‘Accomplished by methods which are indefensible’: Electric utilities, finance, and the natural barriers to accumulation

Abstract

This paper argues that the emergence of electric utility holding companies in the early 20th century coincides with a number of developments related to the materiality of electricity, principally the necessity that electricity generation and demand be temporally matched. While this material limit posed significant barriers to capital accumulation in the early years of electric utilities, innovations in cost accounting, technology, state governance, and finance shifted what was a limit into an accumulation opportunity for financial capital operating in the form of the utility holding company. The utility holding company took advantage of what was effectively a spatial fix for the electric utility industry, the non-competitive service territory that was enabled by state regulation. This fix proved to be effective for several decades. However, the Crash of 1929 initiated the demise of this particular arrangement, and the example of Carolina Power and Light, an electric utility operating in North Carolina within a mammoth holding company, shows the limits of the non-competitive service territory as a spatial fix. The conclusion briefly considers subsequent fixes that emerged in the electric utility industry, including the present wave of mergers and acquisitions that harkens back to the holding companies of the 1920s.