PECO Energy Company’s history

In 1994, PECO Energy Company ranked among the top 25 electric and gas utilities in America. Over three million customers are served by the company in a service area of 2,475 square miles in southeastern Pennsylvania, including Philadelphia. In 1994, the utility changed its name to PECO Energy Company from Philadelphia Electric Company, which had been referred to by that acronym for most of the twentieth century. A corporate reorganization in the early 1990s prepared PECO for a less regulated electric industry.

The Philadelphia Electric Company was incorporated in 1902, but it has its roots in the Brush Electric Light Company of Philadelphia, which was established in 1881. Dolan convinced ten of Philadelphia’s wealthiest entrepreneurs to invest in a company in 1880 that manufactured, procured, owned and operated various electrical apparatus to produce light, heat, or power by electricity and to light buildings.” In exchange for the license to Brush arc dynamos, which were then considered the most effective lighting generators, a 50 percent stake in the new venture was exchanged for $100,000 of its stock.

In the late 1800s, electric utilities generally concentrated on one product, such as street lighting or industrial applications. Brush Electric Light Company specialized in commercial and street lighting, as its name implied. Henry Lewis served as the Brush Company’s first president until his death in 1886. Dolan, who had been treasurer, chairman of the executive committee, and de facto company head, assumed the presidency at that time. Oversaw Brush’s first permanent generating facility and helped increase its capitalization to $1 million for construction and expansion by deflecting early criticism of the company’s poles and wires.

The electric utility industry was characterized by fragmentation and competition at this early stage. Several companies provided different voltages, currents, and frequencies within the same city, making it difficult to develop standardized products. Near the end of the nineteenth century, utilities began consolidating to end competition and coordinate service. In 1885, Brush merged with its most powerful rival, The United States Electric Lighting Company of Pennsylvania.

In 1886, the merged companies formed an “Electric Trust,” more commonly known today as a holding company. The public and politicians held such combines in mistrust, which necessitated secrecy. As part of its financing, the Trust issued $3.5 million in bonds to acquire or control four more small local utilities. Public and media criticism of the “monopoly” increased as its existence came to light in the early 1880s. According to Nicholas B. Wainwright in his History of The Philadelphia Electric Company, 1881-1961, the Trust’s unpopularity stemmed from its very name. Its hidden management of the operating companies could never earn it goodwill.

As a result of competition, Brush also suffered. The Edison Electric Light Company of Philadelphia had surpassed the Trust in profits by 1892. In the same period, local entrepreneur Martin Maloney reentered the electric industry after a successful gas venture. In order to eliminate wasteful competition, Maloney sought to consolidate Philadelphia’s electric companies and standardize service. Pennsylvania Heat, Light and Power Company was chartered in 1895 with $10 million in capital and immediately began acquiring competitors, taking over Columbia Electric Light Company and courting Philadelphia Edison Company. As of March 1896, he was on Edison’s board of directors after merging with the company.

Thomas Dolan joined the board of directors of Maloney’s Pennsylvania Heat shortly after it acquired the Electric Trust and all its subsidiaries. He stated in his first annual report that Maloney’s consolidation scheme was relatively smooth in part because his goals were perceived positively by the public, as opposed to the Electric Trust. “To secure the type of service that would enable the Company to provide electricity to its patrons under such conditions that they could use electricity more generally and in many ways that the high prices prevailing prevented, and to demonstrate to the citizens of Philadelphia that a corporation could work for the public as well as its stockholders at the same time. As a matter of fact, Maloney lowered residential rates below the national average.

Five of Philadelphia’s eight independent arc lighting companies were absorbed by Maloney in 1898. In the following year, the $25 million National Electric Company emerged as a threat to his progress. One of the few strong competitors left was the Southern Electric Light and Power Company, which was immediately acquired by the new entity. That year, Maloney negotiated a merger between the two big companies. Net profits of $518,00 were generated by the combination of $19.9 million in assets. In 1902, the companies incorporated as the Philadelphia Electric Company (PE).

Joseph B. McCall succeeded Maloney as president, guiding the company through a difficult period of legal, financial, and technical reorganization. Increasing demand led to the utility’s need for a massive central generating station by the turn of the century. It generated over 7,000 kilowatts (kw) when PE’s Station A on the Schuylkill River was completed in 1903. Although PE standardized most of its service as alternating current, most of downtown Philadelphia, which was served by the Edison division, continued to operate on direct current until 1935 (reflecting Thomas Edison’s belief that alternating current was dangerous). At the corner of Tenth and Chestnut streets in Philadelphia, PE moved to a new, larger headquarters in 1907. PE operations remained centered at that location until 1973.

A number of factors contributed to the dramatic expansion of the electric industry during the first two decades of the twentieth century. Equipment was developed that was larger and more efficient, and service areas were expanded to include rural areas. To increase electricity use, company-sponsored sales departments promoted electric appliances such as washers, irons, refrigerators, and vacuum cleaners. Demand for electric power increased significantly with the development of new applications. The PE system of 1903 (at 20,000 kw) had a higher capacity than the 30,000- and 35,000-kw units installed in 1915 and 1916.