Public Utility Services: From Luxury to Necessity

By Branko Terzic

In 1907 only 8% of US homes had electricity which was considered a rare and expensive luxury.  The most powerful national corporation in 1907 was the American Telephone and Telegraph Company (AT&T). By 1907 AT&T had over three million telephone customers and the independent telephone companies had another three million customers meaning that 32% of all households had telephone service.  The AT&T president at that time Theodore Vail said his goal was that of” One policy, One System, Universal Service.”  That meant AT&T was on a program of acquisition. In 1913, however, to avoid anti-trust action by the US government AT&T reached an agreement with the independent telephone companies which stopped AT&T’s further acquisition of the independent telephone companies.

Even so, AT&T was faced with rate setting proceedings in the thousands of municipalities it served with telephone service. In the period up to 1907 it was the political clout of the telephone industry with the independent companies and especially the national giant AT&T which helped usher in the age of state public service commission regulation of the public utilities. The electric utility industry joined in as they too faced the problem of negotiating tariffs and tariff proceedings before hundreds of municipal regulators in each state.

The basic rate for telephone service in 1907 was between $3-$5 per month for local calling. With the average monthly wage in 1907 being about $17 this meant that telephone service was a luxury more for those in the upper economic brackets. Electricity service was also a luxury in 1907.

The WRC was later renamed the Wisconsin Public Service Commission in recognition of its new authority over electricity, gas and telephone public service companies.

The La Crosse rates approved by the Wisconsin commission in 1907 were three-part rates with service, demand (HP) and energy (kWh) components. There was also a declining block charge for energy. Demand (power) in 1907 was still measured in horsepower (HP) and only later replaced by units of Watts. There was one rate for “lighting” service and another for “power” service. Here is the lowest usage “power” rate:

Power Rates 

The service charge shall be twenty-seven dollars per year per horsepower demanded.
The meter rate for less than five hours per day per horsepower demanded shall be five cents per kilowatt hour.

The resulting monthly service charge was in 1907 was $2.25 which would be about $75 per month and the $0.05 per kWh would be $1.68 per kWh in 2024.

Once again this was a luxury bill for those with higher incomes.  The national average residential electric rate in November 2024 is reported as about $0.17 which shows significant improvement on electricity production and delivery costs over the past century.

Electricity stopped being a “luxury” when it offered more “power” services with the introduction of Tesla’s new AC electric motors in new labor-saving devices and appliances.  Nonetheless, it actually took more than the introduction of labor-saving devices to really spur massive and rapid electrification. Up to this point in time electrification substituted for some other prior power sources either, wood, coal, kerosene, animal or human muscle power.  It took the introduction of another new technology, one that required electricity and only electricity to operate to create an even greater demand for universal electric service.

What was that new technology which demanded electricity? It was the radio.