The History of Public Utilities

A public utility is a business that supplies an amenity to the public at large. Public utilities provide water, electricity, natural gas, telephone service, trash and other essentials. With the rise of the cellular phone the telephone utility has seen a decrease in use. Typically a public utility has a natural monopoly on the service it provides. It is more economically efficient to have only one business provide the service. When it comes to charging for the services the business provides the companies are entitled to charge self-determined, reasonable rates for the service.

These rates are typically influenced and established by regulations on the service itself. Electricity is used by about 97% of people in the United States today. Just 132 years ago not a single house used electricity. That changed when a man named Thomas Edison discovered how to harness to energy. Thomas Edison was an inventor and is the holder of 1,093 patents. He is credited with inventing items such as the electric light bulb, phonograph, motion picture camera, and the stock ticker. Edison was credited with the invention of the electric light bulb in 1878.

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After receiving support and funding by the famous banker J. P. Morgan, Edison was able to open one of the first research laboratories in the United States. In this laboratory Edison was able to focus on unlocking the full potential of electricity. After a few months of research Edison founded the Edison Electric Light Company which manufactured light bulbs to be used as a replacement for kerosene lamps. Two years later he founded the Edison Illuminating Company. This company started an electric revolution. Edison and his company installed electric wires and light bulbs in J.

P. Morgan’s home. This was the first home in the United States to be completely lit by electricity. These personal electric lighting systems were powered by on-site generators. After complaints of noise pollution Edison began brainstorming a solution. With more funding from J. P. Morgan, Edison opened the Pearl Street Station, a central power station, in Manhattan in 1880. This power station would later provide electricity to 508 paying customers within the next four years. The cost of electricity has been steadily rising for the last 40 years.

In 1973 the price was just above 2 cents per kilowatt per hour. Now in 2012 the price is about 10 cents per kilowatt per hour. This intense price increase can be explained by the rise in demand of electricity. The demand for electricity has risen dramatically in the last sixty years and is projected to keep growing. The demand for electricity is five times greater today than it was in 1950. The rise in demand of electricity is explained by two simple factors; global warming and population increase. The world’s average temperature has risen 1. 0°F since 1950.

It wasn’t until fairly recent that CO2 emissions became a known contributing factor in the rise of temperature. If global warming emissions continue temperatures are expected to increase by 10°F by the end of the century. As temperatures rise, electricity demand will also increase. In fact, an 8-10°F temperature increase is expected to lead to a 20 percent increase in annual electricity demand, assuming no growth in population. Population increase is the other contributing factor in the rise in demand for electricity. The world’s population has increased by 173. percent since 1950; from 2,555,982,611 to 6,991,800,919. Simply put the more people that inhabit the world the greater the demand for electricity will be. Natural gas is another service provided by public utility companies. It is a natural occurring substance located deep underground. The gas is typically found in rock formations and coal beds. Natural gas is formed by organic matter that is crushed, pressurized, and heated into a gas composition. The gas has been used by humans for thousands of years. In fact, around 500 B. C. he ancient Chinese constructed bamboo poles to channel leaking gas. They used the ignited gas to boil seawater to make it drinkable. However, the organized gas usage didn’t come until much later. In 1821, William Hart dug the first successful natural gas well in the U. S. in Fredonia, New York. Shortly after, the Fredonia Gas Light Company was formed, becoming the first American natural gas distribution company. Natural gas is now used to heat more than 50 percent of homes in the United States today. The cost of natural gas, like electricity, has been on a steady rise for the last 60 years.

However, there have been short-term spikes and declines in the price of the gas. The rapid rise in 2000 was caused mainly by the increased demand for natural gas and rising energy prices in general. The sharp decline in 2009 was a response to the global economic collapse that drastically cut demand. The demand for natural gas follows a very predictable pattern. In the winter months the demand for natural gas is at its highest of the year; because it is cold outside and consumers want to heat their homes. This is followed by a sharp decline in the spring months when it is fair outside.

Then a slight increase in the summer months is shown because of the warm/hot temperatures. Lastly is the sharp increase in the fall months when it becomes cold again. There are a few concerns with the processes used to extract the natural gas. Researchers have found that 7. 9 percent of the methane present in the atmosphere is puffing out from shale gas wells, intentionally vented or flared, or seeping from loose pipe fittings along gas distribution lines. Fracking is a common but controversial method for extracting oil and natural gas from underground deposits trapped in shale or other rock formations.

The fracking process uses toxic chemicals and as a result poses serious environmental and health risks. Water is another service provided by public utility companies. Throughout history humans have been coming up with innovative ways to make the process of retrieving water easier and more efficient. Indoor plumbing can be tracked back to the days in early Rome. These Romans constructed systems of pipes and pumps to provide water for both private and public uses. The common process of pumping and sanitizing water (water towers) eventually gained way in the 19th century.

Today, the average American family uses about 69 gallons of water per day; most of it being wasted. The cost of water, just like electricity and natural gas, has been steeply rising for the last 30 years. Since the 1980’s the price of water has increased by 300 percent. A positive correlation is observed between the cost and demand of water. Just like the price, the demand for water has risen over the last few decades. When we compare the demand for water to the rise in population we find and explanation. As the world’s population has increased the demand for water followed right along.

A few concerns for the supplying process of water do exist. Continuity of water supply is taken for granted in most developed countries, but is a severe problem in many developing countries, where sometimes water is only provided for a few hours every day or a few days a week. Water quality is another concern. It is estimated that 2. 6 billion people lack proper water sanitization. Lastly, water pressure can be so low as to result only in a trickle of water or so high that it leads to damage to plumbing fixtures and waste of water.

Overall, it is shown that the prices and demand for public utilities have been rising dramatically over the last 50 years. The rising also does not seem to be slowing down. Simply put, the price and demand of public utilities will continue to reach new figures unless humans decide to do something about. Atmosphere emission rates and proper extraction and usage processes are general areas that could be improved. Until those areas are improved it is projected that the overall prices and demand for public utilities will continue to rise.


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The History of Public Utilities. (2017, Feb 05). Retrieved from