This post by Johanna Bozuwa was originally posted on thenextsystem.org

Executive Summary: Electric utility (re)municipalization is gaining popularity as a strategy to shift away from a reliance on fossil fuel extraction in the context of combating climate change. Across the world—from Berlin to Boulder—communities have initiated campaigns to take back their power from investor-owned (private) utilities and create publicly owned and operated utilities. Moreover, such efforts are increasingly taking on the perspective and language of energy democracy.

Energy democracy seeks not only to solve climate change, but to also
address entrenched systemic inequalities. It is a vision to restructure
the energy future based on inclusive engagement, where genuine
participation in democratic processes provides community control and
renewable energy generates local, equitably distributed wealth (Angel,
2016; Giancatarino, 2013a; Yenneti & Day, 2015). By transitioning
from a privately- to a publicly owned utility, proponents of energy
democracy hope to democratize the decision-making process, eliminate the
overriding goal of profit maximization, and quickly transition away
from fossil fuels.

Utilities are traditionally profit-oriented corporations whose
structures are based on a paradigm of extraction. Following the path of
least resistance, they often burden communities who do not have the
political or financial capital to object to the impacts of their fossil
fuel infrastructure. Residents living within three miles of a coal
plant, for instance, are more likely to earn a below-average annual
income and be a person of color (Patterson et al., 2011); similar
statistics have been recorded for natural gas infrastructure
(Bienkowski, 2015).

These utilities are in a moment of existential crisis with the rise
of renewables. From gas pipelines to coal power plants, their
investments are turning into stranded assets, as political leaders and
investors realize that eliminating fossil fuels from the energy mix is
paramount to creating healthy communities and stemming climate change.

Unfortunately, often publicly owned utilities in the United States
have similar energy generation profiles to their privately owned
counterparts (American Public Power Association, 2015). This paper
explores the extent to which publicly owned utilities are reticent to
take on the new energy paradigm and evaluates their ability to provide
energy democracy compared to investor-owned utilities.

The results of this study not
only identify what principles of energy democracy currently exist in
publicly owned utilities, but also provide strategies to reorient and
rebuild publicly owned utilities with strong foundations in energy
democracy.

Five utilities in three states—Virginia, Ohio, and
Nebraska—were selected as case studies to represent a range of
regulatory, political, and geographic contexts. Data was gathered
through 25 in-depth, semi-structured interviews as well as additional
primary and secondary sources.

Results show that publicly owned utilities meet more of the
conditions for energy democracy than investor-owned utilities, but still
fall short in many respects. However, their structures provide a better
platform to change their orientation to an equitable,
community-controlled utility.  The results of this study not only
identify what principles of energy democracy currently exist in publicly
owned utilities, but also provide strategies to reorient and rebuild
publicly owned utilities with strong foundations in energy democracy. By
looking to the strengths and pitfalls of these studied publicly owned
utilities, energy democracy activists who take on (re)municipalization
campaigns can intentionally build out energy democracy and create a more
just energy future.

Outlined below are some of the major findings, categorized by energy
democracy’s energy portfolio, political, and economic conditions:

Energy Portfolio: The publicly owned utilities
studied in this paper have higher levels of renewable energy than
private utilities. While one of the publicly owned utilities gains the
majority of its renewable energy generation from wind, a significant
amount of the publicly owned utilities’ renewables come from large-scale
hydro power, which has significant environmental and community
repercussions. To further energy democracy, publicly owned utilities
should enable much more ambitious renewable energy goals from such
sources as solar and wind.

Political: Community members’ lack of understanding
of their utility’s decisions and the energy system as a whole is a
pervasive problem with all utilities studied, though to varying degrees.
This has a direct negative impact on participation in democratic
actions—like voting or public meetings—and is particularly troubling
from an equity perspective because it leaves an elite few to make
decisions. Investor-owned utilities use their economic power to further
capture political systems and implement their desired policies. Publicly
owned utilities allow for a much larger scope of people who could
participate and therefore limit elitism, while still suffering from some
inequalities. To further energy democracy, publicly owned utilities
should identify ways to increase community understanding and counter
elitism by increasing the participation of diverse voices. This could be
accomplished through such methods as input from local neighborhood
assemblies and diversifying utility boards through seat allocations.

Economic: Neither utility structure studied has
expansive decentralized renewable energy in their service area. A system
based on decentralized renewables would require a drastic change from
current business models, but this shift is much more manageable for
publicly owned utilities than for investor-owned utilities that pursue
profit for shareholders through constant expansion and
capital-intensive—often fossil fuel-based—infrastructure projects.

The publicly owned utilities studied that own renewable energy are
going through processes of partial privatization. Existing regulation
has led them to rely heavily on power purchase agreements (PPAs)
with large corporations—even investor-owned utilities—for their
renewable energy needs. This is a double-edged sword. On the one hand, PPAs
with for-profit entities can increase the long-term costs of renewable
energy for a community (i.e. over the long run, it could be
significantly cheaper to use bond financing to build and own renewable
energy infrastructure directly). On the other hand, PPAs
could be used to further distribute ownership of renewable energy if
utilities entered into contracts with local community members. However,
none of the utilities studied are currently pursuing this strategy.

Revenues from publicly owned utilities studied are generally paid to local governments and not shareholders, allowing profits to benefit local communities directly. This aligns well with energy democracy values, specifically keeping value local and redistributing wealth within a community. Publicly owned utilities also distributed wealth internally in a more equitable fashion. The highest-paid employees at publicly owned utilities studied never makes more than ten times the average lineman, while the highest-paid executives at investor-owned utilities makes more than one hundred times as much.

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