens Lay to Insull: “Like Insull, Lay grew up dirt poor but fired with ambition. He attracted well-placed mentors, made strategic corporate moves, and enjoyed spectacular progress. Like Insull, he cultivated influential political players and, at several crucial turning points, turned lack of government oversight to his advantage.” Ultimately, like Insull, Lay overreached, failed and faced government criminal prosecution. Insull was exonerated by a jury. Lay died before facing trial, his house of Enron a smoking pile of rubble.

(I have several Ken Lay stories based on my own experience covering him and the evolution of the electricity business in the 1980s and 1990s, which I may address here in the future.)

Lambert’s book is the best available synthesis of the entire span of electricity politics from the early 20th Century to today. It’s dense, sometimes obtuse and convoluted, but well worth the effort required to read it.

lambert book

Jeremiah D. Lambert, “The Struggle to Shape and Control the Electric Power Industry,” The MIT Press, 2015.