WASHINGTON — The return of rapid load growth still is a relatively new phenomenon for the power industry, but demand has seen such cycles several times before, speakers said at the annual half-day meeting of the Energy Bar Association’s Electricity Steering Committee.

Electricity started off as a niche product, with fully distributed power generators serving mansions and some industrial customers in the late 19th and early 20th centuries, recalled Hannah Wiseman, professor of law at Penn State University.

Appleton, Wis., was home to the first grid in the country, with a hydropower dam serving multiple homes and the lights dimming as water flow slowed.

At first, industry preferred distributed power, and residential customers used electricity only for lights, but that expanded to new products like electric clocks. It was not until World War I that industrial use took off and the grid as we know it started to be patched together, Wiseman said.

“We start to see more centralization, and we start to see more federal involvement, which means we also start to see more public involvement in power,” Wiseman said. “So the War Department in World War I became directly involved in determining where the electricity needed to be generated most.”

The department helped to wring efficiency out of the grid by determining when coal power needed to be dispatched due to hydropower not producing enough to meet demand, she said.

Under the New Deal, electricity service started expanding to more rural areas, such as through the Tennessee Valley Authority. Then World War II and its demands on industry made the backbone transmission system developed in the 1930s a valuable investment. Demand surged during the war as industry built massive fleets of airplanes that needed aluminum, she said.

“Historians say that that previous buildout that was in the 1930s was viewed as an overbuild,” Wiseman said. “Private industry said: ‘Will the rural customers … use this much power? Do we need all this transmission?’ It turned out to be quite important.”

After the war came the golden age of the investor-owned utility, when demand grew by 416% between 1949 and 1969, with residential demand growing even faster at 540%, Harvard Law School’s Ari Peskoe said.

There was a massive housing boom after the war, and the electric industry tried to maximize their individual power demand.

“If you get what was called ‘a total electric home’ at the time, where it’s using electricity for heat, hot water for cooking; that’s a massive increase in the amount of electricity that house is going to consume,” Peskoe said.

From 1970 to 1990, demand grew by 100%. A survey by the Department of Energy in 1979 found homes that only had electricity used three times the amount of power as homes that had another fuel such as gas or oil, Peskoe said. The industry tried to maximize those total electric homes with direct financial incentives and via advertising in the early days of television.

“There’s some great commercials there,” Peskoe said. “You can see Ronald and Nancy Reagan promoting all sorts of electricity use in the home.”

The rapidly growing demand coupled with efficiencies from new, larger power plants meant that adding capacity to the grid lowered costs for everyone, Peskoe said. That led to similarly rapid growth in power demand, which had to be managed either by taking turns building new plants or working together on joint projects.

“Consistent with Section 202(a) of the Federal Power Act, the Federal Power Commission was focused on encouraging utility coordination at the bulk power system,” Peskoe said. “So, for instance, in 1964, it publishes a two-volume national power survey, and the theme of that is basically the benefits of coordinated growth. That is, utilities ought to be interconnecting more. They ought to be trading more. There ought to be more joint planning, even potentially joint dispatch.”

That all should sound familiar to anyone who knows the FPC by its newer name, FERC, and while the commission, states and industry are grappling with demand growth and the need to meet it now, the days of power too cheap to meter are over.

Former FERC Commissioner Philip Moeller, who recently left the Edison Electric Institute, started at the commission in 2006 when the economy was booming, but then the 2008 financial crisis hit. That contributed to low demand growth, but it also led central bankers to cut interest rates to zero in advanced economies.

“We had a period of extraordinary monetary policy where interest rates were basically zero for almost 10 years,” Moeller said. “I mean, that’s an exaggeration, but not too far off.”

In a capital-intensive industry where investments last for decades, the cost of borrowing money is important, Moeller said. Those zero interest rates are a thing of the past. But when it comes to the electric industry, the regulatory framework also is vitally important, said Moody’s Ratings Vice President Jairo Chung. About 50% of the credit risk in Moody’s analyses comes from the regulatory side of things.

“We look at the judicial underpinning of the regulatory framework where the authorities operate,” Chung said. “So, this could be state regulation, but also federal-level regulation, and we also look at the consistency and predictability of the law.”

Other ratings agencies assign utility credit scores to states, but Moody’s instead is more granularly focused on how specific utilities work within their state frameworks because that can vary across firms under the same jurisdiction, she said.

Maryland People’s Counsel David Lapp criticized agencies that rank states because he has found the rankings to be arbitrary, with different agencies scoring his state very differently.

“My primary concern as the customer advocate is regulators overusing or being oversensitive to how a rating agency may categorize the state as a whole,” Lapp said. State rankings can change, with no impact on a utility’s credit rating, which is more important to investors than ratepayers, he said.