How the Grid was built (and why Energy companies are hustling us into paying for their Smart Grid)

The grid came into existence to optimize efficiency (and hence profitability) for the producer. Society has organized itself around this approach to business ever since, and in doing so, I believe, has tied itself in knots.
In the early days of electricity, as in the early days of the auto and other industries, there were many competing standards. Hundreds of equipment manufacturers and thousands of small utilities operated on a myriad of voltages and delivery systems, and this was highly irrational and ineffi cient, meaning it ran contrary the spirit of the age.

The key event in the early history of the grid was the day that Thomas Edison installed the first electricity meter. His first central generator had gone into action on Pearl Street in Manhattan in 1882, and Edison began by charging his customers on Wall Street according to the number of lights in their buildings. That meant he was highly incentivised to make his system as efficient as possible in its consumption of both fuel and electricity. No matter that his incandescent lamp turned only ten percent of the electricity into light, with ninety percent wasted as heat. This inefficiency would have been solved were it not for the introduction of the electricity meter. Once he changed his business model, introduced meters, and charged for the electricity rather than the light, Edison had no reason to develop more efficient bulbs. And unnoticed, the metered supply became the standard way of delivering electricity around the Western world.
Agreement on standards did not inevitably lead to an industry dominated by one or two very large companies. This happened, of course, but commercial factors were what decided it, as best exemplified by the rise of GE.
Once GE established its control over the utilities industry through its dominance of the market in power generation, it turned to controlling the electric lightbulb market, which it did largely through overtly manipulative practices. I find this particularly revealing because GE is very proud of its illustrious past, referring to it all the time. In a July 2009 speech launching its smart-grid strategy, the president of the lighting and appliance division told his audience of journalists, by way of introduction, “In the first half of the twentieth century, [GE] produced one of the world’s best home-appliance businesses.”
The mechanisms by which GE developed this world-beating business model illustrate neatly how the growth of the grid and the growth of the amoral corporation went hand in hand. Most homeowners were not interested in the many fancy appliances on view in the futuristic showrooms set up by the power companies from 1910 onward. But there was one thing they all wanted: electric light. And that was motivation enough to have power lines brought into their homes. The company selling most of the lightbulbs was GE, which owned the patents thanks to the company’s founder, Thomas Edison. By 1911, GE controlled seventy percent of the U.S. lightbulb market—a much higher figure than the number that offi cially established it as a monopoly under the Sherman Antitrust Act of 1890. How did the company achieve this? Simple: It secretly owned another company called National Electric Lamp Company, and through National it bought up its eighteen largest competitors. To keep up the pretense GE even sued National in 1904, for patent infringement. It was all a sham; GE was suing itself. And yet, even when this sham was discovered, GE managed to hold on to its two hundred lightbulb patents and, thus, controlof the market.
In the great economic slump of the 1930s, GE’s sales declined along with everyone else’s, but its control of the lightbulb market saw it through the Depression just fi ne. Even in its worst year, 1933, the lightbulb division made a small profi t. Electric light had become the one thing nobody wanted to be without.
There was genuine demand for lightbulbs, which can’t be said of the appliances on offer. Its lightbulb business is just a small-scale representation of the way GE conducted itself through the first few decades of
electrification. There were fifteen sizable electric companies in the early 1880s, according to Nye. By 1893 there were just two—GE and Westinghouse—and it was GE that went on to shape America.
The first step in building a company like GE or Westinghouse, after pooling patents to better control the market and to avoid costly legal battles over similar patents, is to acquire any smaller regional companies in order to reduce competition and create larger, homogenous markets for greater economies of scale.