The U.S. electrical grid as we know it today is a massive network of machinery consisting of hundreds of thousands of miles of transmission and distribution lines and tens of thousands of substations and transformers (“the grid” or ​“bulk grid”). This array of wires and machine terminals brings electricity generated at power plants to our homes, schools, and businesses, increasing (stepping up) or decreasing (stepping down) the voltage accordingly.

In the United States, the electrical grid is regulated primarily by the Federal Energy Regulatory Commission (FERC). There are two other regulatory bodies: the North American Electric Reliability Council (NERC) - who develops reliability standards, monitors the bulk grid, and educates personnel - and the Institute of Electrical and Electronic Engineers (IEEE), who develops non-mandatory standards for the grid.

Nationally, the grid itself is broken down into three interconnections, or areas that are linked up to ensure reliability and safety in the event of power plant or power line failures. Those interconnections are the Eastern Interconnection (East of the Rocky Mountains and a small portion of Texas), the Western Interconnection (West of the Rocky Mountains), and the Electric Reliability Council of Texas (ERCOT). Those Interconnections are then further divided into balancing authorities, either Regional Transmission Organizations (RTOs) or Independent System Operators (ISOs). RTOs and ISOs are non-profit companies that operate and monitor the grid, ensuring a steady power supply. Balancing authorities either operate a traditionally regulated market, where utilities are vertically integrated, or a competitive market, which allows for competition between independent power producers. In traditionally regulated markets, utility companies own the entire supply chain and sell directly to consumers, while in a competitive market, utility companies typically purchase electricity from independent energy producers and then sell it to consumers.

In the tri-state region, New York state’s grid is overseen by one operator, New York Independent System Operator (NYISO), while Connecticut is part of a larger operator, ISO-NE (which also includes Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont). New Jersey is part of a large, regional organization, PJM Interconnection, along with twelve other states.

1882 - early 1960s: The birth of the grid

In 1882, the ​“city that never sleeps” lit up the night for the first time with the opening of Thomas Edison’s Pearl Street Station, the first commercial power plant in the United States. That plant powered Manhattan’s financial district and launched an electricity revolution that quickly spread throughout the country. Shortly after the Pearl Street Station opened, a rapid series of inventions helped form the grid as we know it. In 1886, the first transformer was built, allowing voltage to be stepped up or down, revolutionizing the way power was transmitted. Then in 1888 the rotating field AC alternator, the precursor to most modern generators used today, was invented; and in 1889, the first long distance transmission line, with a voltage of 4,000 volts or 4kV, was completed in Oregon. Less than 15 years after Edison’s original generating station was opened, electric companies were building large-scale generating facilities, with higher voltage power lines. The Niagara Falls Generating Station in Buffalo, New York, built by Westinghouse Electric, best exemplified the rapid expansion of power generation – it was able to carry power generated by the Falls on 11 kV lines throughout the City of Buffalo.

The rapid expansion of the power grid caught the eye of state regulators. In 1907 New York State created the Public Service Commission to regulate electric companies and protect ratepayers in the State. Just seven years later, in 1914, 43 states had created their own regulatory commissions overseeing utility companies. The federal government followed suit and created the Federal Power Commission, FERC’s predecessor, in 1920. By 1927, the grid had reached a point where there was a need for governing bodies to oversee and manage the flow of power. In response, the Pennsylvania - New Jersey interconnection was formed, a predecessor to PJM.

As the Great Depression gripped the US, the federal government looked for novel ways to generate and bring electricity to its citizens. The Tennessee Valley Authority (TVA) was created in 1933 as a federally owned electric utility company by President Franklin Roosevelt as part of the New Deal. Instead of investor owned, the TVA was publicly owned, but it was still supported through the sale of electricity, not taxpayer money. It took inspiration from the New York Power Authority (NYPA), founded by then Governor Franklin Roosevelt in 1931. In 1936, President Roosevelt signed the Rural Electrification Act, one of the largest investments into the grid in the nation’s history. This act created the rural electrification administration, tasked with building power lines and generating stations in rural communities and bringing them the electricity that urban centers had enjoyed for decades.

In the post-war period, electricity use tripled and demand was increasing by 8% annually. In 1960, the grid reached a milestone of 60,000 circuit miles. By the early 1960s following natural growth of investor-owned utilities supported by significant federal and state investments, nearly every American had electricity in their homes, and 97% of farms were connected to the grid, as power quickly transitioned from a luxury for the few, to a necessity for all in American society.

Mid-1960s - early 2000s: Upgrades for reliability and reorganization

The second period of grid growth took place roughly over the period between 1965 through the early 2000s and was focused largely on reliability upgrades - versus expansion - and reorganization of how the grid was managed. By the mid-1960s, the limits of the grid began to emerge. A series of far-reaching blackouts, bookended by the 1965 and 2003 Northeast blackout each led to a series of major reliability upgrades during that time period. At the same time, changes in grid management took place.

The first major change was the introduction of the National Electric Reliability Council in 1968, a predecessor of the modern NERC. This Council was created in response to the 1965 Northeast blackout as a governing body to set reliability standards across the nation so all transmission developers and utility companies were using industry best practices.

A decade later, international volatility led to a series of oil crises, sending energy prices skyrocketing. In response, the federal government created the Department of Energy to research new sources of power generation and energy efficiency. The Federal Power Commission was also reorganized under the Department of Energy as the Federal Energy Regulatory Commission (FERC). To further reduce energy prices, in 1978 President Jimmy Carter signed the Public Utility Regulatory Policies Act, which allowed nonutility generators to be added to the transmission system, creating competitive markets where utility companies no longer hand monopolies over price. This was strengthened in 1992 with the Energy Policy Act (EPACT), signed by President George H.W. Bush.

As competitive energy markets emerged in the Northeast, a need for overseeing the flow of power emerged. In 1997, ISO-NE was created to monitor New England’s grid, and in 1999 the NYISO was created to monitor New York’s grid. The creation of these two independent system operators cemented an era of reorganization in the power system and paved the way towards the resilience upgrades of the 21st century.

2000’s - today: Resilience and the beginnings of transformation

Up until the last two decades or so, the United States did little to change the grid, both in fuel types and transmission.

In response to the 2003 Northeast blackout, federal regulators determined that there needs to be higher standards for grid reliability. This led to the Energy Policy Act of 2005 to be signed into law by President George W. Bush, which set stricter provisions for grid reliability in the United States. Two years later, President Bush signed the Energy Independence and Security Act, which, among other things, set provisions for grid modernization – the first major piece of legislation of the 21st century pushing grid modernization.

In an effort to rebound the US economy after the 2008 financial crisis and advance grid modernization, President Obama signed the American Recovery and Reinvestment Act into law. The provisions included investments to upgrade the grid and set up a ​“smart grid” – a grid that uses smart technologies to better control the flow of power and create a more efficient system.

2012 brought the strongest storm the region has seen in a generation - Superstorm Sandy ravaged the region, leaving millions without power for days. For some, it took weeks for the lights to come back on. This storm forced local utilities and state lawmakers to assess the grid and the power system, spurring resilience and reliability measures across the region. Utility companies invested billions of dollars into their equipment with measures such as replacing old utility poles, modernizing substations, and upgrading power lines. PSEG, a utility company that serves New Jersey, alone spent nearly 5 billion dollars over the ten year period after Sandy modernizing and strengthening their equipment.

Superstorm Sandy was a catalyst for state politicians to look at our energy system in the context of climate change and take note of the aging grid. The region determined that it must move away from fossil fuels and to clean energy sources to protect future generations from extreme weather events such as Sandy. In 2019, New York passed the landmark Climate Leadership & Community Protection Act (CLCPA), and New Jersey released its Energy Master Plan, both of which set ambitious goals for securing renewable energy for the state and increasing building electrification. That same year, Governor Ned Lamont of Connecticut signed an executive order directing the Department of Energy and Environmental Protection to study pathways towards carbon free electricity by 2040. These landmark measures led to the closing of the last coal-fired power plant in the region, the Logan Generating Plant in South Jersey.

State action coupled with a need to recover after the COVID-19 Pandemic pushed federal regulators to act. In 2021, the Bipartisan Infrastructure Law (BIL) was passed and in 2022 the Inflation Reduction Act was passed, both of which provide investments and loans at the federal level to spur renewable energy development. These pieces of legislation have spurred the private sector to start to build out the grid in the region, ensuring energy security for the coming decades.

In response to legislation, climate change, and increasing demand, utility companies and transmission developers in the region have started once again to build out their grids. A transformation is underway in our energy system, and we will revisit the topic in more depth in a future post.