During the initial years of electricity distribution, Thomas Edison's direct current was the standard for the United States, and Edison did not want to lose all his patent royalties.[9] Direct current worked well with incandescent lamps, which were the principal electric load of the day, and with electric motors. Direct-current systems could be directly used with storage batteries, providing valuable load-leveling and backup power during interruptions of generator operation. Direct-current generators could be easily paralleled, allowing economical operation by using smaller machines during periods of light load and improving reliability. At the introduction of Edison's system, no practical AC motor was available. Edison had invented a meter to allow customers to be billed for energy proportional to consumption, but this meter worked only with direct current. The principal drawback of direct-current distribution was that customer loads, distribution and generation were all at the same voltage. Generally, it was uneconomical to use a high voltage for transmission and reduce it for customer uses. Even with the Edison 3-wire system (placing two 110-volt customer loads in series on a 220-volt supply), the high cost of conductors required generation to be close to customer loads, otherwise losses made the system uneconomical to operate.

Alternating current systems can use transformers to change voltage from low to high level and back, allowing generation and consumption at low voltages but transmission, possibly over great distances, at high voltage, with savings in the cost of conductors and energy losses. A bipolar open-core power transformer developed by Lucien Gaulard and John Dixon Gibbs was demonstrated in London in 1881, and attracted the interest of Westinghouse. They also exhibited the invention in Turin in 1884. However these early induction coils with open magnetic circuits are inefficient at transferring power to loads. Until about 1880, the paradigm for AC power transmission from a high voltage supply to a low voltage load was a series circuit. Open-core transformers with a ratio near 1:1 were connected with their primaries in series to allow use of a high voltage for transmission while presenting a low voltage to the lamps. The inherent flaw in this method was that turning off a single lamp (or other electric device) affected the voltage supplied to all others on the same circuit. Many adjustable transformer designs were introduced to compensate for this problematic characteristic of the series circuit, including those employing methods of adjusting the core or bypassing the magnetic flux around part of a coil.The direct current systems did not have these drawbacks, giving it significant advantages over early AC systems.