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MOTOR


DIAGRAM SHOWING AN EXAMPLE OF LONG-DISTANCE
ELECTRIC POWER TRANSMISSION AND
DISTRIBUTION.


POWER STATION
2000 VOLT GENERATORS IN MULTIPLE


figure 1.3. Diagram Showing an Example of Long-Distance Electric Power Transmission and Distribution, 1895
Source: S. Danna Greene, ˜˜Distibution of the Electrical Energy from Niagara Falls,™™ Cassier™s Magazine, 8 (1895), 358.
Chapter 1: Invention and Spread of Electric Utilities 17

Paris in 1881.56 Three years later, a similar system, comprised of a
conductor surrounded by a split overhead pipe, was used on the tramway
between Frankfurt and Offenbach constructed by Siemens for the Wein-
mann Bank.57 Despite these early efforts, the widespread adoption of
electric trams in Europe did not occur until after trams had become well
established in the United States, already a leader in the adoption of new
technology in public transportation.58 But taking the lead from American
innovators, by the late 1890s the electric streetcar had ˜˜completely trans-
formed European urban transportation.™™59
Thomas Edison also experimented with electric railways. In 1881, he was
given a contract by Henry Villard, president of the Northern Paci¬c Railroad,
to construct a 2.5-mile electric railway at Menlo Park, New Jersey, which he
proceeded to do. If the railway proved to be successful, Villard was to pay for
installation of ¬fty miles of electric road in the wheat region of the northwest.
The bankruptcy of the Northern Paci¬c in 1883 caused Villard to withdraw
from the presidency of the railroad and return to Germany in January 1884
(where he stayed four years before returning to the United States), and
Edison™s attention was directed elsewhere.60
The ¬rst commercially successful, large-scale urban electric tramway in
the world was built by the ¬rm of Frank J. Sprague in Richmond, Virginia,
in 1887“1888. Sprague accepted a contract that called for the construction
of a system of forty cars, twelve miles of track, and a 375-horsepower
power plant. Once the task was undertaken, it became clear that Sprague
had underestimated the challenge, and the project ultimately cost him
nearly twice what he was paid. Nevertheless, the system was very suc-
cessful. Sprague solved numerous engineering problems during construc-
tion, and the Richmond system became a prototype for urban electric
tramways.61 The electri¬cation of urban tramways was quite rapid after
this. In 1890, of the 5,783 miles of tramways in existence in the United
States, only 16 percent were electri¬ed; but by 1902, of the 16,652 miles in
existence, 97.5 percent were electri¬ed. The corresponding 1902 ¬gures
were 59 percent for Great Britain and 91 percent for Germany.62
Another area where electricity became a part of intra-urban transit was
in subways. Once transit became motorized, the desirability of removing it
from street traf¬c became apparent, particularly in areas of high density.
This could be done either by elevating the vehicles above the level of the
streets or by putting them underground. When steam engines were the
motive power, elevated railways became common in many large cities. The
combustion products of steam engines generally made them unsuited for
underground use, although London did use steam engines underground
beginning in the 1860s.63 Virtually all other urban subway systems were
electri¬ed from the beginning.
The earliest inter-urban lines, initially extensions and connections of
existing suburban lines, were established shortly after the development of
Global Electri¬cation
18

trams.64 The electri¬cation of main-line railroads in Europe and the United
States followed, gaining momentum after the turn of the twentieth century.65

the pattern of development of the electric
utility industry
Once all of the components of the technology had been developed, the
process of electrifying homes, shops, factories, tram lines, and farms could
begin. While the story in each country had unique aspects, the process of
electri¬cation followed certain patterns. Globally, urban areas became
electri¬ed before rural ones. There was a strong preexisting demand for
light, power, and transportation. Over time, new devices to connect to the
system were invented or adapted, including products such as electric irons,
fans, water heaters, ranges, vacuum cleaners, shavers, toasters, hot plates,
and refrigerators.66 Every city and town in the world wanted electric ser-
vice. By the turn of the century, or shortly thereafter, with the exception of
the least developed areas of the world, nearly every city and most of the
larger towns had electric service of some type, at least in central areas.67
Factories and plantations where processing occurred were quick to adopt
electricity and occasionally began supplying surrounding areas, especially
when they were geographically isolated.68 Electric motors were quickly
adopted for industrial uses. With the development of the steam turbine and
improved transmission technology, an increasing number of systems
extended their networks to suburban and surrounding areas, and smaller
towns were integrated into networks.69
Hydroelectricity™s role came early in the process of electri¬cation and
played an important role in stimulating developments in transmission.70
The costs of hydroelectric production were almost entirely capital costs;
because there was no fuel to acquire and burn, there was very little addi-
tional (marginal) cost to putting those facilities to use. The initial capital
cost of a hydroelectric plant, of course, could be very large. By 1895, the
crucial year that alternating current was selected for the hydroelectric
project at Niagara Falls, there was a growing number of ˜˜long-distance™™
alternating-current systems in operation, the vast majority of which were
hydroelectric. The longest and highest voltage system in the world was the
largely experimental line from Lauffen (where a relatively small, 150 kW
hydroelectric generator provided electricity to a cement plant) to Frankfurt,
Germany, at 175 km (109 mi) and a quite remarkable 40,000 volts.71 There
were, in 1895, six other transmission lines ranging from seven to eighteen
miles in length and carrying current of 6,000 to 11,500 volts in California,
Connecticut, Mexico, and Italy, and twenty-four smaller lines in the United
States, Mexico, Canada, and Europe.72
The size and scale of potential networks increased dramatically after the
turn of the century with technical developments in transmission. By 1914,
Chapter 1: Invention and Spread of Electric Utilities 19

there were ¬fty-¬ve transmission lines of 70,000 to 150,000 volts in the
world, ranging in length from 19 to 245 miles. Of the highest-voltage lines,
¬fteen of the top twenty were in the United States. The eleven highest-voltage
transmission lines, and twenty-one of the top twenty-¬ve lines, were operated
as part of hydroelectric power systems, con¬rming its role in the development
of transmission systems. Information on the longest, highest-voltage lines
outside the United States is presented in Table 1.1. While these lines could be
found all over the world, none of them crossed national boundaries in 1914.
The increases in generation and transmission capabilities enabled the size
of electric utilities to rise dramatically after 1900. As electricity in the
household came to be viewed no longer as a luxury but as an essential
commodity, it became imperative in developed countries to extend service
to rural areas, often under the stimulus of governments at various levels.
This process began effectively in the 1920s and continued at varying paces
throughout the century.73

the capital intensity of the central-station electric
utility and its implications
The equipment needed to generate, transmit, and distribute electricity had
distinctive economic characteristics. It was expensive and relatively com-
plicated (hence the need for skilled labor to manufacture and maintain it),
and it quickly became obsolete. There was a continuous need for replace-
ment, upgrading, and new investment. The most salient feature of the
electric utility industry was its extraordinarily high capital intensity.74 The
relative capital intensity of the central-station electric power industry in the
United States, for example, is illustrated in Figure 1.4. With the exception
of steam railways during that industry™s formative years, no other public
utility or manufacturing industry came close to approaching the capital
intensity of the electric power industry from its inception in the late nine-
teenth century up to World War I. After the war, as output expanded
dramatically and new uses that vastly improved the load factor were found,
the capital/output ratio tended to converge toward that of other industries,
but it still remained quite high.75 This pattern was repeated, at varying
paces, throughout the developed world in the twentieth century.
High capital intensity in¬‚uenced the industry™s development in several
ways. In every country, a huge capital investment had to be made before an
electric utility could even begin operation. Expensive equipment had to be
bought and installed, and interest costs had to be paid before any revenue
was received. Initial investment and rapid subsequent expansions simply
could not be ¬nanced out of retained earnings; outside sources of funds
were essential. Capital was not easy to obtain because starting a utility was
perceived to be a very risky proposition in the early days. The initial and
constantly increasing need for capital led to both traditional ¬nancing
Table 1.1. The 25 Highest-Voltage Transmission Systems Outside the United States, 1914

Company Voltage
Name (000s) Type Distance (miles) Plant Location, Terminus
115 144
Inawashiro Hydroelectric hydro Lake Inawashiro, Tokyo, Japan
Power Co.
110 135
Hydro-Electric Power hydro Niagara Falls, Toronto, Canada
Commission of Ontario
110 35
Lauchhammer AG steam Lauchhammer Mines, Riesa,
Germany
110 47
Mexican Northern Power Co. hydro Boquila, Parral, Mexico
110 105
Ebro Irrigation & Power Co. hydro Serge River, Barcelona, Spain
110 86
Chile Exploration Co. steam Tocopila, Chuquicamata, Chile




20
100 87
Shawinigan Water & hydro Shawinigan Falls, Montreal,
Power Co. Canada
100 43
Tata Hydroelectric Co. hydro Khopoli, Bombay, India
100 65
Pfalzwerke, AG steam Hamburg, Ludwigshafen,
Germany
88 124
Societa Italiana di hydro Pescara River, Naples, Italy
`
Elettrochimica
88 51
Rio de Janeiro Tramway, hydro Lages River, Rio de Janiero,
Light & Power Co. Brazil
88 56
Sao Paulo Electric Co. hydro Soracabo, Sao Paulo, Brazil
˜ ˜
88 64
Tasmania Hydroelectric & hydro River Ouse, Hobart, Tasmania
Metal Co.
85 169
Mexican Light & Power Co. hydro Necaxa, Mexico City, Mexico
85 80
Toronto Power Co. hydro Niagara Falls, Toronto, Canada
84 30
Victoria Falls & Transvaal steam Vereenigung, Johannesburg,
Power Co. South Africa
Company Voltage
Name (000s) Type Distance (miles) Plant Location, Terminus

80 107
Energ±a Electrica de Cataluna hydro Pyrenees Mountains, Barcelona,
´ ´ ˜
Spain
77 48
Katsuragawa Denryoku hydro Komahashi, Tokyo, Japan
Kabushiki Kaisha
72 93
City of Milan hydro Grossoto, Milan, Italy
72 72
Societa Generale Elettrica hydro Cedegolo, Milan, Italy
`
dell™ Adamello
70 158
Hidroelectrica Espanola hydro Molina, Madrid, Spain
´ ˜
Molina
70 71
Compan±a Hidroelectricae hydro Santiago River, Guadalajara, etc.,
´
˜´
Irrigadora del Chapala Mexico




21
70 155
Societa Elettricita Rivieradi hydro S. Dalmazzo, Novi, etc., Italy
` `
Ponente
70 73
Swedish State Railways hydro Porjus, Kiruna, Sweden
66“72 77
City of Winnipeg hydro Point Dubois, Winnipeg, Canada
Source: U.S. Department of Commerce, Bureau of the Census, Central Electric Light and Power Stations and Street and Electric Railways, 1912
(Washington, DC: USGPO, 1915), opposite p. 132.
Global Electri¬cation
22

20


18
Electric Light and
Power
16


14

Steam Railways
12


10
Street and Electric
Railways
8
Telephone
.
6


4
All
Manufacturing
2


0
1870 1880 1890 1900 1910 1920 1930 1940 1950 1960


figure 1.4. Capital/Output Ratio for U.S. Utilities, Transportation, and
Manufacturing, 1880“1950
Source: Melville J. Ulmer, Capital in Transportation, Communications, and Public Utilities
(Princeton: Princeton University Press, 1960), 256“57, 320, 374“75, 405“6, 472“73, 476, 482,
486; Daniel Creamer, Sergei P. Dobrovolsky, and Israel Borenstein, Capital in Manufacturing
and Mining (Princeton: Princeton University Press, 1960), 265“67.


methods (issuance of equity and debt) and to the design of imaginative ways
of attracting new investment, primarily through the use of leverage via
holding companies and by drawing funds from abroad.76
The large amount of capital and the near impossibility of employing that
capital in any other use once it was in place had other major implications
for the industry. The revenues required to cover operating costs were a
small portion of the total revenue required to also service the huge capital
costs. If revenue only covered operating costs, a utility could remain in
operation but would be unable to maintain or expand its capital. The
difference between the level of prices that would permit a utility to operate
in the short run versus the level that would enable it to operate in the long
run was large; it created a situation that could contribute to uncertainty in
consumers™ minds over what level of prices was proper or fair. Competition
was problematic because it could force prices to a level that covered only
short-run operating costs, thus discouraging future investment and making
potential competitors reluctant to compete with an existing ¬rm. These
economic factors eventually resulted in utilities becoming monopolies in
their service area, with the market power to earn supernormal pro¬ts. The
growth in scale economies in generation and the inherent scale returns in
network expansion led to fewer utilities serving larger areas, each
increasing its apparent monopoly power and creating suspicions about the
Chapter 1: Invention and Spread of Electric Utilities 23

prices being charged. The utilities were not unfettered, however. Distri-
bution systems had to use land that the utility did not own, typically the
rights-of-way of public streets, and this generally required the assent of
government, often in the form of a franchise, which required some political
accommodation between the utility and community it served.
Because electricity cannot easily be stored, nor can it be traded among users
once it is generated, it becomes possible for a utility to engage in price dis-
crimination, charging different prices to different consumers or groups of
consumers, a practice that could well lead to higher pro¬ts. This situation
could pit groups of consumers against one another, and the tension thus
produced could be played out in the political arena. As electricity became more
ubiquitous and more essential to modern life, the requirement that utilities
have government approval at least for their distribution systems made them
dependent on politicians, made their behavior an object of political concern,
and also created opportunities for corruption. These problems were com-
pounded when the utilities were owned and operated by foreigners.

governments and the electric utility industry
The state in its various forms “ including municipal, provincial, and national
governments “ has participated extensively, as both regulator and owner, in
the electric utility industry. In summarizing a series of papers given at the Third
World Power Conference in 1936, William H. England noted, ˜˜Electric and
gas utilities in the various countries have developed in a variety of ways. In
some countries foreign capital has played a major part, in other nations public
ownership and operation has dominated these industries, in other lands
private control has been entirely or almost entirely responsible for their growth
and development, while in still other lands private companies, municipal
plants, State or Province ventures, and mixed public and private schemes have
each contributed in building and operating these industries.™™77
The precise nature of government participation has varied tremendously
in different countries and over time, and its desirability often was the cause
of bitter political battles.78 As cities became electri¬ed, utilities virtually
everywhere had to obtain municipal franchises, which invited some mea-
sure of public oversight or control. Many municipalities already had
experience with water and gas utilities, so some basic rules, regulations, and
procedures previously existed. One feature of the utility franchise that was
common in many countries was that municipalities retained the right to
purchase or take over the utility after the expiration of the franchise, which
could be granted for as little as a decade or as long as half a century.79
As electric utilities grew in size and as long-distance transmission became
increasingly important, government involvement and concern tended to
move to higher levels.80 The First World War placed a great demand on
resources and awakened governments to the necessity of strategic planning.
Global Electri¬cation
24

They came to realize that electric utility networks were strategically
important and that large regional, even national, systems would be desir-
able. The governments of many countries studied the possibilities of
rationalizing transmission and distribution systems and creating national
grids, either through direct public control or by encouraging private electric
utilities to adapt their own systems.81 These plans foreshadowed the
nationalization of electric utilities that occurred in many European coun-
tries in the post“World War II era, a process that also took place in many
former colonial dependencies (principally in Africa and Asia), in Central
and South America, and, of course, in the centrally planned economies.
In countries where foreign companies participated in electri¬cation, the
relationship between electric utilities and governments (at the national or
subnational level) could be even more complicated than it was where the
con¬‚icts were simply between domestic consumers, domestic private capital,
and the various levels of governments. Foreign investors were crucial, of
course, and they were encouraged and welcomed at ¬rst, but once the
electricity supply was established and deemed essential, complications ensued:
Relationships between the company and its consumers, suppliers, and com-
petitors and with labor were subjected to close scrutiny and frequent inter-
vention by the state. Foreign-owned companies often were subjected to severe
criticism; after all, the provider of this critical service was a monopolist, and in
most cases the owner was far away. When domestic economic times became
dif¬cult, particularly when exchange rates deteriorated, foreign-owned electric
utilities, with their large amount of ¬xed and unmovable capital, became
targets for extreme government intervention. In many cases, the government
took actions that led to the redirection, withdrawal, or con¬scation of foreign
capital, through either purchase or expropriation “ a process called by us
˜˜domestication™™ of the electric utility sector.

trends in electricity production and the implication
for capital investment
Today, there is a massive amount of data, much of it quite detailed, on the
electric utility industry worldwide.82 Most countries (or subnational
political units), however, did not collect data on capacity, investment, and
costs, much less patterns of consumption, in any comparable, systematic
way until well into the twentieth century. Only scattered data are available
for the early years of the industry™s history. The only data that are con-
sistent for a large number of countries across a long time period are for total
electricity production.83 Because all electricity produced must be consumed
instantaneously, the only differences between production and consumption
in various countries are line losses.84 Furthermore, because international
trade in electricity was relatively minor (as will be shown below), national
production and consumption ¬gures should be roughly comparable.
Chapter 1: Invention and Spread of Electric Utilities 25

100000
Switzerland
Sweden
United States Germany

United Kingdom
10000
Millions of kWh (per thousand population)




Canada
France
Norway

1000




100


Argentina
Italy
China
10
Peru

Dominican
Czechoslovakia Republic
Bulgaria
Japan
1
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990


figure 1.5. Per Capita Output of Electricity, Selected Countries, 1900“1985
Source: Bouda Etemad and Jean Luciani, World Energy Production 1800“1985 (Geneve:
`
Librarie Droz, 1991), 91“165.


A major in¬‚uence affecting the total output of electricity, of course, was
population. Figure 1.5 presents information on the growth of per capita
production of electricity for sixteen countries for which we have long-term
data. Fortunately, these countries include some whose economies developed
early as well as others whose economies developed later or remained less
developed.85 The vertical axis in this chart is logarithmic in scale, so a
straight line represents a constant rate of growth of output (the steeper the
slope of the line, the higher the rate of growth). The pattern of growth in
per capita production across these countries is quite clear: There was very
rapid early development followed by slower but steady growth. The ¬gure
also shows that there were signi¬cant differences between countries in the
level of per capita electricity production and that these differences tended to
persist over time. Many of the differences were related to the level of
economic development. China, for example, had roughly the same amount
of per capita production in 1950 as Japan did in 1910 or Italy did in 1900.
Growth in electricity production requires the expansion of capacity,
which must be funded through domestic private capital, public capital, or
foreign capital. Table 1.2 presents estimated growth rates for ¬fteen
countries (those with the longest data series are listed ¬rst).86 Overall
growth rates in per capita production (essentially equivalent to growth rates
in consumption) for countries with the longest series of data (1900“1902 to
1985) were roughly 5“7 percent per annum. If capacity grew at the same
rate as output, the implications for capital investment are clear. With
overall growth at 5 percent per annum, capacity would have to double
Table 1.2. Per Capita Electricity Production Growth Rates, Selected Countries, 1900“1985

Growth Rate Early Period Later Period
Country Years (% per annum)† Early Period Growth Rate Later Period Growth Rate
1900“85 4.9 1900“19 14.6 1920“85 3.7
Switzerland
1900“85 6.6 1900“18 18.6 1919“67 5.1
Italy
1901“85 6.2 1901“17 29.0 1918“85 4.5
Norway
1902“85 5.4 1902“29 9.1 1930“85 5.2
United States
1907“85 7.5 1907“29 10.5 1950“85 7.4
Japan
1913“85 5.6 1913“19 9.2 1920“85 5.6
Sweden




26
1913“85 5.5 1913“29 8.4 1930“85 5.6
Germany
1913“85 6.0 1913“29 13.8 1950“85 5.6
France
1919“85 3.9 1919“29 11.9 1930“85 3.4
Canada
1921“85 6.4 1921“29 13.2 1930“85 5.7
United Kingdom
1923“73 6.6
Hungary
1924“73 12.2
Bulgaria
1929“85 9.2
Dominican Rep.
1940“85 10.42
China
1950“85 4.72
Peru

Growth rates are based on regressions of time on the log of per capita electricity production.
Source: See Figure 1.5
Chapter 1: Invention and Spread of Electric Utilities 27

roughly every fourteen years. With a 6 percent growth rate, capacity would
have to double every twelve years, while with a 7 percent growth rate it
would have to double roughly every ten years. Most countries exhibited
much higher growth rates for earlier periods than they did for later peri-
ods.87 This highlights just how important ¬nancing was for the early
periods of the industry™s history in nearly all countries. With a growth rate
of 18 percent per annum, as Italy had from 1900 to 1918, capacity would
have had to double a little less than every four years. That represents a
substantial amount of new capital that had to be raised.

characteristics of a maturing industry:
a snapshot at 1933
By the second quarter of the twentieth century, the electric utility industry
was beginning to mature. Electri¬cation had spread to a greater proportion
of the world™s households, new electrical devices were being adopted, and
rural areas were becoming integrated into networks in an increasing
number of countries.88 Factories in the industrialized world became almost
completely electri¬ed. Electric drive enabled greater ¬‚exibility in the
organization of the factory ¬‚oor, thus enhancing productivity.89 The decade
of the 1920s also witnessed grand plans for ever larger and more complex
regional and national networks “ Superpower and Giant Power in the
United States and the national grid in Britain, for example.90
The publication in 1936 of the ¬rst statistical yearbook of the World
Power Conference, containing data for 1933 and 1934, provides an oppor-
tunity to compare some aspects of the structure of the industry in various
countries of the world.91 Figure 1.6 presents a cross-country comparison of
the percentage of the population that lived in areas supplied with electricity,
a measure of the potential availability of electric service.92 It is clear that the
smaller, more densely populated Western European countries had done the
best job of providing the opportunity for electric service to their residents.
This is not surprising given their size, level of development, and access to
capital. Several larger, highly developed countries, such as Germany and the
United States, had progressed tremendously but still had a substantial portion
of their populations residing in areas where electric service was not available.
In other countries, some (but not all) of which had relatively high income, a
substantial amount of work remained to be done as of 1933.
By 1933, the uses of electricity were quite varied, including traction;
public street lighting; private lighting in homes, shops, and of¬ces; metal-
lurgical processes; and powering motors in factories. While the relative
importance of each of these uses varied considerably across countries,
electricity provided for industrial uses and by industrial establishments was
exceedingly important.93 Table 1.3 contains information on both the
consumption of centrally generated electricity by industry and the
Global Electri¬cation
28

100%


90%



80%


70%


60%



50%


40%


30%


20%



10%


0%
Be ds
m




Fr g
ce




l
n

y

ria

(Is kia

)
.

H da

ry




G nd
e




Es a
ia

d

ia

Au o

N Mo a
co

Cs


s
ga
he rk




xe d




Po y




.S




Au d
ria




Po e
Bu nd




na
ul
lia an




e


ni
r




ai




ec




i



R lan



ic


i
l




ar

ew ton



an



ch tral
Sw giu

Lu rlan




ga

an




at
bu



Ita
n




an




h. roc

di
a




to



nb



a




la
ey va




ex




Tu
rtu

Sp




st




la




hi
U
rla




m




re
m




an




St


lg




In
Ire




a
m
ic




un

nl
m
l




s
ta
rk slo




M
er




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en




e




-V




Fi




ou
C




ee




E.
itz




G




n
D




o
et




er



Fr
ch




h
N




ra




ut
th




et
N




en
ze




sh
st




So
or
C




Iri




Fr
Au



Tu




N




figure 1.6. Percent of Population in Areas Supplied with Electricity, 1933
Source: Frederick Brown, ed., Statistical Year-Book, 1933 & 1934 (London: World Power
Conference, 1936), 102.



Table 1.3. Industrial Electricity, Selected Countries, 1933

Industrial
Consumption as Percent of Total Percent of Industrial
Percent of Total Capacity (kW) Establishment
Consumption, Provided by Electricity Sold
Central-Station Industrial Outside
Utilities Undertakings Establishment
Austria 23 22 64
Belgium n.a. n.a.
72
Czechoslovakia n.a. 60 15
Denmark n.a. 19 0
Estonia 67 49 0
Finland n.a. n.a.
92
France 65 32 39
43‡
Germany n.a.
66
Greece 45 55 0
Hungary 62 12 0
Ireland 30 4 0
Italy n.a. n.a.
75
Latvia n.a.
57 22
Luxembourg n.a. 100 7
Netherlands 53 14 14
Chapter 1: Invention and Spread of Electric Utilities 29


Industrial Percent of Total Percent of Industrial
Consumption as Capacity (kW) Establishment
Percent of Total Provided by Electricity Sold
Consumption, Industrial Outside
Central-Station Undertakings Establishment
Utilities

16†
Norway 58 2
Poland n.a. 40 2
Portugal 55 23 0
Romania n.a. 43 4
Spain n.a. n.a.
69
Sweden n.a. n.a.
79
Switzerland 39 25 6
30Æ
U.S.S.R. n.a. n.a.
Canada 73 21 0
United States 50 23 4
Mexico 55 17 3
Morocco n.a. n.a.
33
Tunisia 44 27 0
South Africa n.a. n.a.
70
37§
China n.a.
77
Japan n.a. 10 0
India n.a. n.a.
6
Neth. East Indies 31 15 4
South Australia n.a. n.a.
62
Aus. (Victoria) n.a. n.a.
35
New Zealand n.a. n.a.
25
Source: Unless otherwise noted, from Brown, Statistical Year-Book, 1936, pp. 103, 108“9.

The ¬gure is the proportion of output from C. Krecke and G. Seebauer, ˜˜Organization and
Regulation of the German Electricity and Gas Supply,™™ Transactions, Third World Power
Conference, vol. 5 (Washington, DC: USGPO, 1938), 131.

The ¬gures are for 1935 from Brown, Statistical Year-Book, 1938, pp. 129, 134“5.
Æ
The ¬gure is for the year 1935 from U.S.S.R. Committee for International Scienti¬c and
Technical Conferences, ˜˜National and Regional Planning and Their Relation to the
Conservation of the Natural Resources of the U.S.S.R.,™™ Transactions, Third World Power
Conference, vol. 6 (Washington: USGPO, 1938), 526.
§
The ¬gure is for 1932 from C. Yun, ˜˜A Statistical Investigation of Electric Power Plants in
China, 1932,™™ Transactions of the World Power Conference, Sectional Meeting, Scandinavia,
vol. 2 (Stockholm: Svenska Nationalkommitten for Va
´¨ ¨rldkraftkonferenser, 1934), 530.


production of electricity by industrial establishment. The ¬rst column of
¬gures, which refers only to electricity produced by central stations, con-
tains the proportion of total electricity consumed by industry. These ¬gures
range from around 25 percent (Austria and New Zealand) to over 90
percent (Finland), but most of them are quite large. The second column of
¬gures shows the proportion of a country™s total electricity-generating
Global Electri¬cation
30

capacity from isolated plants installed by industry, a ¬gure that varied
considerably and that also could be quite high, as in Norway. The third
column of ¬gures provides information on the proportion of electricity
produced by isolated industrial plants that was sold outside the establish-
ment itself. With the exceptions of Austria and France, virtually all power
produced by industry in isolated plants was used by the ¬rm that produced
it. Most industrial establishments eventually abandoned their isolated
plants and connected to central-station networks.
Information contained in the statistical yearbook also makes it possible
to determine the extent to which electric energy was traded internationally
in 1933.94 Only a handful of countries imported or exported more than a
small fraction of the electricity produced.95 Capital ¬‚owed across borders a
lot more freely than did electricity. There were a few exceptions. Switzerland
and Austria exported 26 percent and 13 percent, respectively, of the elec-
tricity produced there (and imported virtually none). The country with the
most balanced trade in electricity was Denmark, which imported an
amount equal to 9 percent of its production and exported 6 percent of its
actual production. Canada exported 6 percent of its production and
imported virtually none, while the United States imported the equivalent
of 1 percent of its production.96 Germany, France, Italy, Czechoslovakia,
and Mexico all reported importing 4 percent or less of the amount pro-
duced domestically. The low level of international trade in electricity is
remarkable.97

the extent of foreign ownership and control
of electric utilities
This book is about multinational enterprise and global electri¬cation. We
have sought to collect information to measure the participation of multi-
national ¬rms in some meaningful way. We chose to focus on four
benchmark time periods and then to assemble data for as many countries as
possible for those years. The years selected were (1) 1913“1914, the eve of
World War I, by which time cities had electricity, long-distance transmis-
sion had become established, and regional networks had begun to take
shape; (2) 1928“1932, to account for the disruptions caused by the First
World War and the development of larger networks after the war, some of
which were beginning to become national in scope; (3) 1947“1950, to
capture the changes wrought by the Great Depression, the Second World
War, and the immediate postwar nationalizations; and (4) 1970“1972, near
the end of our story, when the domestication of electric utilities was
practically complete.
We thought carefully about what we meant by ˜˜foreign ownership and
control,™™ and ultimately we settled on the following de¬nition: If a ¬rm
(directly or indirectly) had an equity interest and a signi¬cant degree of
Chapter 1: Invention and Spread of Electric Utilities 31

Table 1.4. Foreign Ownership of Electric Utilities, Four Periods: Percent of a
Country™s Capacity, Output, or Assets of Electric Utilities Owned and
Controlled by Foreign Firms, 1913“1914, 1928“1932, 1947“1950, and
1970“1972*

1913“1914 1928“1932 1947“1950 1970“1972
Europe
1001
Albania x 100 0
60“902 203 04
Austria 0
105 106
Belgium 0 0
957 758
Bulgaria 0 0
09 010 011
Czechoslovakia 0
Denmark 0 0 0 0
2212 913
Finland 0 0
ca.15“2514 ca.10“1515 016
France 0
<1018
ca.1017
Germany 0 0
019 020
Gibraltar 0 0
1“221 5“1022 023
Great Britain 0
(U.K.)
ca.5024 ca.80“8525 ca.8526 027
Greece
<2028 <2029
Hungary 0 0
030 031
Ireland 0 0
3032 033 034
Italy 0
9535 5036
Latvia 0 0
037 ?38 039 040
Luxembourg
ca.10“2041 042
Malta 0 0
043
Netherlands 0 0 0
ca.544 ca.245
Norway 0 0
<4546 7447
Poland 0 0
?48 ca.3049 ?50
Portugal
9551 5052
Romania 0 0
9053 054
Russia/U.S.S.R. 0 0
29/3355 2756 057
Spain 0
058
Sweden 0 0 0
1059 060
Switzerland 0 0
9561 40“50/8562
Yugoslavia 0 0
Australasia
1563 464
Australia 0 0
1865
New Zealand 0 0 0
Africa
10066 067 068
Algeria 100
90þ69 90þ70 90þ71
Egypt 0
10072
Ethiopia x 80“100 0
10073 10074 10075 076
Kenya
10077
Libya 100 80“100 0

(continued)
Global Electri¬cation
32

Table 1.4 (continued)

1913“1914 1928“1932 1947“1950 1970“1972

10078 079
Morocco 100 100
95þ80
Mozambique x x x
081 ca.1082 ca.1083 ca.1084
Nigeria
ca.7885 6586 087
South Africa 0
10088
Sudan x 0
10089 090
Uganda x 0
Asia
10091 4092
Burma 0
(Myanmar)
<1093 51/62/6594
China 0 0
ca. 1795 096 5897
Hong Kong 0
ca.8098 3199 0100
India 0
100101 100102 0103
Indonesia 0
(Dutch E. Ind.)
0104
Japan 0 0 0
100105 ca.100106 0107 0108
Korea (Chosen)
0109 46110 ca.46111
Malaysia (Fed. ca.13“
20112
Malay States)
83113 75114
Manchuria 0 0
(Manchukuo)
ca.100115 97116 ca.70117 0118
Philippines
100119 0120
Singapore (Str. 0 0
Settlements)
100121 0122
Sri Lanka 0 0
(Ceylon)
100123 100124 0125
Taiwan 0
(Formosa)
ca.50126 ca.50127 0128 0129
Thailand
South America
ca.85“95130 90þ131 ca.70“80132 9133
Argentina
ca.75134 ca.75135 ca.75136
Bolivia ca.50“
75137
ca.67“82138 67/80139 67/82140 ca.34141
Brazil
ca.95142 88143 80144 0145
Chile
0146 ca.10147 ca.5148 0149
Colombia
18150 ca.87151 ca.87152
Ecuador ca.50“
87153
100154 100155 0156
Paraguay 0
ca.85157 ca.85158 ca.85159
Peru 0
ca.15160 ca.15161 0162
Uruguay 0
<10166
ca.15163 ca.15164 ca.15165
Venezuela
Central America
ca.85167 ca.72168 ca.60169 0170
Costa Rica
Chapter 1: Invention and Spread of Electric Utilities 33


1913“1914 1928“1932 1947“1950 1970“1972

0171 43172 0173
El Salvador 0
ca.95174 ca.95175 ca.95176 0177
Guatemala
0178 ca.36179 0180
Honduras
0181 ca.80182 0183
Nicaragua 0
77184 ca.100185 ca.100186 0187
Panama
Caribbean
100188 100189 100190 100191
Barbados
ca.90192 ca.96193 ca.96194 0195
Cuba
100196 100197
Dominican 0
Republic
ca.100198 87199 ca.87200 0201
Guyana (British
Guiana)
100202 0203
Haiti
100204 100205 ca.100206 0207
Jamaica
0208 51“59209
[Smaller Islands]
100210 100211 0212
Trinidad and 0
Tobago
North America
ca.13213 34214 24215 5216
Canada
ca.90217 ca.90218 60219
Mexico 0
<1220 ca.0221 0222 0223
United States
Middle East
100224 0225
Israel (Palestine) x 0
80226 20227 0228 0229
Turkey
* In this table, we are trying to ascertain, as best possible, the share of a country™s electricity
provided by foreign ¬rms. For countries that did not exist in certain years “ because they
were part of empires, for example “ we have given percentages that relate as closely as
possible to their boundaries when they ¬rst became nations. We have attempted to measure
the percentage of centrally generated electric power (that is, of public utilities) that was
foreign owned and/or foreign controlled. We exclude industrial and other isolated plants
except where it can be shown that they provided a substantial portion of their output to a
network. The notes to the table are in Appendix B.
An ˜˜x™™ indicates that electri¬cation was negligible. If not otherwise indicated in a previous
note, a ˜˜0™™ or ˜˜100™™ that is not footnoted represents general knowledge. When there is no
entry in a box, we are too uncertain to even make a guess.


in¬‚uence on the management of an enterprise in another country (that is, a
country other than the investor™s home country), the ¬rm in that host
country was deemed to be foreign-owned and -controlled. Some cross-
border equity interest was necessary for foreign ownership and control and
the phrase ˜˜signi¬cant degree™™ meant the potential for a ¬rm to alter a key
aspect of the business or affect a major decision of the business. For a ¬rm
to be ˜˜foreign-owned and “controlled,™™ it had to be owned and controlled
by nonresident investors. We then sought information on the presence of
Global Electri¬cation
34

foreign ownership and control from documents, secondary sources, and the
opinions of experts.
The results of our endeavors are contained in Table 1.4, where we present
our best estimates for as many countries as possible, for the benchmark years,
of the percentage of the electric utility industry (measured as either capacity,
output, or assets) that was foreign-owned and -controlled. For example, for a

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