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Public Ownership: What's Not to Like?

Dan Berman

September 13, 2013

Category: Society > Government and Politics

In 1916 Gifford Pinchot, founder of the Yale Forestry School,  joined with Senator Robert LaFollette and others to form the Public Ownership League, which promoted the idea that "…utilities which are natural and essential monopolies — water, light, power, and transportation" — should be publicly owned and governed by locally elected boards.  Pinchot later expanded on this theme in his book The Power Monopoly: Its Makeup and Its Menace, and during his second term as Pennsylvania governor, he worked closely with President Franklin D. Roosevelt to promote public ownership.

In September 1932 FDR, in a major campaign speech, lambasted private utilities as "fraudulent monstrosities" which sold "watered stock."  He asserted the "undeniable right" of communities to set up "government-owned and –operated utility services … as a national yardstick to prevent extortion."  FDR's administration went on to establish the Rural Electrification Administration to bring electricity co-ops to thousands of communities previously ignored by private utilities.

In our book Who Owns the Sun?, John O'Connor and I noted that the nearby Sacramento Municipal Utility District (SMUD) was far superior to Pacific Gas & Electric Company, the Yolo County supplier.  Words turned into action with our creation of the Davis Coalition for Local Power, which spearheaded a campaign to replace PG&E service with SMUD-supplied electricity in our county.

The Coalition's campaign highlighted the facts that SMUD charged 25% less than PG&E, that SMUD supplied five times as much solar and twice as much wind capacity per capita, and that SMUD was (and is) governed by an elected board which invites public participation at its monthly meetings. In contrast, PG&E is controlled by a self-selected board which meets in secret, regulated only by the Byzantine procedures of the California Public Utilities Commission.  We excoriated PG&E's incompetent and greedy leadership, comparing President/CEO John Glynn's $34,000,000 in total 2003 compensation to the $289,000 earned by Jan Schori, SMUD's General Manager.

Over the years our Coalition secured unanimous support from elected officials in Yolo County and from the three cities in the annexation zone, plus a 5-2 majority on the SMUD board.  But we lost the November 2006 referendum, despite a 62%-38% win in Davis proper.  PG&E admitted to spending $15,000,000 (16 times what we raised) to spread the Big Lie by TV/mail blitz that annexation would cost over half a billion dollars, rather than the  $130 million arrived at by public authorities.    

To make private-to-public conversions impossible,  in 2010 PG&E spent $44 million to sell Prop 16, which would have amended the California constitution to require a two-thirds vote (rather than a simple majority) for communities seeking to replace private with  public ownership. Though PG&E outspent its grassroots opposition by 400 to 1, it lost state-wide by 53%-47%. Davis citizens voted 78%-22% against Prop 16, in another hopeful sign.

The struggle continues.  A fossil-fuel civilization is a dinosaur devouring its own tail.  Real energy solutions — efficiency, renewables, local control, and democracy — are crucial to our future.  To hold otherwise is to help rearrange the deck chairs on the Titanic.