Future Shock: How Aging Infrastructure, Rising Demand, and Tight Budgets Continue to Shape the T&D Industry
“Our industry is faced with deregulation and aging transmission and distribution systems. Most of these systems have far exceeded their designed lives. At the same time, demand is pushing transmission assets to their stability, voltage and thermal limits. Add to that the pressure to reduce capital expenditures and operations and maintenance costs. Without innovation, the future of T&D would look bleak.”
This is from a concluding paragraph from a special Millennium Issue of T&D World released 25 years ago.
I’m not sure I need to even point this out, but the problems of aging infrastructure, demand pushing the grid harder than ever, and not enough funding for O&M concerns are ones we talk about year-round at T&D World and in the industry at large.
Realizing that it has been 25 years since the year 2000 — the year I graduated high school — made my bones hurt a little, but it also made me think of what a pivotal time the turn of the millennium was for electricity. The power grid and electronics in general fared well against the feared Y2K crisis, the name “Enron” had become fodder for late-night comedians and the US West was rocked with blackouts due to market manipulations by that company and others.
A View From the White House
In addition to this being an anniversary issue, this is also coming out in an election year. While it’s true presidents don’t often play as important a role as you might think in energy policy, they can still set national goals from time to time, and their stances on energy issues can be revealing as to where the US was at the time.
Franklin Delano Roosevelt was president during a pivotal time for the development of power grids in the US, and many electric co-ops still in operation today trace their roots to the Rural Electrification Act that created them. For areas that already had electricity, FDR emphasized firm regulation in the public interest of keeping power cheap. In a rather florid speech he delivered Sept. 21, 1932 in Portland, Oregon, he said “Electricity is no longer a luxury. It is a definite necessity,” and said the US was to date backward in adopting it. He placed the blame on utilities themselves, saying rates were too high to encourage common use.
At the start of the 1930s, ten large holding companies owned and controlled three quarters of the electricity industry — companies headed by J.P. Morgan, John D. Rockefeller, Jr., and Samuel Insull. Public ownership of utilities was seen at the time as “socialist,” but public opinion had turned against the power grid being mostly run by a handful of millionaires. FDR famously promised that the US government would never part with its control over its power resources for as long as he was president — a legacy seen in the Tennessee Valley Authority and the Bonneville Power Administration among others.
The impact of the New Deal on electrification was enormous, and it is hard to imagine the power grid being built any other way, particularly in so short a timeframe. Subsequent Democratic presidents deferred to New Deal era policies for the most part and public power expanded.
President Truman spoke about peaceful, civilian uses for nuclear power after ordering the use of atomic weapons. Eisenhower raised questions about public power’s impact on free enterprise, saying that if electricity was too cheap, businesses would not engage with the industry. He pressured Congress to make the TVA financially independent, and the utility — then the leading energy supplier in the US, according to the TVA’s website — found itself in a political fight that ended with it becoming self financing.
President Johnson was known to switch off lights in the White House to avoid wasting taxpayer money, but long before that he worked in the House of Representatives to fund electric co-op projects. Having grown up on a farm without electricity, the issue was one LBJ had some personal experience with. Johnson once said he was called a communist over his support for a group of six dams and the co-ops to distribute their electricity.
Further, Johnson’s signing of the Clean Air Act had a lasting impact on the utility industry. But it was his successor, President Nixon, who expanded the federal government’s oversight of the energy sector further, establishing the EPA. This was done chiefly in response to a global energy crisis whose aftershocks were felt throughout the ‘70s.
The economic fallout of those energy crises continued into the Carter administration, with that president famously encouraging Americans to conserve power and installing solar panels on the White House roof. While some of Carter’s energy policies were repealed (and the solar panels removed by President Reagan), he did elevate the standing of renewable energy and energy efficiency as causes.
Reagan’s tenure following Carter established a familiar pattern of Republican presidents favoring deregulation and fossil fuel use and Democrats promoting renewable energy research and projects. At the risk of sounding reductive, this is broadly how the issue was handled through the next 40 years. President Bush, Sr. focuses on free trade agreements for natural gas and exempts certain utilities from regulation. President Clinton would pledge greenhouse gas reductions and funded alternative energy research.
The second President Bush promoted ethanol, coal power, fracking, nuclear power and oil production. By the time of the 2009 Recovery Act and the Obama administration, I was writing about electricity for the first time and the talk was all about infrastructure improvement and putting serious funding into renewable energy. There was talk of a nuclear renaissance then, but market forces more than politics made natural gas power a winner. Obama also unveiled the Clean Power Plan, intended to be the first-ever limits on pollution from the electricity sector, but then President Trump ordered the plan reviewed with an executive order while withdrawing from the Paris Agreement.
This is what I mean in saying that presidents don’t often play an important role in energy policy. Global economic forces often have far more of an impact on what happens, even as presidents from the two parties install solar panels on the White House or remove them, or enter the US into the Paris Agreement or withdraw from it as the case may be.
Could this constant tit for tat be different in the future? Well, a second Trump administration would likely be a continuation of the first, and the Vice President Harris campaign appears to mostly be a continuation of President Biden’s policies.
Checking the candidates’ campaign websites, Trump’s platform section mentions cutting electric vehicle mandates, cutting regulations and making “America the dominant energy producer in the world, by far!” The site contains a link to the 2024 Republican Party Platform, which declares an opposition to the “Socialist Green New Deal” and calls for “unleash[ing] American Energy.” It specifically mentions lowering energy costs for families and supporting nuclear, oil, natural gas and coal power.
On the issues page of the Harris campaign’s website, bringing down the costs of everyday goods and services is prominently placed, with utility bills specifically mentioned alongside groceries, rent and pharmaceutical costs. The Biden-Harris administration, according to the site, created jobs in the EV and battery supply chains through legislation, going on to say Harris would, as president, “continue to support American leadership in semiconductors, clean energy, AI, and other cutting edge industries.” Harris said it is possible to create a clean energy economy while also cutting emissions and addressing climate change.
A Look at 25 Years Ago
Presidents come and go, but the electricity industry marches on with the clear and increasingly present task of meeting demand for its critical product. In the years that I’ve been covering this sector at least, I have seen more change come through technological and macroeconomic trends than through legislation or regulation, although each driver obviously has a role to play.
My colleagues and I looked over that Millennium Issue of T&D World to see what the discourse on utilities was a quarter-century ago. Plenty of the issues identified then are still open questions and unsolved today. In a piece by James R. Dukart titled Culture Shock, several utility sources agree that high demand for electricity caused utilities to grow, but the growth came at a cost that is less tangible than the bottom line.
Bill Erdesky, an engineer for Florida Power & Light from 1970 to 1991 said working for a utility was a well-respected job and offered a shot at the good life.
“It was a secure job, or at least you thought it was. It was technical in nature and provided a good challenge. Everybody was trying to make a career out of it,” Erdesky told Dukart in the 2000 article. “[Now] everybody is downsizing and merging. You don’t know from one week to the next who you are working for, and it sure doesn't seem like there’s any security anymore.”
The cause for this change in utility culture could be blamed on a professionalization of utility leadership that came as companies shifted from being public goods to being deregulated, competitive and in many cases for-profit.
“All the CEOs are attorneys or bean counters. They run the companies now,” he said. “When I came in, engineers were running it. They became managers and rose through the ranks… More and more decisions are being made higher up by people unqualified to make engineering decisions — and without even consulting the engineers.”
The article also quotes Bill Eads, a district vice president of the International Brotherhood of Electrical Workers (IBEW) in Springfield, Missouri, as saying the globalization that accompanied the growth of utilities has led to a loss of community connection and a corresponding dip in customer service.
“The utilities are not localized like they used to be,” Eads said. “Missouri Public Service is a good example. It was a hometown utility, which grew up to be UtiliCorp United. They have holdings in Canada, New Zealand, Australia and the United Kingdom. It is no longer Missouri Public Service. They are focused on many other countries and cities around the world.”
Another IBEW member from Missouri, Mike Datillo, said utilities used to be extremely focused on customer services, with local offices in every major community they served. The closure of these offices saved money but created a rift between utilities and their customers.
“Now people are talking to customers who are 200 miles away, and the crews are coming from far away to work on those lines. The utilities have lost the customer service aspect,” Datillo said, going on to say his local utility Ameren was outsourcing its customer calls to North Carolina.
I have to admit that reading complaints about a decay in customer service from 2000 made me think of the AI-driven labyrinth I often run into when I have to use just about any company’s customer service line. Talking to a person at all, anywhere on earth, is a bit of a rare treat.
While working for a utility was seen by some as steady and stimulating work, others quoted by T&D World 25 years ago said there was another way to look at a job like this: it could be boring. The changes in job duties that accompanied a changing corporate culture, for some anyway, shook things up in a welcome way.
Mickey Brown, then vice president of distribution at Georgia Power, told Dukart that delivering both power and profits could be more fun.
“I’ve been around for more than 30 years, so I lived through the ‘good old days.’ I didn’t like them. I thought they were dull. We did the same things year after year, with few new challenges or pressures. We just kept up with growth and did not worry about what we were spending to do it,” Brown said.
By contrast, for-profit utilities need to be creative and find new and more efficient ways to meet consumer demands, which were changing in the 2000s as they continue to today.
“We have so much more load on the line. With more electric heat, VCRs and computers, customer expectations are much higher than they were,” he said. “When customers have a choice, we can’t always have our way. We have to figure out better ways to give them what we both want and need.”
Here is a trend that certainly hasn’t changed much in 25 years. New regulations on new construction buildings in some areas are making electric heat and cooking even more prevalent over gas, personal electronics are even more popular (and powerful) and this is to say nothing of the potential impacts of electric vehicles and the growth of data centers and cryptocurrency operations.
I can see how meeting demand while delivering profits could be a fun challenge if there was enough money and electricity to go around at all times and in all cases, but how often is this true for today’s utilities, if indeed it ever was?