The electric utility industry is undergoing its most profound change since Thomas Edison and George Westinghouse battled over whether the American power system should be AC or DC. In essence, that technological choice shaped the industry we know today. Edison's low-voltage, DC system would have required many small generating stations and short distribution lines. The high-voltage Westinghouse AC system promoted development
of long-distance transmission networks that deliver electricity efficiently from large, remote power plants. The economies of scale
involved led directly to the emergence of today's vertically integrated utilities.
Now, the technological revolution based on silicon electronics is again forcing fundamental choices and threatening to reshape electric utilities. Through computerized control, the U.S. transmission system is able to handle greatly
increased numbers of bulk-power transactions. Some 40 percent of the electricity generated each year in this country is sold wholesale. At the same time, customers with sensitive electronic loads are demanding higher quality, more reliable power at the distribution level. An outage of less than one cycle of AC power, or a voltage sag of 25 percent for just two cycles, can cause a microprocessor to malfunction. The cost of a two-cycle outage at a large computer center can be as high as $600,000.
As a result of these technological developments and the regulatory changes accompanying them, competition is increasing rapidly throughout the industry. Success in this era of accelerating change will require taking advantage of new technologies and using them to turn competitive challenges into strategic opportunities.
Technology to Reduce Costs