Let me share two scenarios with you, drawing from the Alaska experience:

The first is industry-driven electrification, and I'll focus on the Juneau area. Starting in the 1880s, the Silverbow Basin around Juneau was home to Alaska's first major gold rush. (I'm discounting Sitka and the Fortymile rushes, because they were a pittance compared with what came later.)

On Douglas Island in particular, the Treadwell gold mines quickly became immense industrial centers and the largest population centers in the territory of Alaska. Large quantities of low-grade gold ore were right at tidewater and so were relatively cheap to develop. However, these mines and the stamping mills the mines fed needed power. That power could be direct -- as in a steam turbine powering the plant directly -- or it could be indirect, using electrically powered machinery using a generator at a distance.

Both methods were used. The Juneau area has ample waterpower sources, and even today, water power supplies the bulk of electricity in Southeast Alaska. In the company towns like Treadwell, electricity was simply a matter of diverting some power from the enormous generators installed to power the mine equipment. Those same generators powered company housing, and the cost of electricity was included in the cost of housing.

Across Gastineau Channel in the city of Juneau, the scenario was different. In 1893, meat merchant Willis Thorp, began to install a water wheel and electric generator on the banks of Gold Creek. After all, 14 years had passed since Thomas Edison had invented the incandescent light.

From the Sept. 9, 1893 issue of The Alaska Journal:

"Juneau is soon to have a system of electric lights; the building on Seward Street above Nelson's Drug Store is being fitted up as a store room and an office..."

(For the complete history of AEL&P, click here.)

Thorp's power plant was a big success, and his new business was named Alaska Electric Light and Power. Thorp eventually moved on to his next business venture -- driving cattle to the Yukon -- and sold AEL&P. The company grew and grew, adding new multi-megawatt power plants and stringing lines across the whole way.

The second way was cooperative-driven electrification. In 1935, President Roosevelt signed the Rural Electrification Administration into being. At the time, more than 90 percent of rural homes had no electric service. This was particularly true in Alaska.

Even in larger communities, like Kodiak, there was nothing approaching an electric grid. You had household generators -- sometimes neighborhood generators -- but these were unreliable and didn't have backups. When the generator broke, your lights went out, and then you had to fix it.

With the Rural Electrification Administration in place, smaller communities (or regions) had the ability to get together and tax themselves to create an electric system. (I'm simplifying here, massively.) Under the cooperative system, the system was owned by its ratepayers. The ratepayers selected a board of directors and elected them in annual elections. Federal loans paid for the initial capital costs.

It may have been the most successful federal program in U.S. history. Eighteen years after Roosevelt created the Rural Electrification Administration, 90 percent of rural America was wired for electricity. (Keep in mind, WWII occurred during those 18 years, too!)

In Kodiak, the Kodiak Electric Association was created in 1941 under the cooperative model. Before KEA's creation, there was a patchwork of neighborhood and home generators supplying electricity. The coming of WWII brought construction of a naval base in Kodiak, spurring the creation of KEA. In other communities, electrification was a municipal effort, with cities fronting the initial capital costs and billing residents.

So, to answer your questions -- How did people pay for electricity? They'd take cash or a check to the electric company and pay the bill. In the KEA office, they have proudly framed a 1941 check that was the first payment to come into the cooperative.

How were they convinced to pay for the service? They didn't have to be convinced. The benefits of electricity were (and still are) obvious to anyone who anyone who tries to read by candlelight. There's a reason we hail Edison today -- he was the inventor who "banished night," to use a phrase from the late 19th century. Electric light was the killer app for widespread electrification. Labor-saving and entertainment devices -- vacuums, refrigerators, radios, etc. -- these came later. Even in 1893, the benefits of electric light were obvious enough that a meat merchant was willing to go to great expense to bring electricity to Juneau -- hardly more than a collection of log cabins on a tidal flat.