As the industry resumes major capital-spending programs, utilities and their stakeholders are rightly concerned about the effects on prices. Traditional regulatory approaches expose utilities to...
Lighting Up the World
Why electricity is good—and more is better.
deserved equal access to the miracle of electricity, so the Rural Electrification Act was passed in 1936. At that time, perhaps the most intense pocket of poverty in rural America was concentrated in the southern states of Tennessee, Virginia, North Carolina, Alabama, Kentucky, Georgia, and Mississippi. Overall per capita income in the region was only 40 percent of the national average, and farm income was even lower—barely one-third the take of farmers in other parts of the nation. 23 In 1933, the average annual income for a farm family in what would become the Tennessee Valley Authority (TVA) region was just $168, as only 3 percent of the farms had power. 24 This made sanitation an ongoing problem and malaria more common. A lack of educational opportunities plagued communities and kept illiteracy rates high.
Operating with the power of government but the flexibility of private industry, TVA was a federal agency established under President Roosevelt’s New Deal to bring electricity, flood control, and economic stability to the Tennessee River Valley during the ravages of the Great Depression in the 1930s. TVA began to provide inexpensive electricity to rural residents of the Valley in 1934. Through the Authority, farmers throughout the South experienced firsthand the benefits of using electricity to easily grind corn, milk cows, and perform other daily chores. Farm wives saw the benefits of electric water pumps, washing machines, irons, lights, and radios. TVA spurred greater demand in rural areas for cheaper electricity and established the Electric Home and Farm Authority to help farmers purchase electric appliances like stoves and washing machines.
Farm families were quickly astonished how much easier and more enjoyable these electrical gadgets made their lives. By 1936, The New York Times published an entire article on the topic, titled “New Era of Power Revolutionizes Life in the Tennessee Valley.” 25 By 1940, a Tennessee farmer had discovered that the “greatest thing on earth is to have the love of God in your heart, and the next greatest thing is to have electricity in your house.” 26 The social, economic, and psychological changes for rural America were far reaching indeed; the number of rural homes in the United States with electricity boomed from less than one in 10 in 1936, to one in four in 1939, to nine in 10 in 1950. 27 In TVA’s first 15 years alone, per-capita income within the Valley climbed from 40 percent of the national average to nearly 60 percent. 28
TVA was granted permission in the 1950s to issue bonds and became self-sufficient enough to pay its own way. By the 1960s, the region’s electricity prices were the lowest in the U.S., and the rural southeast, probably the country’s worst economic rural area just a generation prior, was electrified, highly productive, and relatively free from the devastation caused by flooding. As realized by Knop (1979), “after 40 years TVA’s main goals have been achieved,” and average household electricity use within the Valley had increased 15-fold and per capita income had surpassed the national average. 29 TVA is a prime example of