The power delivery system is largely based on technology developed in the 1950s or earlier and installed as much as 50 years ago. The strain on this aging system is beginning to show, particularly as consumers ask it to do things it was not designed to do. Energy transmission has been further complicated by efforts to deregulate power generation and by the confusion arising from the overlapping jurisdictional authority of federal and state regulators. Among the numerous challenges facing the electricity industry are the rapid increase in wholesale transactions between such entities as independent power producers and distribution utilities; increasing grid congestion; continuing low levels of infrastructure investment; the application of technology to allow more options for consumers; the growing need for better grid security; and the precision power requirements of a digital society.
In the 1990s investment in the US electricity sector declined from its historic average of well over 20% of revenues to 12% and a growing proportion of this investment has been devoted to power generation rather than in improvements to the power delivery system. According to EPRI this period of low investment saw the economic cost of power disturbances from minor interruptions and major outages grow to roughly US$100 billion per year in the US. In other words, for every dollar spent on electricity, consumers are spending at least 50 cents on other goods and services to cover the costs of power failures.
The increasing discrepancy between the growth in demand for power and the expansion of the delivery system to meet that demand poses a significant stress. From 1988 to 1998, US electricity demand rose by nearly 30% while the transmission network’s capacity grew by only 15%.