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 		 [Community ownership of power is the most promising path toward
equity, democracy and renewable energy.] [https://portside.org/] 

 THE GREEN NEW DEAL MUST PUT UTILITIES UNDER PUBLIC CONTROL  
[https://portside.org/2019-02-05/green-new-deal-must-put-utilities-under-public-control]


 

 Jackson Koeppel, Johanna Bozuwa and Liz Veazey 
 February 1, 2019
In These Times
[http://inthesetimes.com/article/21708/green-new-deal-community-ownership-electric-utilities-renewable-energy]


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 _ Community ownership of power is the most promising path toward
equity, democracy and renewable energy. _ 

 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., Jeff
Gritchen/Digital First Media/Orange County Register via Getty Images 

 

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
[https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF]
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
[https://www.forbes.com/lists/2012/12/ceo-compensation-12_Gerard-M-Anderson_PUPA.html].)

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
[http://inthesetimes.com/article/21478/soulardarity-detroit-michigan-solar-power-renewable-energy-blackouts],
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 [https://thenextsystem.org/copa] 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
[https://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1615&context=yjil]
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
[http://aceee.org/research-report/u1602] buildings. The investor-owned
utilities also use regressive pricing mechanisms that squeeze the poor
[https://www.southernenvironment.org/uploads/news-feed/A_Troubling_Trend_in_Rate_Design.pdf]
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.
[https://www.theatlantic.com/business/archive/2016/06/energy-poverty-low-income-households/486197/]”
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
[https://www.energyandpolicy.org/utility-industry-contributions-political-organizations/],
lobbying
[https://www.businessinsider.com/utility-companies-lobbying-campaigns-solar-2017-7]
and tactical philanthropy.
[https://www.roanoke.com/news/politics/general_assembly/dominion-donations-show-it-s-a-power-company-in-virginia/article_f1d230ea-6664-5912-80ad-980a5808a570.html]
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
[https://www.roanoke.com/news/politics/general_assembly/dominion-donations-show-it-s-a-power-company-in-virginia/article_f1d230ea-6664-5912-80ad-980a5808a570.html]
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
[https://www.vox.com/energy-and-environment/2017/7/7/15927250/utilities-rooftop-solar-batteries]
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 municipalization campaigns in Boulder, Colo.
[http://www.dailycamera.com/news/boulder/ci_32311056/boulder-moves-forward-municipal-utility-xcel-sets-clean],
and Minneapolis, Minn.
[https://www.utilitydive.com/news/leverage-how-a-municipalization-threat-created-a-unique-energy-partnership/324636/],
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
[https://energynews.us/2018/01/09/midwest/in-michigan-solar-growth-meets-uncertainty-with-end-of-net-metering/]—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
[https://insideclimatenews.org/news/15102018/rooftop-solar-net-metering-policy-utility-charges-michigan-dte-nevada-alec],
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 [http://www.ipcc.ch/report/sr15/] 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
[https://www.brookings.edu/blog/social-mobility-memos/2017/09/18/hurricanes-hit-the-poor-the-hardest/]
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
[https://thinkprogress.org/green-new-deal-alexandria-ocasio-cortez-democrats-95cb356e94ca/].”
Ocasio-Cortez’s proposal mandates the rapid elimination of fossil
fuel use and calls for
[https://docs.google.com/document/d/1jxUzp9SZ6-VB-4wSm8sselVMsqWZrSrYpYC9slHKLzo/edit]
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
[https://www.electric.coop/our-organization/history/] 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
[https://babel.hathitrust.org/cgi/pt?id=uva.x030450898;view=1up;seq=9]
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
[https://academic.oup.com/whq/article-abstract/31/2/133/1910088?redirectedFrom=fulltext]
to start electric cooperatives, public power districts and municipal
utilities in order to bring electricity to their areas. In 1935,
Congress appropriated $410 million
[https://eh.net/encyclopedia/rural-electrification-administration/] 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
[https://www.cambridge.org/core/journals/journal-of-economic-history/article/flip-the-switch-the-impact-of-the-rural-electrification-administration-19351940/DBD3EDE24B28316BD20F9CFEB633E4EA]
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
[https://babel.hathitrust.org/cgi/pt?id=uva.x030450898;view=1up;seq=12]
and publicly owned utilities with contract negotiation, management
techniques, auditing, construction of their systems and even with
shaping new norms
[https://www.history.com/news/new-deal-great-depression-rural-electrification]
around how to integrate electrification into rural lifestyles. Today,
there are more than 900 rural electric cooperatives
[https://www.electric.coop/electric-cooperative-fact-sheet/] that
started through the program. The administration is now housed under
the U.S. Department of Agriculture, and continues to provide loans
[https://www.rd.usda.gov/programs-services/all-programs/electric-programs]
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
[https://www.vox.com/energy-and-environment/2018/11/30/17868620/renewable-energy-power-grid-architecture?fbclid=IwAR2pnHOs6txNw-cCzw50SRZ96uKB-6yXlPUlub1J-WobO9msoMRt6KgOw6E]
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), [http://thenextsystem.org/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
[https://slate.com/business/2017/04/solar-panel-companies-explosive-growth-is-leaving-workers-behind.html].
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
[https://muninetworks.org/communitymap] 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
[https://www.publicpower.org/system/files/documents/municipalization-forming_a_public_power_utility.pdf].
They are generally a major way for states and localities to pay for
large, expensive capital projects, but they are also a major
constraint
[https://www.taxpolicycenter.org/briefing-book/what-are-municipal-bonds-and-how-are-they-used]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
[https://pdfs.semanticscholar.org/b1be/acfc3af3b47ad56fbe54f1317642df8188ed.pdf]
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
[https://thenextsystem.org/rebuilding-americas-infrastructure] instead
of communities or local governments—essentially giving away public
funds to profit the 1%
[http://unionsforenergydemocracy.org/resources/when-green-doesnt-grow/].
As Ocasio-Cortez puts it
[https://theintercept.com/2018/12/05/green-new-deal-proposal-impacts/],
“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; Liz Veazey; and Johanna Bozuwa

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.

Reprinted with permission from In These Times
[http://inthesetimes.com/?utm_source=reprint&utm_medium=article_link&utm_campaign=portside].
All rights reserved.

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