B. Erosion of the Legacy Grid
These underpinnings of the grid began to erode as a result of a series
of dramatic events beginning with the OPEC oil embargo in the
early 1970s. This has caused essentially all of the positive trends of
the first hundred years to be reversed. Economies of scale were
eliminated by risk and rising costs of resources, construction and
operations. The price of electricity began to increase. Load growth
stalled. Grid reliability declined. Expansion and improvement of the
grid slowed to the point that depreciation now exceeds new capital
investment. Environmental impacts and resource sustainability
became major issues. These changes in the foundations of the grid
have accelerated over the past decade.
Furthermore, the grid began facing new challenges and complexities
for which it was not designed. At the root of these new challenges is
the emergence of alternatives to traditional exclusive monopoly
utility electricity supply. Wholesale and retail competition has
emerged, as have energy generation and management owned and
operated by customers on their own side of the utility meter.
As a result of all of this, the national Energy Advisory Council
concluded in its report to the United States Department of Energy
(USDOE),