Public Power Pt. 1: Why Take Over? — Episode 163 of Local Energy Rules

Date: 17 Aug 2022 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Why would a community go through the laborious, expensive, and drawn-out municipalization process — especially when a win is unlikely? What do cities have to gain?

For this episode of the Local Energy Rules Podcast, host John Farrell and community leaders in six different municipalization campaigns explain their motivations and why a city might attempt to take over its electric utility. This is part one in a special series: The Promise and Peril of Publicly-Owned Power.

Listen to the full episode and explore more resources below — including a transcript and summary of the conversation.

Seth Berry: Our goal, by the way, is really to make Maine the first state in the nation to get to 100% clean energy for all of our needs, that’s the larger overarching goal of Our Power. But we believe also that it has these other collateral benefits, democratic governance and economic equality
John Farrell: Welcome to a special series of the Institute for Local Self-Reliance’s Local Energy Rules podcast focused on public power; utility companies owned by the cities they serve. This series, called The Promise and Peril of Public-Owned Power, responds to an upswell of interest in city-owned utilities, a wave that coincides with over 150 U.S. cities adopting ambitious 100% renewable energy goals. In addition to clean energy, residents of these cities cite local control, lowering costs, and reinvestment in the local economy among the major reasons they want public, instead of private, power companies.

The truth is that while over 2,000 U.S. municipalities have a city-owned electric utility, it’s hard to transition from a private to a public utility. Numerous community-led efforts have failed. And yet, new efforts are born every few months perhaps because, even in failure, these efforts often yield positive change.

In this multi-part series, we explore the “public power” issue from several angles. In this first episode, we examine why communities want publicly owned utilities. You’ll hear directly from community and civic leaders in six places that have past or active public power campaigns, from state representatives to city council members to Sierra Club volunteers. In their own words, they describe the problems presented by the incumbent monopoly utility corporation and what the community hopes to achieve in a transition to public power.

In the rest of the series, we’ll explore what makes public power unique, what happens when communities succeed in their pursuit of public power and what happens when they fail (it’s not all bad); finally, we take a clear-eyed look at existing public utilities before turning our attention to alternative models from across the country where communities are advancing clean energy without municipalization.

I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance and this is episode one in our multi-part series, The Promise and Peril of Public-Owned Power. It’s a production of Local Energy Rules, a biweekly podcast sharing powerful stories about local, renewable energy.

As you heard in the introductory quote from Rep. Seth Berry in Maine, changing who owns our electric utilities springs from a desire to meet many intersecting local priorities. When we interviewed Representative Berry for our podcast in October last year about Our Power, an effort in Maine to change utility ownership from private to consumer ownership…, he had much more to say about why a public takeover feels like the right step to meet ambitious renewable energy goals.

Seth Berry: If you look at the six cities in the nation that arrived at 100% renewable electric first. Those six places were all served by consumer utilities. I can name them for you. Georgetown Texas, Greensburg Kansas, Burlington Vermont, Aspen Colorado, Kodiak Alaska and Rockport Missouri. Four of those, by the way, conservative areas, conservative communities that got to 100% renewable electricity first. And you know what John? This is going to blow your mind, all six of those are served by consumer owned utilities, all six. And what are the chances of that? As I mentioned COUs only serve one in three Americans, so the chances are pretty astronomical that all six of the first communities to get to 100% would be consumer run utilities. But there it is, those six were the first, all of them before 2016, by the way, before Trump was even elected. And look at large utilities, look at the nation’s leading large utility in the race to 100% renewables. It’s SMUD, it’s the Sacramento Municipal Utility District. And don’t you love that name, SMUD? It just has a ring to it. SMUD has seven elected board members, it has a pretty large service area, 1.5 million customers, many of them in rural parts outside of Sacramento, a couple different counties. They’re going to get to 100% renewables by 2030. And this isn’t a goal, this isn’t aspirational. They have a plan, they’re actually clear that they will get there. And that is the kind of game changing leadership that we need.
John Farrell: Almost all communities that have been pursuing public power in the past decade share the Our Power aim of a rapid transition to renewable energy as well as other values like Representative Berry mentioned –– Values like democratic governance and economic equality, more local self-determination, lower costs, and local jobs.

In Boulder Colorado, home to a University of Colorado campus and the National Renewable Energy Laboratory, the community has a compelling mix of youthful activism and technical credibility. The citizen-led effort in Boulder is probably the most famous of public power campaigns, as it has lasted more than a decade since the first successful municipal power referendum. When we interviewed Mayor Susan Osborne in the early days of the campaign in 2013, she had this to say about why Boulder went all in on public power.

Susan Osborne: We had already adopted a climate action plan. We had a number of city programs, both in city buildings and in supporting efforts that businesses and individuals might take to reduce energy use in their homes and businesses. We had adopted Kyoto protocol and began doing the metrics as, as good as we could to track our reduction in carbon. Our electricity provider is Xcel energy, as I think it is in Minneapolis as well. We were looking at a renewal of our franchise agreement, something that only comes along every 20 years…in Colorado, Xcel’s electric electricity supply is predominantly coal. And, over the strong objections of our most active citizens, Xcel went ahead and commissioned a brand new, large coal burning plant in Southern Colorado just a couple of years ago…there was a feeling that this was a company that didn’t share our values and was heading in a different direction. In earlier years was the thought that we could perhaps, by getting out of an investor owned utility, run a more efficient and, run a more efficient operation and have lower cost for our electrical energy.
John Farrell: Leverage was on the mind of Stephen Fenberg, at the time an organizer with New Era Colorado and now a state senator representing Boulder, when we spoke in 2014.
Stephen Fenberg: Community should have leverage to be able to get what they’re asking for at the end of the day, they’re the customer. And if they’re being provided a product that’s not in line with their values, they should be able to have the leverage to demand something better. And if the energy company doesn’t provide it, then they should be able to have the leverage to municipalize.
John Farrell: Back to the interview with Boulder Mayor Susan Osborne, I want to share a summary I provided in that episode of the city’s early study of the potential impacts of municipalization, taken from a story in the local newspaper, the Boulder Daily Camera. The story noted that the study had five key takeaways. One, that a municipal utility could offer lower rates. Two, over a 20 year timeframe a municipal utility could maintain or exceed current levels of reliability; Three, a city-owned utility could reduce greenhouse gas emissions by more than 50% from current levels and exceed the Kyoto goals within the first year. Four, it could get 54% or more of its power from renewable resources and five, that it would essentially create a model public utility, allowing for innovation on everything from energy efficiency to customer service.

This last point was an important finding for Ken Regelson, a local Boulder activist and energy expert. He was often involved in the modeling work that showed the potential benefits of Boulder’s public power takeover. During our conversation in early 2014, he explained that the efforts in Boulder were intended to inspire others, as well.

Ken Regelson: The more that we did that could be followed by others, the better off we would be in terms of what the world needs, which is a very fast switch to renewable energy. So we consciously documented as we went all of the parts of this… If you can tell a good enough story, not just the technical story… you also have to tell the story of how a city can run a utility and do very well at it. Most cities run their own water utilities and do extremely well. Why is an electric utility any different?
John Farrell: State Senator Stephen Fenberg, whom we played a clip from earlier, also felt like pursuing public power would allow the community’s efforts to set a positive example.
Stephen Fenberg: In a lot of ways, people feel like their hands are tied on a local level. And so people were excited and it gave them hope that there actually are things we can do on a local level, like, and have a big impact, not only for your community, but could set an example for other communities as well.
John Farrell: One of those other communities is Santa Fe, New Mexico, described by some as  “ground zero” for the best solar energy resource in the country. For years, the incumbent investor-owned electric utility, Public Service Co of New Mexico, refused to invest in solar. Mariel Nanasi of New Energy Economy explained the frustration when we spoke previously for episodes of the Local Energy Rules podcast in 2014 and 2016.
Mariel Nanasi: We have abundant solar and wind resources in New Mexico. And the monopoly, the electric monopoly has failed to take advantage of that… We asked people about what their preferences is and what we found out exceeded what we thought, which was that 89% of the people want solar. And what was really amazing about it is it cut across party. It cut across ethnicity, it cut across age… so the reason why we are investigating alternatives to this current institutionalized system that really has not served the needs of the people is because it’s not aligned with our values and it’s not aligned with what we know we have to do both in terms of the environment and climate health, but also the economy.
John Farrell: Mariel was emphatic that public power was about more than clean energy and environmental justice. It was about addressing the shortcomings of a monopoly market structure and recapturing wealth that was leaving the community.
Mariel Nanasi: It’s kind of un-American to have monopolies. And so while some people can make the argument that that was a positive thing in 1950 to have, I mean, we didn’t really know better. We have centralized energy productions and then wires coming sometimes 300 miles to people’s homes. Well, this is a totally different model. This is decentralized energy and much more control, and therefore also much more economic, local, and energy and sustainability. And that has really profound impact for the local economy. And so the money isn’t going to executives who make 600,000 or $3 million a year, and then shipping the profit to shareholders on Wall Street, no, it’s recirculating and being repurposed into our community.

The city of Santa Fe exports 10 million to wall street every year in profits. If that money went back into the city’s budget, it could be used for schools or parks or education or whatever the city decided.

John Farrell: What’s the overall purpose of a public power campaign, says Mariel?
Mariel Nanasi:  it’s really about building political will and removing the social license of these energy companies that are not doing what they’re supposed to be doing… Santa Fe has like all these great resolutions passed about wanting to be carbon neutral in 2040, but there’s no way we can be that way while we are getting our energy from coal, for instance.
John Farrell: We’re going to take a short break. When we come back, we hear more about the centrality of affordability and renewable energy in public power campaigns in Colorado, California, and Iowa. You’re listening to a Local Energy Rules podcast, part of our multi-part series, The Promise and Peril of Public-Owned Power.

MIDWAY PITCH

John Farrell: I want to pause and recognize one theme that’s already emerging. In New Mexico and Colorado, public power advocates noted that the incumbent utility didn’t share the community’s values, reflected in its continued investment in resources that benefitted shareholders but not the community. We’ll continue to see this reason pop up along with the economics, as communities realized they could save money and get better alignment with their values by going public.

The economics [or “opportunity to save money”] has been a major motivation for Pueblo, a community of just over 100,000 in south-central Colorado. City council member Larry Atencio joined me for a Local Energy Rules episode in 2018, and he focused squarely on high electricity costs for his constituents.

Larry Atencio: I am a Pueblo city Councilman and I represent district two, which is made up of mostly low to moderate income individuals. And my thinking was they’re having a hard time with their electricity bills and their energy costs are sky high. We have the highest electricity costs in the state of Colorado here in Pueblo, Colorado. And my thinking was how do we relieve some of the pressure finance on low to moderate income people and getting together with the Sierra Club and with other environmental groups, we talked about 100% renewable energy. And I thought that is going to be a great way to reduce energy costs, not only for my constituents, but for the city of as a whole.

It came about when Black Hills took over, they built this new power plant out, a gas fired fire plant outside of the city of Pueblo because they are the only electric provider for the city of Pueblo. So they had to, they literally had to build their own power plant to serve the city. Now, the public utility commission of course gave them permission to recoup all of the cost. And that is what led to the high electricity bills for everyone.

John Farrell: Larry shared how the city began exploring public power as a option to alleviate high energy costs:
Larry Atencio: Yeah, the city of Pueblo, we develop, we put together an electric utility commission to see whether it would be feasible for the city of Pueblo to municipalize. I’m co-chair of that committee. And we are looking into each and every possible combination or option that we could use to bring those electricity costs down for our residents and for industry too, by the way.
John Farrell: Two years later, I spoke with Jamie Valdez, a volunteer with the Pueblo Sierra Club chapter about the progress of the municipalization campaign. Jamie suggested that the effort was definitely about costs, as the city pays 35 to 40% more than the state or national average for electricity, but that there were also broader issues in the public power campaign.
Jamie Valdez: we felt that we wanted some local accountability. We also felt like we wanted local control, but local input into those policies and things like that. And so, you know, on the rates and things. And so we felt like by municipalize, that would give us that opportunity to kind of have self determination when it comes our communities electric needs.

this investor owned utility, this investor owned model of a utility is it’s an extractive model…They are extracting very high profits, very exorbitant profits from our, our already low income community. And we’re paying higher rights rates than the state average or the national average…imagine the good that those revenues could do Pueblo. If they were redistributed amongst our community, through the utility, paying their employees and those employees then spending their money locally, et cetera, imagine the good that that could do our community. If those funds, those revenues were redistributed into our own local economy.

John Farrell: Renewable energy was a common theme between Larry and Jamie’s account of the Pueblo public power campaign, and Jamie noted that the incumbent utility wasn’t very keen on renewable energy, especially if customers owned it.
Jamie Valdez: Black Hills Energy has shown a reluctance to make, make, move towards renewable energy. And more than that, they’ve shown kind of, um, they seem to almost have a disdain for renewable owners, folks who have rooftop, solar and things like that. They’ve pushed for very unfair net metering policies that would target those folks that do have rooftops top solar with extra charges and things like that, which would really negate the benefits of them having rooftop solar beyond that, they just recently built the Pueblo area or polo airport generation station. It’s a fairly new generation station and as a natural gas station. And so their incentive is to stick with natural gas so that they can get all, they can get all the profits they can out of that capital construction projects
John Farrell: The Pueblo campaign isn’t over, despite a ballot box setback in 2020. As we’ll explore in later episodes in the series, public power campaigns face stiff competition from incumbent utilities, who spend millions of dollars on advertising campaigns designed to dissuade voters from picking public power.

Even communities that pursue options besides municipal power have many of the same motivations as other public power advocates.. In California, as in eight other states (you can see the full list on ILSR’s Community Power Map), cities actually have a lighter lift alternative to municipalization, called community choice energy. Lane Sharman, co-founder and chair of the San Diego Energy District Foundation, joined me in May 2014 (for episode 23 of Local Energy Rules) to explain why he and other advocates wanted this public solution. While San Diego has this municipalization lite opportunity, the rationale for public management sounds a lot like the justification for public power campaigns in Colorado, New Mexico, and Maine.

Lane Sharman: it raises the larger philosophical question of what belongs in a public agency and what belongs in a for profit company. And if you have energy in a for profit company, the question is, will the company pursue the lowest cost energy source in order to maximize its profits? I mean, that’s just a logical thing to do. Luckily in the state of California, the energy is not a, by the IOUs is not actually a source of profit realization, is actually the maintenance of the hardware network. But when you in law, large, the hardware network to buy and procure more energy, you increase the profits of the industrial utility. So there is an indirect reason for increasing the quantity of energy. And I think it just raises the question of energy is the source of our problems with climate change, combusting fossil fuels, and therefore like water and education, it may be that energy is better managed as a publicly accountable resource, like education and water.
John Farrell: San Diego Community Power starts serving customers of that community this year, a testament to how community choice makes the transition to public governance easier, something we’ll talk about in future episodes in greater detail.

As in San Diego, advocates in Decorah, Iowa, see public power as an antidote to failures of profit-driven energy monopolies. A town of 7500 in northeastern Iowa, Decorah hosts a small liberal arts college as well as one of the nation’s few energy districts. The focus of Winneshiek Energy District on keeping energy local since 2010 also formed the kernel of its public power campaign, Decorah Power.

Andy Johnson and Joel Zook joined me in April 2018 for a Local Energy Rules episode and Andy wasted no time in explaining why public power was a powerful counter to private monopoly electric utilities.

Andy Johnson: When you’re a publicly owned, consumer owned utility, there is no profit being siphoned off out of state investors. The other side of it though, is that large companies, typically people think about as being possibly more efficient and having economies of scale. But that only works when there’s a competitive marketplace and distribution of retail electricity in many states, including Iowa, is not a competitive marketplace. So the investor owned utilities, including our current incumbent, has no competitive pressures to be leaner and more efficient. And so they’re very big and possibly quite bloated. And that’s what I think the studies that look at municipal utilities, ours and others, find many of our peer municipal utilities in Iowa function actually much more efficiently than any of the investor utilities.
John Farrell: As Andy mentions, most public power campaigns eventually produced a feasibility study that compares the public power option to the status quo. In nearly every case, these initial studies show that public power can address the communities’ desires at a lower cost. The Decorah study was no exception, as Joel explained.
Joel Zook: The study projected that the city could basically offer the same reliable service at about 30% less cost… what is it that the city would do with that savings? Is that something that you can offer the customers rate relief? Is it something that you wanna pay down your debt more quickly from that acquisition, or more investment in local infrastructure?
John Farrell: We’ll come back to Decorah’s public power campaign in a later episode because, like Pueblo, it’s been ongoing despite some ups and downs.

Overall, our tour of six public power campaigns illustrates a consistent set of interests: renewable energy, affordability, local decision making, public over private interests, nonprofit versus for-profit. Given the attractiveness of public power, why have so few communities flipped the switch from private to public?

In forthcoming episodes, we’ll dive in, exploring the high bar these efforts must clear, the broad benefits of public power, and what communities can achieve even if the end result isn’t what they expected.

John Farrell: Thank you so much for listening to this episode of Local Energy Rules, the first in our multi-part series, The Promise and Peril of Public-Owned Power. Although we shared samples from six campaigns, there are several more that are examining public power, from Chicago to Washington, DC, to Ann Arbor, Michigan. You can learn more about these other community campaigns in an ILSR article titled “Spreading Like Wildfire,” published in March 2020.

On the show page, look for links to the full-length podcast episodes with leaders from each of the six communities we featured, as well as additional ILSR resources on public power and municipal utilities. On the website of the Institute for Local Self-Reliance, you can also find every existing city-owned municipal utility on our Community Power Map.

Our next episode in the public power series, in two weeks, features highlights of the benefits of public power. Ursula Schryver, Vice President of Strategic Member Engagement and Education at the American Public Power Association discusses the lower costs, better reliability, and the benefit of local accountability in city-owned utilities. We also visit with leaders from  several cities with public utilities, two of which already source their electricity from 100% renewable resources.

Local Energy Rules is produced by me and Maria McCoy, with editing and sound production by audio engineer Drew Birschbach. Tune back into Local Energy Rules every two weeks to hear more powerful stories of communities taking on concentrated power to transform the energy system. Until next time, keep your energy local, and thanks for listening.


Why Do Cities Pursue Utility Takeovers?

In the episode, public power supporters from New Mexico to Maine share how their communities would benefit from municipalization.

If you look at the six cities in the nation that arrived at 100 percent renewable electricity first, those six places were all served by consumer utilities.

— Seth Berry, Maine

Many of them are driven by decarbonization goals, but their motivations go beyond clean energy. Local accountability, affordable rates, and keeping energy dollars local are also cited as the benefits expected from a municipal utility.

There was a feeling that this was a company that didn’t share our values and was heading in a different direction. In earlier years the thought was that we could perhaps, by getting out of an investor-owned utility, run a more efficient operation and have lower cost for our electrical energy.

— Susan Osborne, Boulder

For the featured interviewees, public power is an aspiration. The cities they represent — Boulder, Colo., Santa Fe, NM, Pueblo, Colo., San Diego, Calif., and Decorah, Iowa — are all served by for-profit, investor-owned utilities.

Taking over an electric utility is no small feat. The last campaign that successfully established a municipal utility was Winter Park, Fla., in 2003.

Still, the slim odds did not discourage Boulder, Pueblo, Santa Fe, or Decorah advocates from starting their municipalization campaigns. Episode three of this special series, The Promise and Peril of Publicly-Owned Power, takes a deeper look at these campaigns and the many legal steps a city must overcome. Before that, stay tuned for a discussion of what’s possible under public power and real examples of its benefits.

Want to hear more from the featured interviewees? Check out the full conversations (in order of their appearance in the episode) below:

Episode Notes

See these resources for more behind the story:

For concrete examples of how towns and cities can take action toward gaining more control over their clean energy future, explore ILSR’s Community Power Toolkit.

Explore local and state policies and programs that help advance clean energy goals across the country, using ILSR’s interactive Community Power Map.


This is the 163rd episode of Local Energy Rules, an ILSR podcast with Energy Democracy Director John Farrell, which shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion.

Local Energy Rules is Produced by ILSR’s John Farrell and Maria McCoy. Audio engineering by Drew Birschbach. Additional Music by Coma-Media from Pixabay.

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter, our energy work on Facebook, or sign up to get the Energy Democracy weekly update.

Featured Photo: illustration by Maria McCoy

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Maria McCoy is a research associate with the Energy Democracy Initiative. In this role, she contributes to blog posts, podcasts, video content, and interactive features.