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Electric Power to the People
by Howie Hawkins, Syracuse Greens
Energy deregulation in US has utterly failed to deliver on its promise of lower prices for consumers due to more competitive markets. To the contrary, prices are soaring due to the cartelization of energy suppliers and the merger wave among utilities. Almost every state has felt the impact of wholesale electric prices manipulated by a small group of energy giants to create artificial shortages that sent spot market prices soaring by 500 to 1000 percent during 2000.
Energy deregulation in most states was cover for a massive bailout of the bad investments of investor-owned utilities (IOUs) in nuclear power plants and so-called “independent power producers,” which are often different subsidiaries of the same parent holding companies. The total bill for this bailout if “deregulation” is carried through in all the states with nuclear power plants has been estimated at $500 billion to $1 trillion dollars, far surpassing the record-breaking savings and loan bailout.
Energy deregulation in most states was cover for a massive bailout of the bad investments of investor-owned utilities…
While serving as cover for the nuclear bailout, deregulation is also in the process of transforming electric power from a publicly-regulated service into a market and profit driven commodity. Deregulation encompasses wholesale energy prices, increasingly retail energy prices, nuclear power plant oversight, and incentives and standards for energy efficiency and renewable energy production.
Under this new regulatory regime, energy conservation has plummeted, renewable energy production has stagnated, nuclear waste and fossil fuel air pollution continues, deteriorating old nukes continue to operate despite dangerous mechanical flaws, and energy prices surge.
The general public is raging over skyrocketing utility rates and collection agency intimidation to collect on overdue utility bills. The environmentally conscious are upset that the limited progress on conservation, efficiency, and renewables that was made in the 1980s has been reversed in the deregulatory 1990s. Meanwhile, aging and therefore more accident-prone nuclear power plants receive financial bailouts, license extensions, and reduced Nuclear Regulatory Commission and public oversight and regulation. And fossil fuels remain the principal planned source of future transportation fuels as well as electric power generation while global warming continues without a serious public policy response.
Politically, the Democrats and Republicans are unalterably compromised by campaign contributions from the utility companies and their close allies in the banking industry. Bank financing charges for power plant construction amount to 40% of all utility costs. Historically, 60% of the entire underwriting business in the US has come from the utilities industry. The Democrats and Republicans don’t want to bite these hands that feed them. If there ever was an issue where the Greens can take the lead, energy is that issue.
Energy deregulation has been building as a policy since the Carter administration. In 1978, Carter deregulated wholesale gas prices while prioritizing subsides for coal gasification and nukes over solar-based renewables. The Reagan administration removed most of the minimal federal tax credits for solar installations and subsidies for weatherization of poor people’s homes that had been part of Carter’s energy policy.
At the end of the first Bush administration, the Energy Policy Act of 1992 was enacted to deregulate the market in interstate wholesaling of electricity and create the federal policy framework of incentives for state by state deregulation of utilities and the wave of utility mergers we have seen in the 1990s. Under the Clinton/Gore administration, the Federal Energy Regulatory Commission promulgated in 1996 the regulations to implement the Energy Policy Act of 1992.
In every state that has deregulated, the plan has had overwhelming bipartisan support.
Then the states started deregulating. In 1996, the California state legislature adopted, with every single Democrat and Republican voting in favor, the deregulatory bill that led to the rate shock and service blackouts of 2000 and 2001. In New York, each IOU worked out its own special deregulation (and bailout) plan with the Public Service Commission with bipartisan agreement in the legislature not to intervene and legislate guidelines, resulting in a gutting of incentives for energy conservation and renewables and a massive bailout of utilities’ nuclear plants. In every state that has deregulated, the plan has had overwhelming bipartisan support.
It is easy to see why Californians are moving toward public power. While customers of investor-owned utilities (IOUs) experienced rate shock and service blackouts, the customers of California’s two big public power systems, the Sacramento Municipal Utility District (SMUD) and the Los Angeles Department of Water and Power, had stable rates and no blackouts.
Public Power Costs Less
Nationwide, the 2008 public power systems in the country delivered power to residential customers for 18% less than IOUs during 1999. The average price was 7.2 cents per kilowatt our for public power systems and 8.5 cents per kilowatt hour for IOUs.
Most of the 2000 public power systems are small municipally owned companies. Nevertheless, public power systems are still able to keep their prices lower for two basic reasons. First, they don’t have to pay dividends to stockholders. They aim to run at cost, without a markup to cover profits. Second, most public power systems are democratic. Their boards are elected or at least appointed by elected politicians. The ultimate boss is the consumer served by the utility, not the shareholders seeking to maximize profits. So public power executives cannot get away with kind of looting that IOU executives have.
The responsiveness of public power systems to consumer concerns has also been a reason why public power systems have led the way in energy conservation and renewable energy production. The Sacramento Municipal Utility District (SMUD) provides a case in point. With the antinuclear movement instigating a broad citizen movement that petitioned for an initiative referendum, SMUD voters decided in 1987 in a public referendum that they wanted to shut down SMUD’s financially disastrous Rancho Seco nuclear power plant. SMUD then redirected utility investments toward energy conservation and renewables. Today, SMUD has paid down its nuclear debt and is one of the leading utilities in the world in energy efficiency and solar-based, renewable energy production. That is why they were able to provide low-cost, uninterrupted service during the California energy crisis in the winter of 2000.
Nuke Fire Precipitated Blackouts
California had no shortage of power capacity before the blackouts hit during 2000. The capacity in California was 40,000 megawatts. The highest peak demand ever was 33,000 megawatts. But during the winter, many generators were down for repairs. Energy activists allege they were scheduled down for repairs deliberately to create a power shortage and higher prices. In any case, there was still enough power to avoid blackouts until a February 3 fire at the San Onofre Unit Three nuke near Los Angeles knocked that plant off line.
Instantly, one quarter of the state’s reactor capacity was gone and the blackouts began.
… the customers of California’s two big public power systems … had stable rates and no blackouts.
The corporate media have grossly under-reported the role of the San Onofre nuke fire in precipitating blackouts during the 2000–2001 winter. The NRC has not been forthcoming with reports about how it happened. But the incident does show how insane the new push for nuclear power is. Under the best of circumstances, a new nuke would take 5–10 years to come on line. When all subsidies and lifetime costs are figured in, the cost of nuclear electricity is, to be very generous, at least 10 cents per kilowatt hour. Meanwhile, wind power generators can be built today in a few months and bring power to homes, commerce, and industry for 2.5 cents a kilowatt hour.
Solar Power through Public Power
The energy industry may have overreached with its deregulation schemes in the 1990s. The public is beginning to fight back. There are many lessons to be learned from the power struggle over power that goes back a century. The idea that electricity and gas should be commodities sold for profit instead of public goods provided at cost under democratic public control like water, roads, and schools has never been completely accepted in the US. 2008 public power systems, as well as 900 cooperatively owned systems, are testament to the fact that private IOUs never completely won out. Now a new movement for public power is emerging.
The Green Party, which is not compromised by the campaign contributions of utilities, their banks, and their energy suppliers, needs to be the electoral arm of this movement. And Greens are beginning to rise to this challenge. As Medea Benjamin, who has been named the Energy Spokesperson for the California Green Party, put it in a call for Greens to mobilize for a rally for Clean, Affordable Power under Local Public Control in Sacramento on September 9, 2001:As you well know, the Green Party has been on the forefront of promoting positive energy solutions in this state. We are the only party to have opposed deregulation while the Democrat and Republican legislators in Sacramento unanimously supported it. We worked hard to try to overturn deregulation through a citizen initiative. Our key values of ecological wisdom, grassroots democracy, decentralization and sustainability counter an energy fiasco that has been characterized by ecological destruction, top-down and corrupt politics, marginalization of local communities and disregard for the future environmental needs of this planet. We are the only party that includes in its platform a call for phasing out fossil fuels and nuclear energy, and replacing these with renewable energy, conservation and efficiency. And Greens are on the front lines in the statewide effort to take the profit motive out of our energy system and replace it with locally controlled, public power that would put the needs of Californians and our environment front and center where they should be!
In New York, Greens are spearheading a Campaign for Affordable, Renewable, Public Power. The campaign has six policy goals:
1. Affordable Prices: All energy products are priced at the minimum level consistent with the costs of production and ecologically sound use.
2. Energy Lifelines: Each citizen is guaranteed a minimum fair share of energy regardless of ability to pay.
3. No Nukes: Rapid phase-out of New York’s six nuclear power plants.
4. Renewable Energy: A rapid transition to clean, renewable energy sources, including wind power, solar-thermal, solar-electric, geothermal, biofuels, and solar-hydrogen fuels.
5. Public Power: Conversion of investor-owned utilities into locally-owned and controlled Public Energy Districts (PEDs), which will coordinate statewide energy planning through a democratized New York Power Authority, whose board will be composed of representatives of the PEDs and at-large members elected at public elections. The natural energy resources of the New York State, as well as the production, transmission, and distribution infrastructure of energy, belong to all the people of New York State.
6. Freedom of Information: All information regarding the activities of every energy agency and all data on reserves and consumption are publicly available on a timely basis to facilitate the fullest possible public participation in the preparation of energy plans and to monitor their implementation.
The Campaign for Affordable, Renewable, Public Power will campaign for a public power system that is decentralized and democratic, with the following elements:
Public Energy Districts: Towns and cities, alone or in contiguous combination, will form their own local power company with the power to build, acquire (by eminent domain if necessary), and operate power generating and distribution facilities, and to issue revenue-producing bonds. Their boards will be elected by their workers (one-third of the seats) and the citizens of the public energy district (two-thirds of the seats).
…Greens nationally should begin projecting the federation of statewide public power systems into a national public power system.
State Energy Board: The state energy board will be composed of representatives elected by the Public Energy Districts’ boards (two-thirds) and representatives elected in public elections (one-third). It will take over governance of the New York Power Authority and transform it from a top-down, patronage-ridden, corporate-oriented agency to a democratic, competent, public interest-oriented agency. Its responsibilities will include:
- Trusteeship of the state’s natural energy resources
- Operation of statewide energy infrastructure
- State energy planning based on the coordination of local PED plans
- Allocation of state energy research and development funding
- The missing element in the California and New York campaigns is the national element. As long as local and even state public power systems are at the mercy of the ExxonMobils and Enrons for energy and Wall Street for financing, the biggest financial and industrial corporations in the world will use their tremendous economic power to extract the highest possible prices from the public power systems. So just as Greens in New York are calling for municipal utilities federated into a statewide public power system, Greens nationally should begin projecting the federation of statewide public power systems into a national public power system.
In taking up this program, the Greens will be confronting some of the core pillars of US capitalism. But there is no way around it if we want an affordable and renewable energy system. Private industry has demonstrated its utter irresponsibility in pursuit of profit maximization. Their fossil fuels are heating up the planet. They are destroying local environments with their oil drilling and strip mining. And their nukes have left us a deadly legacy of nuclear waste that will last millions of years (Plutonium-239 has a half-life of 24,000 years; as it decomposes, uranium-235 is formed, which has a half-life of 710,000 years).
Private industry has shown itself systematically incapable of choosing the path of affordable, safe, renewable energy. Only through a public power system will the people have to power and freedom to choose the road to a sustainable, solar economy. That is one of the central goals that led to the creation of the Green Party. The deregulation-induced energy crisis now means it is time for Greens to act on that goal.