The utility industry has been in decline for half a century, according to a mid-80s book by a Merril Lynch analyst, Leonard S. Hyman.

In America’s Electric Utilities: Past, Present, and Future (which, now would be distant past, past, and recent past, of course) Leonard S. Hyman lays out a narrative for America’s electric utilities that goes roughly like this:

1900 or so: Edison and Westinghouse put the industry together, but there’s substantial competition on all fronts, including the customers themselves, who might very well choose to make their own power.

1907: The utilities get regulated, supposedly because they were a “natural monopoly.” Utilities, in effect, get the government to guarantee that their investors will get a “fair rate of return,” which no one defines. The interesting thing about Hyman’s argument here is that he thinks the utilities allowed/pushed for regulation largely as a way of reducing risk so that they could borrow money more cheaply. It’s yet another way in which financing the kinds of huge project that is an energy plant has affected the structure of the industry.

1915: Things settle down. The electric utility model we know is firmly established. Now, it’s just a matter of making more demand, so that plants can get bigger and run more efficiently.

1915-1935: Holding companies grow as a form of leverage and an easy asset with which to swindle sucker investors. Actually, the form of these companies look a lot like our real estate investment vehicles.

1935-1945: Roosevelt Administration smashes through the holding companies, requiring that they actually have a reason to exist aside from skimming money off the public good. It takes a while to break up all those companies. And there’s a lot of other stuff going on.

1945-1965: These were “the good old days,” Hyman says. “The industry increased the size of power plants, and those new plants utilized fuel more efficiently.” Coal prices went up but were swamped by efficiency increases. Demand rises steadily, something like 7-8% each and every year. All you do to plan is say, “Well, Bob, I say we build more.” Bob assents, each and every time.

1960-1973: The use of oil for electric generation skyrockets. Growing from just 6.1% of generation in 1960 to a peak of 16.9% of generation in 1973. Utilities were trying to get away from burning all that nasty sulfur-heavy coal. Meanwhile, conventional coal plants stop getting more efficient. Demand stops growing. Nuclear power sucks up all the money in the industry as huge plants hit major cost overruns. BUT, here’s the bright side: the use of coal falls to about 44% of the electric mix. And right in the middle of this period, power goes out for 30 million northeastern customers. Everyone says, “WTF? I thought you had this figured out.”

1973: Energy prices skyrocket, consumers pull back. The utilities are stuck with all this excess capacity and cost overruns and all that noise. It’s important to note here that the ‘73 embargo was just the match that lit the powder keg.

1974: Investors start to realize that perhaps utilities are a little riskier than they thought. Too big to fail, but certainly small enough to lose money. That heavily influences how much money they have to pay to borrow more money.

1979-1983: Three Mile Island. Oops. Even if it didn’t kill a whole bunch of people, it sure scared everyone. Another strike against nuclear power. The bigger one, though, was the costs. Here’s an amazing quote, written like a truly outraged analyst, “On October 5, 1983, Cincinatti G&E shocked investors by announcing that the Zimmer nuclear station, supposedly 97% complete, would required $2.8-3.3 billion in additional investment and two to three years of work to be finished. That news was the first of many disastrous nuclear crises that followed.” $6 billion in construction was “written off to oblivion” and stock prices plunged 60-80%.

What went wrong? Here’s Hyman’s short list:

The nuclear crises of 1983-1984 pushed a number of utilities close to bankruptcy. Demand for power was unpredictable. Development of nuclear power had been arrested. Many utilities had excessive capacity. The concept of central station power was under attack. New methods of regulation [he means environmental regs] seemed to put a premium on discouraging demand for central station power… Many utility executives and government officials concluded that electric utilities must turn to smaller power stations (some owned by non-utilities) and must exchange power from surplus to deficit regions as much as possible… Utilities could no longer run as monopolies.

Who won in all this? There’s really no one to cheer for but the anti-hero: Coal.

And now, things look just as grim as they did back in the 70s and early 80s. All those coal plants that provide baseload power for the U.S.? Well, they’re getting old. The Edison Electric Institute says the industry will have to spend between $1.5 and $2.0 TRILLION over the next 22 years just to keep the lights on. Who is going to pay for all that? Probably not the utilities themselves. Take a look at Xcel: they had net income of about $500 million. That’s not much. And Xcel is one of the big utilities.

On the other hand, as they like to say in Silicon Valley, it’s the big problems that present the big opportunities.