Bernie Sanders’ plan calls to seize public production of power

The for-profit companies that reign over our energy system now have shown no meaningful sign of being willing to transform our energy system; they are much more interested in shareholder gains and business as usual. Together, for-profit utilities and fossil fuel companies have created powerful political-economic machines across the country to solidify the status quo of extraction and extortion. In contrast, democratic public ownership of our energy system could prioritize community benefit over profit, paving the way for a just and equitable energy system.

Over the past months, multiple Democratic presidential candidates have come out in favor of democratizing our energy system. Washington Gov. Jay Inslee (who this week dropped out to run again for governor) centered much of his plan for a clean energy economy on community-owned and community-led renewables. And Julian Castro—the former mayor of San Antonio, where one of the more progressive public utilities is located—has voiced support for policies that empower the public to set up democratic utilities not only for electricity but also internet services and water. But Sanders has voiced the most direct support for 100% public power, and this demand is fundamental to his climate plan. Unlike other proposals to date, Sanders’ plan explicitly commits to using public dollars for everything, refusing to leave the transition to corporate investors who so far have failed the public. By doing so, the Green New Deal proposal also ensures that the benefits of the plan don’t disappear into the pockets of billionaires like Elon Musk but are directed toward a more equitable society. Publicly funded projects, when structured so communities have a say in the types of projects and jobs they create, also have the potential to be more accountable, and can prioritize marginalized communities’ access to high-paying, unionized public jobs and respect the rights of the communities where this new infrastructure is built.

In Nebraska, 121 publicly owned utilities, ten cooperatives, and 30 public power districts provide electricity to a population of around 1.8 million people. Public and cooperative ownership keeps costs low for the state’s consumers. Nebraskans pay one of the lowest rates for electricity in the nation and revenues are reinvested in infrastructure to ensure reliable and cheap service for years to come.“There are no stockholders, and thus no profit motive,” the Nebraska Power Association proudly proclaims. “Our electric prices do not include a profit. That means Nebraska’s utilities can focus exclusively on keeping electric rates low and customer service high. Our customers, not big investors in New York and Chicago, own Nebraska’s utilities.”Payments (in lieu of taxes) from the state’s publicly owned utilities exceed $30 million a year and support a variety of social services throughout the state—including the public education system.

Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) speaks during a town hall meeting about climate change on August 22 in Chico, Calif. (Justin Sullivan/Getty Images)

Aug 22, 2019, The presidential candidate’s new climate plan includes moving toward 100% public ownership of power. By Johanna Bozuwa, In These Times

At the municipal, district and state levels, Sanders explicitly commits to supporting the growth of public and co-op utilities.

A year after a neglected Pacific Gas & Electric (PG&E) power line sparked a wildfire that tore through northern California, presidential candidate Sen. Bernie Sanders on Thursday visited Chico, Calif., where many who fled the fire made a new home. He held a town hall the same day he released a new climate plan, in which he declared that the days of investor-owned utilities—with their profit incentives to underinvest in the electric grid and double down on fossil fuels—have to end.

He’s right: It is time for a massive public takeover of the nation’s electric grid.

The for-profit companies that reign over our energy system now have shown no meaningful sign of being willing to transform our energy system; they are much more interested in shareholder gains and business as usual. Together, for-profit utilities and fossil fuel companies have created powerful political-economic machines across the country to solidify the status quo of extraction and extortion. In contrast, democratic public ownership of our energy system could prioritize community benefit over profit, paving the way for a just and equitable energy system.

“We will end greed in our energy system,” says Sanders’ climate plan. “The renewable energy generated by the Green New Deal will be publicly owned.”

His plan comes as public power ownership campaigns mobilize across the country. California’s movement took off after the state’s largest for-profit utility, PG&E, requested a bailout after the fire forced the utility to declare bankruptcy under the weight of liability claims. Communities across the state are now demanding public ownership, and the company’s hometown of San Francisco has begun looking into municipalization.

In New York, in the midst of a July heat wave, Con Edison sacrificed low-income communities of color in Brooklyn by cutting their power to avoid a larger blackout. Residents responded with outrage, and Mayor Bill de Blasio, another presidential contender, called for kicking out the utility in favor of public ownership.

The birthplace of the monopoly for-profit utility, Chicago, just introduced an order to study the feasibility of taking over Commonwealth Edison after years of rate hikes and inaction on climate change. Alderman Carlos Ramirez-Rosa said that “through municipalization, Chicago could accelerate decarbonization, and implement a progressive rate structure that ensures better rates for working-class Chicagoans.”

Over the past months, multiple Democratic presidential candidates have come out in favor of democratizing our energy system. Washington Gov. Jay Inslee (who this week dropped out to run again for governor) centered much of his plan for a clean energy economy on community-owned and community-led renewables. And Julian Castro—the former mayor of San Antonio, where one of the more progressive public utilities is located—has voiced support for policies that empower the public to set up democratic utilities not only for electricity but also internet services and water.

But Sanders has voiced the most direct support for 100% public power, and this demand is fundamental to his climate plan. Unlike other proposals to date, Sanders’ plan explicitly commits to using public dollars for everything, refusing to leave the transition to corporate investors who so far have failed the public. By doing so, the Green New Deal proposal also ensures that the benefits of the plan don’t disappear into the pockets of billionaires like Elon Musk but are directed toward a more equitable society. Publicly funded projects, when structured so communities have a say in the types of projects and jobs they create, also have the potential to be more accountable, and can prioritize marginalized communities’ access to high-paying, unionized public jobs and respect the rights of the communities where this new infrastructure is built.

Sanders’ plan envisions harnessing and expanding the four already-operating federal Power Marketing Administrations (PMAs) and the Tennessee Valley Authority (TVA), as well as creating a fifth PMA, to build out renewable energy. It would inject $1.52 trillion into renewable energy expansion and $852 billion into energy storage, working particularly with publicly or cooperatively owned utilities. By 2035, this plan would essentially decommodify energy generation through the federal authorities. Unlike the TVA of the past, designed largely for the benefit of white men in search of work in the South, the entire plan is based on the Jemez Principles of environmental justice that focus on bottom-up organizing and including all people in decision-making.

At the municipal, district and state levels, Sanders explicitly commits to supporting the growth of public and co-op utilities. Already, public and cooperatively owned utilities serve 49 million people in the United States, at lower costs and with generally more reliable service. In fact, the entire state of Nebraska runs fully off of public power after the state expelled the for-profit utility in the 1940s because of its extortionist rates. Unlike their for-profit counterparts, these entities are ultimately beholden to the public and any profits are reinvested into the community’s schools, parks and public services. This plan would help this sector expand its reach and invest more in renewable energy, energy efficiency, and much more.

It also provides express assistance to states and municipalities so they could start their own democratically owned utilities—ones driven by the public interest and a climate-resilient future. This could be key for places like New York or Chicago that are starting the process of taking over their utility, seeking guidance and expertise throughout the process. By taking energy utilities into public ownership, we can catalyze renewable energy deployment at the same time we redistribute wealth and power.

Elements of Sanders’ proposal are similar to a proposal for a Community Ownership of Power Administration that was co-created by The Democracy Collaborative (where I work) and grassroots energy groups.

Sanders’ plans for public ownership don’t stop at electricity. He would also allocate funds to massively increase public broadband projects to give people access to a new and necessary public good: the internet. An estimated 19 million people, largely located in rural America, still do not have access to broadband. He offers a vision for integrated and effective local public transportation systems with high-speed rail connections. He stresses the importance of building high-quality, low-carbon-footprint public housing, as well as weatherizing already-standing homes to end energy poverty. The plan reinstates the federal Civilian Conservation Corps jobs program to restore our public lands. It invests dramatically more in public regional development agencies like the Appalachian Regional Commission. It even creates spaces for cooperatively owned grocery stores to facilitate local agriculture not held hostage by monopolies like Monsanto.

Sanders is not alone in his call for more public ownership. Sen. Elizabeth Warren has similarly audacious plans for services like broadband, and both Warren and Sen. Cory Booker have invoked the Civilian Conservation Corps as a model. However, Sanders’ Green New Deal proposal stands alone in its comprehensive commitment to public funding and programs.

The future is public. It is accountable to the principles of environmental justice. It is democratic. It is decommodified. Sanders’ plan is the latest to set the bar for a new economy shepherded in by the green energy transition. We learned long ago that private interests won’t solve for climate and justice at the same time—that change will have to come from united and empowered people. Now, this realization is firmly on the presidential political agenda. 

Johanna Bozuwa is a research associate with The Next System Project at the Democracy Collaborative. Her work focuses on transitioning away from the extractive, fossil fuel economy and toward energy democracy.

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Chicago considers municipalizing ComEd

Credit: Wikimedia

By Catherine Morehouse, Utility Dive, July 25, 2019

  • An order introduced at a Chicago city council meeting could allow the city to own and operate Commonwealth Edison’s (ComEd) Chicago facilities.
  • The utility’s contract with the city expires Dec. 31, 2020. On Wednesday, 22 aldermen introduced an order directing the city council to conduct a study on the feasibility of municipalizing the utility’s operations in Chicago. If passed, the Department of Fleet and Facilities Management will be required to complete and turn in a feasibility study by Dec. 1. 
  • The move comes as New York City Mayor Bill De Blasio’s criticized Consolidated Edison (ConEd) Monday, suggesting the city may need “a new entity” controlling the grid after a weekend blackout left more than 70,000 residents without power.

Power outages, climate change and high power bills have all pushed energy politics center stage in the U.S., and some city and state leaders are growing frustrated with their investor-owned utilities. 

“Chicago has an opportunity to define its energy future,” said Alderman Carlos Ramirez-Rosa, one of the sponsors of the measure to study municipalizing ComEd, in a statement. “[T]hrough municipalization Chicago could accelerate decarbonization, and implement a progressive rate structure that ensures better rates for working-class Chicagoans.”

The city’s contract with ComEd, an Exelon subsidiary, has not been renewed since 1992. Illinois law allows cities to take over utility operations.

“ComEd customers are enjoying record reliability in the city of Chicago, where ComEd’s smart grid and other investments have reduced the frequency of outages by nearly 60 percent since 2012,” the utility told Utility Dive in a statement. “This process is an opportunity to build on that progress, which has helped establish the region as a leader in energy innovation while keeping energy affordable for families and businesses.”

In New York, DeBlasio did not explicitly call for municipalization of Consolidated Edison, but he did have sharp words for the utility.  “It’s clear we have to question if ConEd, as it’s structured now, can do the job going forward or whether we need to go an entirely different approach,” he said. “So I’m calling for a full investigation and further that we examine whether we need a new entity to handle the situtation going forward because at this point I do not have faith in Con Edison.”

ConEd said the blackout was caused by a failure at its relay protection system. New York Gov. Andrew Cuomo, D, has directed the state’s Public Service Commission to investigate the issue.

Maine, San Francisco and Boulder and Pueblo, Colorado, have all expressed interest in public utility ownership in recent years.

Following California’s devastating wildfires and Pacific Gas & Electric’s (PG&E) role in them, San Francisco’s Public Utilities Commission in May released a report concluding city ownership of some of PG&E’s grid assets could “improve reliability, affordability, and sustainability.”

Boulder formed its own municipal utility in 2014, but Colorado’s dominant utility Xcel sued the city, calling municipal efforts “premature.” That lawsuit was settled in May of this year, dissolving that municipal utility, but the city said it still intends to put the matter of forming a municipal electricity provider to a vote in the future.

While Maine does not have specific legislation in place, legislative and regulatory leadership have both expressed frustrations with Central Maine Power, the state’s largest utility.  Public Utilities Commissioners blasted the utility in a Sunday opinion editorial, promising to fully investigate a surprise spike in power bills. In March, Maine Rep. Seth Berry, D, told Utility Dive conversations were happening that could move the state toward a consumer-owned utility model.

“The days of the one monolithic utility that delivered power in one direction from far distance centralized generation sources is a dinosaur,” said Berry. “It’s a relic of the late 19th, early 20th century. And we’re ready to move beyond that.”

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Community-Owned Energy: How Nebraska Became the Only State to Bring Everyone Power From a Public Grid

Yes! Magazine, Jan 2015

In this red state, publicly owned utilities provide electricity to all 1.8 million people. Here’s how Nebraska took its energy out of corporate hands and made it affordable for everyday residents.

Wind Power on Plains photo from Shutterstock

Thomas M. Hanna posted Jan 30, 2015

In the United States, there is one state, and only one state, where every single resident and business receives electricity from a community-owned institution rather than a for-profit corporation. It is not a famously liberal state like Vermont or Massachusetts. Rather, it is conservative Nebraska, with its two Republican Senators and two (out of three) Republican members of Congress, that has embraced the complete socialization of energy distribution.

In Nebraska, 121 publicly owned utilities, ten cooperatives, and 30 public power districts provide electricity to a population of around 1.8 million people. Public and cooperative ownership keeps costs low for the state’s consumers. Nebraskans pay one of the lowest rates for electricity in the nation and revenues are reinvested in infrastructure to ensure reliable and cheap service for years to come. “There are no stockholders, and thus no profit motive,” the Nebraska Power Association proudly proclaims. “Our electric prices do not include a profit. That means Nebraska’s utilities can focus exclusively on keeping electric rates low and customer service high. Our customers, not big investors in New York and Chicago, own Nebraska’s utilities.” Payments (in lieu of taxes) from the state’s publicly owned utilities exceed $30 million a year and support a variety of social services throughout the state—including the public education system.

How the state went public

Nebraska has a long history of publicly owned power systems dating back to the beginnings of electrification in the late 1800s. Initially, these co-existed with small private utilities. However, in the post-World War I era, large corporate electric holding companies backed by Wall Street banks entered the market and began taking over smaller private and municipal systems. Using their financial and political power, these corporations dramatically consolidated the power industry in Nebraska and attempted to stop new cooperatives and publicly owned utilities from forming. During this time more than one-third of the state’s municipal utilities were sold to private corporations.

Tired of abusive corporate practices, in 1930 residents and advocates of publicly owned utilities took a revenue bond financing proposal straight to the voters, bypassing the corporate-influenced legislature which had previously failed to pass similar legislation. It was approved overwhelmingly—signaling both popular support for publicly owned utilities in the state and also the beginnings of their resurgence.

Led by powerful Nebraska Senator George W. Norris—the driving force behind the publicly owned Tennessee Valley Authority—a series of state and federal laws were passed including: the state’s Enabling Act (1933), which allowed 15 percent of eligible voters in an area to petition for a decision on a publicly owned utility; the Public Utility Holding Company Act (1935), which forced the breakup and restructuring of corporate electricity monopolies; and the Rural Electrification Act (1936), which provided financing for rural electricity projects. By 1949, Nebraska had solidified its status as the first and only all-public power state.

Every Nebraskan can help make decisions

Local control and the possibility for democratic participation are defining features of Nebraska’s publicly owned electricity system. At the ground level, public utilities and cooperatives are run by publicly elected power district boards, cooperative boards, or elected city councils (often through appointed boards). These bodies establish budgets, establish service standards and policies, and set prices.

Regularly scheduled meetings of power boards and councils are open to public involvement and comment. Should they so wish, every Nebraskan has the opportunity to become involved in the decisionmaking of their local electricity provider.

One such example relates to the increasing use and proliferation of renewable energy facilities. While the state remains heavily reliant on coal and nuclear sources to provide low-cost energy to consumers, interest in renewable energy—primarily wind—has taken off in recent years. In 2003, electricity consumers, many of whom drove more than 100 miles for the event, participated in an eight-hour deliberative polling survey for the Nebraska Public Power District (NPDD)—a public corporation owned by the state of Nebraska that supplies energy to 600,000 people via local, publicly owned utilities and cooperatives.

The topic at hand was the potential addition of more than 200 MW of wind energy by 2010. Ninety-six percent of the participants supported the wind project, with 50 percent agreeing it was the right size and 36 percent wanting it expanded (compared to just 3 percent who wanted it reduced).

In addition to its other wind power facilities, in 2005 NPDD began operating the Ainsworth Wind Energy Facility, the nation’s 2nd-largest publicly owned wind farm consisting of 36 turbines generating up to 59.5 MW of energy. In 2011, the state’s energy plan acknowledged both that power generation from wind had doubled every two years since 2006 and that developing just 1 percent of the potential energy from wind in Nebraska would satisfy the state’s entire peak demand.

Moreover, public ownership of electricity generation and distribution in Nebraska is complemented by another seemingly socialist idea—planning.

The Nebraska Power Review Board is a state agency that oversees the publicly owned electricity system. In addition to its regulatory functions—such as monitoring rate increases and arbitrating conflicts—the five person Review Board (appointed by the Governor and confirmed by the legislature with party, occupational, and term limit restrictions) “oversees the preparation and filing of a coordinated long-range power supply plan,” as well as the location and construction of new electricity generation facilities.

Toward a century of local control

A common concern with public ownership of larger scale systems is that it can lead to inefficiency, unaccountability, and bureaucracy. But Nebraska’s nearly 100-year-old experience with a completely public and community-owned electricity system demonstrates that this does not necessarily have to be the case.

The principles of subsidiarity and local control can, in fact, be preserved through a networked mix of publicly owned institutions at various scales without sacrificing efficiency or service quality.

Of course, public ownership alone is not a fix-all solution. It does, however, provide an opportunity for a community, a city, or even a whole state to become actively involved in economic decisionmaking on important matters affecting their lives, their environment, and their future. 

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Investor-owned utilities have lobbied against rooftop solar projects and dug in their heels on transitioning to renewables. A Green New Deal should empower communities to kick them out.

FEBRUARY 1, 2019

The Green New Deal Must Put Utilities Under Public Control

Community ownership of power is the most promising path toward equity, democracy and renewable energy. BY JACKSON KOEPPEL, JOHANNA BOZUWA AND LIZ VEAZEY

In designing the Green New Deal, we must call for change that not only helps us meet our climate goals, but shifts the very structure of the institutions that created the problem to begin with.

Highland Park, Mich., is a small, majority-black community of three square miles, nestled in the center of Detroit, with some of the highest poverty and unemployment rates in the country. It’s suffered a series of indignities and setbacks over the years: a state emergency management takeover of the city and surrounding areas; a state takeover of the public water infrastructure; public school closures; and a collapse of tax revenue fueled by white flight, fossil-fuel-driven suburban development, and the rapid decline of the housing market and auto industries.

Residents were hit again when, in 2011, an armada of flatbed trucks with workers bearing DTE Energy logos moved through the city and started pulling streetlight poles out of the ground. Residents watched from their porches as their infrastructure was taken away in real time.

DTE Energy, the area’s investor-owned monopoly energy utility, repossessed over 1,000 streetlights from Highland Park because of $4 million in unpaid electric bills accumulated over many years. (To put that in context, the city’s debt to the utility was still significantly less than what DTE’s CEO, Gerard Anderson, took home in compensation that year: $5.4 million.)

The repossession prompted Highland Park residents to organize and put up their own solar street lights. But it also forced the community to reckon with deeper questions of how DTE treated residents. A 2017 survey of 70 Highland Park households conducted by Soulardarity, a nonprofit and community organizing group, found that close to half of those polled had trouble paying their electrical bills. A quarter had experienced gas or electricity shutoffs, the majority of which were during Michigan’s cold winter months. Nonetheless, DTE has proposed additional extensive rate hikes, raising money that goes in large part to maintain their current coal plants, build new fossil fuel plants and pay their CEOs millions.

While DTE’s actions are shameful, they aren’t too different from the behaviors of many investor-owned utilities in the United States.

The Green New Deal advocated by members of Congress and presidential hopefuls, including Detroit’s own freshman Rep. Rashida Tlaib, promises rapid action on climate change. While the Green New Deal should encompass a massive range of initiatives, a cornerstone must be a program to free communities from the unjust power of investor-owned utilities—not only for de-carbonization, but in order to transform our economy so it serves everyone. Modeled after the original New Deal’s Rural Electrification Administration, such a program could give communities the much-needed finance and capacity to kick out their investor-owned utilities in favor of community-run, renewable-powered utilities.

The problem with investor-owned utilities

DTE and its fellow investor-owned utilities have a long history prioritizing money-making over the needs of communities or the environment. As companies that are largely traded on the stock market, their primary driver is shareholder gain and growth. They dump pollution on poor people and people of color, situating their noxious fossil fuel plants, landfills, incinerators or refineries in black and brown neighborhoods, where the residents have less capital—be it time, money or political influence—to object.

Households in low-income neighborhoods and communities of color across U.S. cities experience a higher-than-average energy burden—a higher ratio of energy costs to earned income—in part because they often live in older, energy-inefficient buildings. The investor-owned utilities also use regressive pricing mechanisms that squeeze the poor to the benefit of their shareholders and higher-use ratepayers: High-energy commercial users get lower rates, while ordinary consumers who seek to save money through conserving energy or installing solar systems find themselves being hit with higher fixed rates from utilities just to get access.

Throughout Wayne County, which includes Highland Park and Detroit, households at 50 percent or less of the poverty level are spending a stunning 30 percent of their income on energy—three times the threshold that qualifies as living in “energy poverty.” And across the country, much as in Highland Park, shutoffs are an all-too regular occurrence, putting residents at risk of being without air conditioning in extreme heat, home heating in extreme cold, or even the ability to operate life-supporting medical equipment.

These big companies consolidate political power through campaign contributions, lobbying and tactical philanthropy. They have built up serious political and economic machines where they operate, often so much so that the regulators bend to their will, quashing community needs. For example, Dominion Energy of Virginia is the largest corporate contributor to electoral campaigns in the state. “No single company even comes close to Dominion in terms of its wide-ranging influence and impact on Virginia politics and government,” says Larry Sabato, a University of Virginia professor. 

The private utility industry shows no meaningful sign of being willing—or even able—to adapt to the urgent need for a shift to renewable energy. In large part, this is because their business model revolves around a centralized distribution system and a deeply-vested interest in fossil fuel infrastructure, from pipelines to power plants. These companies have used their economic and political machines to dig in their heels in on the energy transition—from fighting rooftop solar tooth and nail to changing rate structures in ways that make renewable energy financially infeasible.

While some investor-owned utilities are starting to shift to renewable energy, their compulsion to recoup their sunk costs and obligation to generate shareholder profits continually impede progress. If not for pressure from community members across its territory and municipalization campaigns in Boulder, Colo., and Minneapolis, Minn., the much-lauded electric utility Xcel may not have made commitments to increase its use of renewable energy so quickly.

Where they’ve given in to renewables, investor-owned utilities actively campaign against any projects that would fall outside of their ownership. For example, DTE has been pushing a proposal that would change how net metering works—a move that could seriously hurt rooftop solar because those who have it would benefit less from the energy they contribute to the grid. In response to DTE’s proposal, Becky Stanfield, senior regional director of Vote Solar says, “It is very clear that DTE is trying to put a dagger in the heart of rooftop solar in Michigan.”

This is especially problematic because we only have 12 years to implement a 45 percent reduction in our collective greenhouse gas emissions to avoid the worst consequences of climate change, according to the latest report of the United Nations Intergovernmental Panel on Climate Change. 

The United States is already feeling the effects of climate change, with the costs disproportionately falling on low-income communities and people of color. The investor-owned utilities’ persistence in a climate-change-fueling business model is a threat to us all. 

Time to take the power

This failure begs the question: Is it time to liberate ourselves from for-profit utilities in favor of community control? By cutting ties with investor-owned utilities to build new, publicly owned and operated energy utilities, communities could put themselves back in charge of decision-making, seek to lower their energy burden, transition more rapidly to renewable energy and place equity at the center of energy policy. 

Now elected officials like Tlaib and Rep. Alexandria Ocasio-Cortez (D-N.Y.) have teamed up with climate activists to demand adoption of a “Green New Deal.” Ocasio-Cortez’s proposal mandates the rapid elimination of fossil fuel use and calls for a renewable, resilient energy future with “social, economic, racial, regional and gender-based justice and equality” at the core. 

Community control of utilities is a key way to deliver on a just Green New Deal. One way to bring this about is to have the federal government fund this ownership shift through patient, low- to no-interest loans (as well as grants and other incentives) to support the creation of community-owned, nonprofit utilities, allowing communities to ditch their current for-profit utility contracts and take over their local wires. 

The parallel: electrifying rural America

This is not unprecedented. The U.S. government took very similar steps in the 1930s when Congress passed the Rural Electrification Act as part of the New Deal to supply power to areas that for-profit companies had written off as unprofitable.

When that act was signed into law by President Franklin D. Roosevelt, investor-owned utilities had left nine out of 10 rural homes without access to electricity. Writes author John L. Neufeld in his book, Selling Power: Economics, Policy and Electric Utilities Before 1940, “Stories abounded of farmers coming individually and in groups to utility executives begging for service, only to be flatly rejected, even when their need came from illness in the family and even when they were close to an existing power line.” 

This created deep divides between America’s cities and country, leaving rural areas behind. “Beyond [city limits] lies darkness,” wrote one advocate for rural electrification. Rural residents were subject to grueling labor each day, with women bearing a disproportionate burden of the back-breaking work. Without running water, gas or electricity, processes like laundry and cooking took much longer, detracting from women’s ability to make life richer and fuller, recounts William Leuchtenburg in Franklin D. Roosevelt and the New Deal.

Through the Rural Electrification Act of 1936, Roosevelt launched the Rural Electrification Administration (REA) as a way to jumpstart rural electrification by providing long-term, patient capital in the form of low- to no-interest loans. Originally, they were offered to for-profit utilities, but the utilities rejected the loans, continuing to deem REA projects unprofitable. But, farmers and rural communities applied in huge numbers to start electric cooperatives, public power districts and municipal utilities in order to bring electricity to their areas. In 1935, Congress appropriated $410 million in loans over the first 10 years of the program (more than $7.5 billion in 2019 dollars), and within a decade of opening up the program, rural areas went from having little to no electricity to more than 90 percent electrification, spurring faster growth of rural economies. Nearly all of the loans were fully repaid and the ultimate cost to the taxpayer was low. REA is now considered one of the most successful of the New Deal agencies.

While REA controlled the flow of federal funds to the region and supervised their use, communities were given a substantial amount of autonomy to build out electrification in their areas and were largely owned and operated by customer-owners. As Brian Cannon describes in his analysis of rural electric co-ops in the West, “Power Relations: Western Rural Electric Cooperatives and the New Deal,” “Although REA programs were planned and administered in Washington, D.C., western residents rather than New Deal administrators initiated most of the region’s rural electrification efforts.”

REA provided important technical and legal capacity to support the localities, helping the newly formed cooperatives and publicly owned utilities with contract negotiation, management techniques, auditing, construction of their systems and even with shaping new norms around how to integrate electrification into rural lifestyles. Today, there are more than 900 rural electric cooperatives that started through the program. The administration is now housed under the U.S. Department of Agriculture, and continues to provide loans to rural areas for new investments in their grids.

The proposal: Community Ownership Power Administration

Current investor-owned utilities think of shifting to renewable energy in much the same way as the utilities of the 1930s thought of rural electrification, as a non-economic social good, and have actively opposed being mandated to act. This clear market failure, along with investor-owned utilities’ immense political power, has stymied action on many community solar, energy-efficiency and non-exploitative rate projects across the country. 

A Green New Deal should emancipate communities from these investor-owned utilities, fixing the market failure by deploying the much-needed finance and capacity to kick out their incumbent utilities for publicly run, renewable-powered ones. The reality is that the new, renewable grid we are trying to build will be based on more decentralized assets amenable to the scale of local power, not the old, top-down model of investor-owned utilities.

To do so, we advocate implementing what we call the Community Ownership Power Administration (COPA), a financing and technical capacity program similar to the REA of the first New Deal. COPA would provide a catalytic tool for a new energy system based on local, community benefit. Municipalities, counties, states and sovereign tribal nations could gain the necessary legal authority along with access to a suite of patient financing and funding mechanisms—including low-to-no-interest loans, grants and other incentives—needed to terminate their contracts with investor-owned utilities, buy back the energy grid to form a public or cooperative utility, and invest in a resilient, renewable system. 

The funds could be used by the community utilities to invest in a vibrant local economy. Working with community members, the utilities could build or spur projects in energy efficiency, grid resiliency, shared solar and electrification, and provide affordable energy rates, good jobs and access to community-based enterprise along the way.

This approach could increase buy-in from organized labor, as well. Unions have historically pushed back on renewable energy developments since utility and fossil fuel companies have typically had union representation, while renewable energy companies to date have largely not been unionized. The public sector’s higher rate of unionization—about five times higher than private sector workers—could increase unions’ trust that a publicly-owned utility would secure labor agreements with fair wages and good working conditions throughout their operations and contracted work.

These community-based utilities could even take over other public goods—such as broadband internet and water—to ensure that these necessities are owned and operated by the communities that use them. Already more than 800 communities in the United States have invested in public or cooperative broadband networks to provide affordable, locally controlled access to telecommunications.

Much like the REA, COPA would also provide technical assistance that helps communities navigate legal and technological challenges throughout the takeover and startup process. The program could even help to provide ideas and guidelines for setting up institutions that allow for participatory democracy, distributed ownership and delivering on a vibrant economy, while still leaving room for local design.

These utilities could implement multi-stakeholder boards, where workers, community members and elected officials make decisions together. They could also include consistent neighborhood meetings on topics ranging from workforce needs to how rates are affecting residents to new renewable energy projects in order to decentralize participation and draw upon local knowledge—be it technical expertise or pure lived experience—across their service area. These meetings would provide avenues for petitioning and enable better mechanisms for transparent, accessible information. While REA mobilized electrification and broadened community asset ownership, many of the rural electric cooperatives of today operate as “old boys’ clubs” without clear avenues for community members to engage or even know they have an ownership stake. By taking clear steps to democratize community utilities, COPA iterates upon and builds better institutions that will specifically ensure that low-income residents and communities of color have access and agency in this process.  

To date, communities that have municipalized utilitites have financed the takeover of investor-owned utilities largely through municipal revenue bonds. They are generally a major way for states and localities to pay for large, expensive capital projects, but they are also a major constraint on what cities can do. Municipal bonds, which are traded on the financial market, require payback with interest, with rates higher for poorer cities as a result of low credit ratings from private rating firms. The COPA program would help by providing multiple low-cost financing pathways to make the transition more affordable and accessible for communities across the United States. 

Beyond financing newly formed community utilities, COPA could also provide financing or funding to already existing publicly- or cooperatively-owned utilities transitioning to more renewable projects. The policies and subsidies that the United States has provided up to now for the energy transition, and infrastructure writ large, have been too focused on for-profit companies instead of communities or local governments—essentially giving away public funds to profit the 1%. As Ocasio-Cortez puts it, “For far too long, we gave money to Tesla [and to other technology entrepreneurs], and we got no return on the investment that the public made in new technologies. It’s the public that financed innovative new technologies.”

A related problem: since publicly owned utilities or nonprofits don’t pay taxes, they currently cannot take advantage of federal investment or production tax credits to finance a renewable energy project. As a consequence, they end up contracting with a for-profit corporation that constructs and owns the renewable energy assets, and claims the tax credit. This has led to privatization of our renewable energy assets instead of direct investment and ownership by communities and local governments. 

COPA would avoid this. Instead of continuing to consolidate wealth among high-paid CEOs and shareholders, community utilities could reinvest wealth back into the grid and the larger community. COPA would help by redirecting public investments to public institutions, focusing on creating value for communities through a renewable energy future.

In designing the Green New Deal, we must call for change that not only helps us meet our climate goals, but shifts the very structure of the institutions that created the problem to begin with. It means putting public goods under public control, providing clear pathways for communities like Highland Park to take energy into their own hands and build utilities that are for and by the people.

Highland Parkers have organized to install solar street lights, weatherize homes and bulk-purchase solar. They’ve also created a proposal for citywide solar lighting and the Blueprint for Energy Democracy, a community-wide plan to achieve sustainability. With support through the Green New Deal and COPA, Highland Park can build on this organizing to become a model of what local power can do.

JACKSON KOEPPEL, JOHANNA BOZUWA AND LIZ VEAZEY

Jackson Koeppel is the executive director of Soulardarity, a grassroots membership organization working for energy democracy in Highland Park, Mich., and its neighboring communities. Liz Veazey is network director at We Own It, a national network for cooperative member-owner rights, education and organizing with a focus on rural electric cooperatives. Johanna Bozuwa is a research associate with The Next System Project at the Democracy Collaborative.