A Tale of Three Cities

Just before 5 p.m. on January 24, five police officers shuffled in front of the Pacific Gas & Electric (PG&E) headquarters in downtown San Francisco. Two men in casual attire conferred with security guards behind the tall plateglass doors. They then nervously walked out to the middle of the street to stare past the rush-hour stream of street cars and taxis. The police heard, on their walkie-talkies, that protesters were approaching. As the clock hit the top of the hour, the guards inside began shooing utility workers out a side door. Soon, about 100 demonstrators arrived, charging PG&E with “ethical bankruptcy” and demanding publicly managed power as the way out of California's electricity crisis. Members of a new statewide coalition, “Public Power Now,” they were in the streets again one week later — this time in four cities across the state — protesting the bailout that California was promising to the utilities.

What they're asking for is nothing new. Public control of power production and supply is an idea that's more than 100 years old. And today, in California communities from San Francisco to San Diego to the college town of Davis, consumers are talking about taking control of the whole system from top to bottom.

“We can look at a well-run municipal utility district and see there are models staring us in the face,” says Medea Benjamin, Green Party candidate for US Senate in 2000 and spokesperson for Public Power Now. Benjamin points to the Sacramento Municipal Utility District, a public agency that has sold electricity since 1946. The average residential customer of Sacramento's utility paid nearly $20 less than comparable PG&E ratepayers in December. The municipal utility also “gives away free shade trees to reduce air conditioner use,” she notes. When the public owns the utility, “you have a real incentive for conservation.”

The Los Angeles Department of Water and Power, the state's largest public power agency, also protected its customers from the blackouts and bill hikes. While deregulated bills in San Diego tripled to as much as $138.50 last August, the average LA residential customer paid about $50 a month consistently all year.

The utility has also reaped big cash windfalls for the city. Because it owns more than enough generation facilities to power Los Angeles, last year the utility transferred more than $115 million to the LA general fund, according to assistant general manager Henry Martinez. Additional profits are rolled into paying off debts. About a year ago the utility broke ground on a new program to improve efficiency and is expanding green power programs.

“These things aren't pie in the sky,” says Benjamin. “These are real, and these are working.”

S. David Freeman, head of LA's utility, agrees: “I think public power is the biggest part of the answer.”

Advocates say that the benefits are straightforward. Public utilities bring local control, charge lower rates, can promote cleaner energy, and stress conservation. The American Public Power Association reports that approximately 2,000 cities nationwide deliver power through publicly managed systems, eliminating the profit motive that has driven California to the crisis point. The entire state of Nebraska still moves its juice through publicly controlled lines, as it has for decades.

How not to do energy policy

California, the world's sixth largest economy, emerged last year as a case study in how not to plan an energy policy. The deregulation plan was cooked up under the close watch of Southern California Edison CEO John Bryson and other utility execs — in fact, it has been reported that they wrote the thing themselves. The law split the electricity business into two sectors: One group of companies generates power; the other group buys that power and delivers it.

Though it once was heavily promoted and defended by the state's utility companies, the 1996 deregulation law has pushed those same utilities to the brink of bankruptcy, caused shortages of electricity statewide, failed to promote renewable energy or conservation, and increased dependency on dirty power, including nuclear energy.

“Deregulation cedes all control to a handful of corporations,” says Tyson Slocum, a senior researcher for Public Citizen's Critical Mass Energy and Environment Program.

The scheme also served to consolidate the generation business, and small marketers took the fall. “The utilities were very successful in undermining retail competition,” says Kirk Brown of the San Francisco-based Center for Resource Solutions. This winter, Brown says, there were no green retailers left.

The other effect of the split system was to raise wholesale power costs, with companies that generate the power having an incentive to sell it for as high a price as they could get. By the end of the year, two of the utilities — Southern California Edison and Pacific Gas and Electric — claimed a combined debt of about $12 billion.

But the twist was that the two have affiliate companies in both lines of work: generating and distributing power. So, when the generators charged too much, they were essentially overcharging themselves. As a result, while one arm of each corporation suffered, another posted record profits. PG&E and Edison's parent corporations have spent some $22 billion on new “power plants, stock buybacks, and other purchases that far exceeded their alleged $12 billion debt,” according to a Public Citizen report released in January.

Meanwhile, the deregulation law caused a near-collapse of energy conservation programs and laid the groundwork for the deterioration of environmental regulations. “California was once the leader in energy efficiency programs in the country. But energy conservation was stalled by [the deregulation law],” says Karl R. Rábago, managing director of the Rocky Mountain Institute, a Colorado-based nonprofit organization that specializes in energy efficiency. “That may be the saddest story of California restructuring — that they squandered the transition time to really ensure alternatives.”

The shenanigans of the companies have strengthened the hands of those who clamor for public power. Activists are pushing to build systems that are democratically run, giving customers decision-making power on key issues.

When residents of Sacramento wanted to sever their dependency on nukes, for instance, they put a measure on the ballot in 1989 that forced the utility to decommission the Rancho Seco Nuclear Power plant. In the years that followed, because of customer demand, the Sacramento Municipal Utility District became known as the driving force behind solar power development in the state.

“The state should see this ‘crisis,'” consumer advocate Ralph Nader says, “as an opportunity to establish a longer range energy policy that stresses deep energy efficiencies and solar energy public power systems that are focused under local control.”

In 1996, as the flawed deregulation bill was being approved, Daniel M. Berman made some prescient predictions in the book he co-authored, Who Owns the Sun? (Chelsea Green): “What will happen when the new, unregulated ‘independent power producers' pass on whopping rate increases to the public as the price of natural gas soars? Will big industry come weeping to the public, hat in hand, as the savings and loan investors did? Will there be a massive ratepayers revolt when utilities try to stick consumers with doubled and even quadrupled utility bills?”

Seeing his predictions come true, Berman recently laid out his solution: create an excess profits tax to get back extorted revenues, ban utility money from politics, remove barriers to creating new public power districts, set aside 5 percent of utility revenues for conservation programs, and mandate solar panels for all new buildings.

From his perspective, it's the only way to do it: “more democracy, more efficiency, more use of renewable energy, and more local control.” For the burgeoning activist movement in California, these goals are taking center stage.


No Paywall. No Ads. Just Readers Like You.
You can help fund powerful stories to light the way forward.
Donate Now.