“Local, self-organized institutions are a significant asset in the institutional portfolio of humankind, and need to survive into the twenty-first century. Many indigenous institutions that developed to govern and manage local common-pool resources have proven themselves capable of enabling individuals to use these resources intensively over the long run. Some have survived centuries or even millennia without destroying the delicate resources base on which individuals depend for their livelihood.”
-Elinor Ostrom, American Political Economist and Nobel Prize winner.
Merriam-Webster Dictionary defines electricity as, “a fundamental form of energy observable in position and negative forms that occurs naturally (as in lightning) or is produced (as in generator) and that is expressed in terms of the movement and interaction of electrons.” We get our electricity through fossil fuels (coal, oil and natural gas), renewable energy (hydroelectric, wind, geothermal, and solar) and nuclear power (Sunshine).
Fossil fuels, or mineral fuels, are derived from natural resources within the Earth (Sunshine). Because they are taken from within the Earth, they are nonrenewable and finite. Science Daily defines fossil fuels as “buried combustible geologic deposits of organic materials, formed from decayed plants and animals that have been converted to crude oil, coal, natural gas, or heavy oils by exposure to heat and pressure in the earth’s crust over hundreds of millions of years.” This might sound cool, but the processes of getting fossil fuels out of the Earth are disruptive to the ecosystems (See North Dakota, Keystone XL Pipeline, Enbridge Oil Pipelines, and Texas). The human use of fossil fuels for energy releases the largest perpetrator of greenhouse gases: carbon dioxide. Carbon dioxide traps solar heat in the atmosphere, increasing global warming. Some of these fossil fuels are referred to as “natural gas,” however, this is a marketing tactic used to separate the fact that greenhouse gasses are released via use of these “natural” gasses as well.
Renewable energies have two key differences from fossil fuels: the source is infinite, and the generation and use of energy from most of these infinite resources do not harm our ecosystem or cause global warming (NREL). These renewable resources are solar (generated from the sun), wind (generated by wind turbines), geothermal (Earth’s natural internal heat) and hydroelectric (using water to create energy). These are the common forms of renewable energy (NREL). Of these renewable energies, only one has proven to do damage to ecosystems: hydroelectric. Hydroelectricity involves dams, and the use of dams have many negative environmental impacts (International Rivers).
Division of energy used in the United States (Sunshine):
Fossil fuels 67% [coal (41%), oil (5.1%), natural gas (21%)]
Renewable energy 16% [mainly hydroelectric (92%), wind (6%), geothermal (1%), and solar (1%)]
Nuclear power 13%
Other sources 3% (i.e. biofuels, biomass, data here is difficult to obtain)
Electricity, A History
“Aw yis, lookit mah fancy machine.”
[Credit: Matt Howe]
In 1882, Thomas Edison developed and installed the United States’ first electricity plant. The chosen location was Pearl Street, located in the financial district of New York City. This plant generated power for local businesses, who were able to use their light to attract customers (Institute for Energy Research). This plant was an asset to a corporation, making it an Investor-Owned Utility (IOU).
Due to the popularity and the invention of numerous household tools run by electricity, the market began to boom. At the time, a single plant could only emit low voltages of electricity within a one-mile radius. In response, multiple plants were installed throughout the cities, owned by various companies—due to the process still being in the beginning stages, the price of originating a plant prevented most companies from owning multiple plants (Institute for Energy Research).
In 1892, Samuel Insull moved to Chicago from Britain to serve as secretary to Thomas Edison. He managed an electricity plant owned by Edison’s company, and pushed for the bottom-line in a classical sense, asking himself: how can we make more money? Insull’s tactic was to sell the need of electricity to those who would use it during off-peak hours; the consumers he targeted, at the time, generated their own electricity. Insull won these consumers over with low prices; with the invention of alternating current transformers (known as AC), the ability to send more electricity over longer distances, increased competition between electric companies and lowered prices even further (Institute for Energy Research).
This increase in competition led to companies purchasing other companies, in an attempt to lower competition. Electricity was monopolized in many cities throughout the United States (Institute for Energy Research). Electricity, and other utilities, became what is economically considered to be a natural monopoly (Investopedia). This “natural” monopoly exists because the price of a company originating and operating an electric plant is so costly, that entrepreneurship in the field is thin (Institute for Energy Research).
The response to this natural monopoly took two forms: municipal ownership and state regulation. Municipal Utility Districts (i.e. MUDs) are government-owned utility companies; to achieve this, governments purchase electric
companies. Not all citizens are comfortable with government-owned utilities however: some local government’s have a history of misusing community funds. There was also a heavy cultural distrust of socialism. State regulation was offered as an alternative to government-owned utilities; here, the state would pass laws and intervene in companies as needed (if the companies were found to be taking advantage of their monopoly position) (Institute for Energy Research).
In the spirit of capitalism, it did not take the companies long to take advantage of their monopoly positions. Holding companies began to pop up in relation to the electric plants (Institute for Energy Research). A holding company is a parent corporation, which owns stock in another company, allowing it to make decisions for the company from which it owns stock (Investopedia).
Holding companies are exempt from most investigations, because they function across state lines. They are also exempt if a company fails, losing little financially in comparison with those who own stock in the holding company, who receive the brunt of the hit (Kennon). Electric companies began a pyramid-scheme of holding companies, creating sub-holding companies. Between 1922-1927, holding companies increased from 102 to 180, while actual electricity companies lowered from 6,355 to 4,409. Insull alone had a capital investment of $27 million, with assets totaling $500 million. The stock market crash of 1929 brought much of this abuse “to light” and federal intervention increased. The Public Utility Holding Company Act of 1935 banned the pyramid structure of holding companies (Institute for Energy Research).
The Public Utility Holding Company Act of 1935 was repealed by the Energy Policy Act of 2005 (Federal Energy Regulatory Commission). The Energy Policy Act stripped fluids used for fracking from multiple clean air and water protection acts (Earthworks). This act also encourages drilling in the Gulf of Mexico, and offers a tax incentive to nuclear power structures at about $4.3 billion, with just $2.7 billion going to renewable energy credits and $1.3 billion towards energy conservation (Committee on Energy and Commerce). This creates the question of whether the government has the best interest of our people and our planet in mind. On this website you can read more about America’s extensive (and unnecessary) fossil fuel exploitation in other countries, such as Mexico, Iran and Syria.
Benefits of Publicly Owned Utilities (POU)
“Open and informed participation at the local level needs to be encouraged to minimize the probability that local energy policies are dominated by any one interest to the exclusion of others, and to maximize the probability that realistic, potentially valuable observations and ideas will be introduced, circled, and developed” (Brunner and Sandenburgh, 11).
Public utilities come in a few forms: Municipal Utility Districts (MUDs) or cooperatives (NPPA). MUDs are government-owned and managed utilities (Farlex Financial Dictionary), and cooperatives are community-owned and managed by and for the people of said community. MUDs and cooperatives are considered non-profit (California Energy Commission). Both gained widespread support in the 1900s for providing utilities to rural areas, where IOUs would not venture for perceived lack of profit (UWCC).
In cooperatives, those who directly manage are voted for as representatives, and function with a democratic structure in that decisions are made by the community, and implemented by their representatives. Each community member who benefits from the utility is a member-owner of the utility: a co-op is owned equally by each member of the co-op. This can be considered a part of a participatory economy; A participatory economy is a democratic economy where there is community ownership over productive properties (i.e. farms, work spaces, schools) and consequent resources (Participatory Economics).
Cooperatives differ from MUDs in various ways. Co-ops have less of a hierarchical structure, are member-owned (therefore excess profits are returned to member-owners), have room for and encourage high involvement from the community in decision-making, and are more involved in financially supporting their community. Both are better for the community in comparison to IOUs because there are no outside stockholder’s to worry about pleasing.
The state of Nebraska is an example of how MUDs and Utility Cooperatives work. While there are several utility co-ops in the United States, there is only one state that is 100% charged by publicly owned utilities: Nebraska. Since 1949, Nebraska has, “121 publicly owned utilities, ten cooperatives, and 30 public power districts…provide electricity to a population of around 1.8 million people” (Hanna). Given our knowledge of the history of electricity in North America, we can surmise that this was not always the case. Post-World War I, “large corporate electric holding companies backed by Wall Street banks entered the market and began taking over smaller private and municipal systems.” deconstructing a largely publicly owned state (Hanna).
In the early 1900s several attempts were made by the people to introduce bills that would help Nebraskans gain back their utilities from corporations, but Nebraska state legislators were heavily influenced by these corporations and very little progress was made (Hanna). In 1930, a revenue bond financing proposal was introduced directly to state voters, as advocates bypassed the state legislature. This proposal was approved, and following were numerous state and federal laws that changed the game for utilities in Nebraska (Hanna):
Enabling Act (1933): 15 percent of eligible voters in an area to petition for a decision on a publicly owned utility
Public Utility Holding Company Act (1935): forced the breakup and restructuring of corporate electricity monopolies
Rural Electrification Act (1936): provided financing for rural electricity projects
Not only was the overhaul to publicly owned utilities better for the consumer, who could now enjoy a say in the prices of their utilities, but they could also determine the types of utilities they use, i.e., renewables. Nebraska is still reliant upon coal and nuclear power, yet has experienced a sizable increase in renewable energy (Hanna). In 2005, the Nebraska Public Power District began operating the “second largest publicly-owned wind farm in the country,” the Ainsworth Wind Energy Facility (NPPD). Stepping outside of Nebraska, we can see the work being done by cooperatives and publicly owned utilities throughout the United States as playing a major role in renewable energy. Since 2010-17, electric cooperatives throughout the United States have increased their solar capacity from 37 MWAC (functioning power) to 392 MWAC (America’s Electric Cooperatives). It is estimated that by the end of 2017, there will be a growth of up to 480 MWAC, the largest growth rate in a year yet (America’s Electric Cooperatives).
“Much of the growth in both deployed and planned solar can be attributed to collaboration among co-ops. Forty-two percent of co-op solar projects are joint efforts involving either the generation and transmission co-ops (also called power supply co-ops) or fellow distribution co-ops” (America’s Electric Cooperative).
In a nationwide survey that took place between December 2016 and January 2017, Cooperatives were asked what their drive was for an increase in relying upon renewable energy over fossil fuels. Overwhelming, the responses fell under the intent of increasing “consumer satisfaction” and responding to consumer demand for solar offerings” (America’s Electric Cooperatives). This shows that cooperatives are listening to the people of their community (because they are the people in their community) and that what the community wants is renewable energy.
“Part of the mythology that they’ve been teaching you is that you have no power. Power is not brute force and money; power is in your spirit. Power is in your soul. It is what your ancestors, your old people gave you. Power is in the earth; it is in your relationship to the earth.” –Winona LaDuke, Native American environmentalist and member of White Earth Ojibwe.
When corporations make decisions for mass groups of people and countries as a whole, it hurts everyone. When governments are making decisions on behalf of corporations for masses of people and other countries, it continues to hurt everyone while acting under the guise of the voice of the people. In these two situations, enormously important decisions are being made by a handful of people.
When cooperatives make decisions, we have the people residing in a community making the decisions for their community, and working with other communities to help better the living conditions of everyone. As a country we make up 5% of the world’s population, but we are the second largest consumer of energy behind China (Central Intelligence Agency). It is time for us to make changes for the health of the world, and our corporations and our governments are not going to do it for us. Electric cooperatives are the future of global warming prevention and reversal.
Federal Energy Regulatory Commission. (April 24, 2006). Repeal of the public utility holding company act of 1935 and enactment of the public utility holding company act of 2005. Federal Energy Regulatory Commission.
Hanna, T. M. (Jan 30, 2015). Community-owned energy: how nebraska became the only state to bring everyone power from a public grid. Yes! Magazine.
