Electricity Markets: US

Martin Lin

The US power system has been criticised for being an antiquated system developed in the last century and suffering from significant underinvestment. These claims were renewed after the Northeast Blackout of 2003 and during passage of the subsequent Energy Policy Act of 2005, as well as during the debate and passage of the American Recovery and Reinvestment Act of 2009, the so-called Stimulus Bill adopted in the wake of the financial crisis. While those criticisms are not completely unfounded, they often ignore the substantial changes that have come to shape the electricity system for the Continental US.

The localised direct current (DC) system established by Thomas Edison and anchored by the coal-fired Pearl Street Station in the late 19th century is a far cry from the alternating current (AC) system of long-haul transmission lines with a mix of generating sources and Internet-based markets pricing thousands of locations over every hour that we have in the early 21st century. To be sure, some of the issues that plagued Edison and his contemporaries still lurk today. However, advances in technology make both the possibilities for the future system and the sense of underinvestment