THE
CASE FOR WHY MUNICIPAL POWER IS SUPERIOR AT LEAST IN THEORY
The
way in which Minneapolis Energy Options used municipalization as a strategy to
campaign for clean energy could not have had the power it did if there had not
grains of truth we could present on the multitude of benefits municipal
utilities bring in general. The very
positive aspects of municipal utilities helped add an essential element of
inspiration among supporters of the campaign. The municipally-owned energy
utilities in major cities like Los Angeles, Sacramento, San Antonio, Austin
were pointed to as role models for what Minneapolis could achieve. For example,
people served by municipal utilities such as Los Angeles and Sacramento were
the only ones in California that were protected from the outrageous Enron-staged
rolling brown-outs and rate spike extortion.
In
other words, a municipally-owned energy utility is not an exotic concept. 25 percent of US electricity is supplied by locally owned
municipal utilities and co-ops. NOTE 1 There are already 125 municipal electric
utilities in Minnesota and 31 municipal gas utilities including Rochester,
Moorhead and Wilmar. In fact 50 out of 87 county seats are served by a municipal
electric or gas system NOTE 2
There are in fact close to
2,000 municipal utilities that are in operation across the United States.
However only perhaps half a dozen of them were formed in recent years while the
vast majority have been municipally owned for decades or right from the start.
NOTE 1 Everyday
Socialism, American-Style, Is Happening Now Tuesday, 14 May 2013 10:44 Gar Alperovitz
Chelsea Green Publishing book excerpt http://truth-out.org/news/item/16353-everyday-socialism-american-style-is-happening-now
MUNICIPAL
POWER HAS GREATER FINANCIAL EFFICIENCY
Residential
customers served by municipal-owned electric utilities pay a national average of 14 percent less in
rates than their counterpart customers of corporate power companies. NOTE 1
Municipal utilities pay back roughly 25% more to their communities than
investor owned utilities that have signed franchise contracts. NOTE 2
There are structural ownership-related reasons why municipal utilities
are generally more financially efficient in getting the same amount of work
done at a lower cost.
Municipal
utilities can obtain tax-exempt financing for capital projects. This allows
municipal utilities to invest more money into grid maintenance and outage
prevention which makes their service more reliable.
Knowing
this, which system of utility ownership is more likely to have lower rates?
1:
A municipal utility that reinvests its surplus back into the system and directs
revenue to the city general fund
2:
A for-profit corporate-owned utility that pays dividends to stockholders and
gives only a small fraction of its revenue back to the city in franchise fees.
Because
cities have no stockholders demanding returns on investment, they are in a
position to pass the savings directly onto their citizens.
Under
municipal power there are no right of way fees added to utility bills, no
shareholders to pay dividends to, minimal overhead, no excessive lobbying
presence at the state capital, and no lavish multimillion dollar per year
executive bonuses to pay. In the case of Boulder, Colorado corporate-owned
utilities have chosen to spend their customer payments to fighting municipal
governments in courts and interfering in people’s ballot initiative campaigns.
Profits under municipal utilities go back to local or county
government rather than to distant out-of-town or out-of-state investors and
thus help the city or county supplement their budgets
and ease pressure on property taxes.
Ashland, Oregon, has a
successful example where municipal utility profits provide 30 percent of the
general fund that pays for such services their basic services. NOTE 3 http://www.ashland.or.us/Page.asp?NavID=37
Here
is one argument that detractors against Minneapolis Energy Options have made in
light of these benefits of municipal ownership. It was to point out how these
undeniably well-performing and efficient municipal utilities had been under
municipal ownership for decades or since the very beginning of electrification.
Then they’d say it is the process of making the switch from an investor owned to
a municipal utility that would be financially detrimental.
However Winter Park, Florida is an example of
a city which successfully converted to a municipal energy utility on June 1st
2005 after 69% of its voters voted to exercise the
buy-out option against their incumbent utility on September 9th 2003. Winter Park customers
have noticed that their service has more reliable and with more competitive
rates to boot. Their municipal utility did take some short term losses because
it had to make capital improvements that their previous investor-owned utility
deferred. But it is now it is making millions of dollars in annual profit and
is investing that profit into the undergrounding of power cables.
NOTE 4 (multiple
sources included)
NOTE 1 Everyday
Socialism, American-Style, Is Happening Now Tuesday, 14 May 2013 10:44 Gar Alperovitz
NOTE 2 Ken Bradley Taking control of our
energy future published October
9, 2012 http://www.journalmpls.com/news-feed/voices/taking-control-of-our-energy-future
NOTE 4 http://cleanenergyaction.org/2011/07/25/randy-knight/ http://cityofwinterpark.org/departments/electric-utility/
MUNICIPAL
UTILITIES HAVE HIGHER RELIABILITY
As far as technical efficiency, municipal
utilities are in fact more reliable, as measured by the average number of
minutes a customer spends without power each year. NOTE 1 On
average, municipal utilities have significantly fewer power outages and are
quicker to get the power back on after severe weather events than
Corporate-owned privatized utilities.
,
For instance, municipal
utilities in some of the hardest-hit areas of Massachusetts after Hurricane
Irene in 2011 were able to restore power in one or two days, while
corporate-owned utilities like NStar and National Grid took roughly a week for
some customers. NOTE 2
One can easily say
that this is because municipal utilities often maintain their grid better so
there are less damages in the first place.
Why is it that city-owned energy utilities on a
nationwide average basis have better-maintained infrastructure, fewer hours of
outages and faster response times to disasters, and than corporate power
utilities? It is because city-owned utilities naturally pay more attention to
local repair concerns and have proportionally more employees on hand in the local
community ready to fix outages and do basic maintenance.
NOTE 3
When ownership is close to service, then rates and
service can be influenced by members of the community. This provides a muni the
built-in incentive to operate in the public interest and long-term community
benefit.
When
a utility’s workers, policymakers and managers are part of the community they
distribute power to, they have a social capital incentive to provide great
service. They can’t hide behind a 1-800 number from a place far away.
A
utility owned and operated under local control is more likely to offer more
reliable service and resonate with local needs than a utility whose personnel
and ownership is spread across a wide multi-state distance.
But
in addition, no muni is an island. They have very big networks of mutual aid
agreements with other municipal utilities around the region (and nationwide)
that help out in the case of outages.
Knowing
this, which system resonates better with the spirit of democracy, accountability
and local control?
1:
A state-regulated monopoly with a self-selected board of directors who are
accountable primarily to stockholders and govern the utility and/or the holding
company by meeting secretly behind closed doors in a distant corporate
headquarters despite being overseen by a state PUC…
or
2:
A utility commission appointed by the City Council or a board of director’s
elected by the customers they serve and meets in public while inviting input?
NOTE 1 Ken
Bradley Taking control of our energy future published October 9, 2012 http://www.journalmpls.com/news-feed/voices/taking-control-of-our-energy-future
NOTE 2 (CITATION NEEDED) http://www.nytimes.com/2013/03/14/business/energy-environment/cities-weigh-taking-electricity-business-from-private-utilities.html?pagewanted=all&_r=0 Cities Weigh Taking Over From Private Utilities
By DIANE CARDWELL
Published:
March 13, 2013
NOTE 3 (CITATION NEEDED) http://www.communitypowermn.org/will_this_impact_jobs_and_people_employed_by_the_utilities
A QUALITY
EMPLOYMENT OPPORTUNITY FOR UTLITY WORKERS
A municipal
utility would employ more people than a privatized investor owned utility with
good working conditions to boot.
According to an advocacy group called Massachusetts
Alliance for Municipal Electric Choice, government-owned utilities on average
employ more linemen per utility customers than the corporate utilities. NOTE 1
The City of
Minneapolis has a strong history of paying its employees well, and a commitment
to living wages and collective bargaining.
Eliminating
market barriers to municipalization placed by legalized monopolies will allow
more space for localized renewable energy incentives to be realized, which will
in turn stimulate the creation of additional new green jobs in installation,
manufacturing, and maintenance.
MUNICIPAL
UTILITIES HAVE SHOWN THE MOST GROUNDBREAKING ENVRIONMENTAL BREAKTHROUGHS
As far as credentials on
environmental sustainability, many larger municipal utilities are much further
along on fighting climate change with local renewable energy generation than
Minneapolis has been. Municipal utilities have demonstrated a superior ability
to cut greenhouse gasses and be catalyst for moving their cities in a clean,
renewable energy direction. For example, the Sacramento Municipal Utility
District has a goal of reducing emissions by ninety percent by
2050, and has installed one hundred times more solar capacity than Minneapolis had (at the time of
the Minneapolis Energy Options campaign). NOTE 1
The
Municipal Utility of Austin, Texas has committed to reaching 35% renewable
energy by 2020. Gainesville, Florida with a
population of just 130,000 has more megawatts of solar energy installed than
the entire state of Minnesota had at one point.
Perhaps the biggest success story
is with the San Antonio municipal utility. It
recently completed a new 20 MW solar project (more that twice the amount of the
installed solar capacity of the entire state of Minnesota in 2012) plus having
the most wind capacity of any municipal utility, while maintaining the lowest
electricity rates of any of the 10 largest cities in the United States. NOTE 2
The city of Lancaster, California created a municipal utility after its
school board rejected an offer from SolarCity on the claim that it was
unaffordable. Since municipalization the city bought 32,094 panels, had them
installed on 25 schools, generated 7.5 megawatts of power and sold the
enterprise to the school district for 35 percent less than it was paying for electricity
at the time. NOTE 3
Another example of a sensible investment is a wastewater-to-energy
facility in California's Point Loma Treatment Plant. It serves a
450-square-mile area near San Diego. The methane produced through the treatment
of wastewater process generates electricity.
On
the other hand, a community’s long-term goals such as investment in energy
conservation, pollution prevention, localized renewable energy deployment and
local infrastructure building all have a difficult time translating into the
reductionist quantitative language of corporate owned utility profit.
NOTE 1 COMMUNITY
VOICES | Minneapolis' energy future: What will our options be?
July 26, 2013 http://www.tcdailyplanet.net/news/2013/07/26/community-voices-minneapolis-energy-future-what-will-our-options-be
NOTE 2 Ken Bradley Taking control of our
energy future published October
9, 2012 http://www.journalmpls.com/news-feed/voices/taking-control-of-our-energy-future
NOTE 3 (With Help From Nature, a Town Aims to Be a Solar Capital By FELICITY BARRINGER http://www.nytimes.com/2013/04/09/us/lancaster-calif-focuses-on-becoming-solar-capital-of-universe.html?pagewanted=all&_r=0 Published: April 8, 2013
DENNIS KUCINICH PROVIDES A STORY FOR
MUNICIPAL POWER
The
large, centralized, corporate owned utilities have resisted publicly-owned
power utilities for over a century. Public power advocates were victims to the
Cold war era McCarthyism. Private utilities accused them of being “socialists
and communists out to destroy the American System of government”. NOTE 1
2004/
2008 Presidential candidate and Congressman Dennis Kucinich was one politician
who has embodied populist resistance to privatization of public utilities.
When
he was mayor of Cleveland, the banks who were holding
city loans demanded Kucinich to sell Muny Light which would have been a
contradiction to his campaign platform. Cleveland Electric Illuminating
also tried to strongarm Kucinich. By all means, Cleveland managed their own
utilities successfully.
Kucinich
was even faced with a recall election in 1978 because he would not sell
Cleveland’s municipal utility to a private company.
When
Kucinich held firm and refused to sell out Muny light, the Cleveland banks that
held the city loans blackmailed the city in their outrage by taking Cleveland
into default and blamed it on Kucinich. This cost him his job and he lost the
November 1979 mayoral election.
The
next mayor of Cleveland sold the public utilities and the rates doubled.
In 1993, a reporter for The Cleveland Plain Dealer had been
investigating Mr. Kucinich's decision not to sell Muny Light, and concluded
that the move in fact would have highly benefited consumers. Cleveland Electric Illuminating’s nuclear-laden energy rates were far higher than those of
Muni light NOTE 2
This marked the revival
of his political career, giving him a powerful resurrecting campaign
message. With a light bulb as his logo and the slogan "Because he was
right," Mr. Kucinich won election to the Ohio state Senate in 1994 and the
United States House of Representatives in 1996 serving for 16 years.
NOTE 1
The
Last Energy War: The Battle Over Utility Deregulation
By Harvey Wasserman (p31)
NOTE 2 http://work.colum.edu/~amiller/nyt-kucinich.htm January 2, 2004
CHALLENGING BUSH
