On March 13, 2013, Diane Cardwell writes in The New York Times:
Across the country, cities are showing a renewed interest in taking over the electricity business from private utilities, reflecting intensifying concerns about climate change, responses to power disruptions and a desire to pump more renewable energy into the grid.
Over the years, many localities have examined creating municipal utilities, usually around the time their franchise agreements with private electric companies are to expire. But officials and advocates are now examining municipal utilities as concerns rise over carbon emissions from fossil fuels, especially coal, and as the ability to use renewable energy sources like solar and wind increases.
But private utilities often resist giving up control — and customers — to new, public competitors, arguing that it leaves them unable to recoup investments made in anticipation of customer needs. In addition, the power industry cites its experience and long history in keeping the lights on while meeting environmental goals.
Roughly 70 percent of the nation’s homes are powered through private, investor-owned utilities, which are allowed to earn a set profit on their investments, normally through the rates they charge customers. But government-owned utilities, most of them formed 50 to 100 years ago, are nonprofit entities that do not answer to shareholders. They have access to tax-exempt financing for their projects, they do not pay federal income tax and they tend to pay their executives salaries that are on par with government levels, rather than higher corporate rates.
That financial structure can help municipal utilities supply cheaper electricity. According to data from the federal Energy Information Administration, municipal utilities over all offer cheaper residential electricity than private ones — not including electric cooperatives, federal utilities or power marketers — a difference that holds true in 32 of the 48 states where both exist. In addition, they can plow more of their revenue back into maintenance and prevention, which can result in more reliable service and faster restorations after power failures.
And the road to a new utility is steep and studded with pitfalls, a long and expensive journey that has stalled many towns that have embarked upon it in recent decades. The community and the utility must fix a price for the electric company’s property, a calculation that includes not just the value of poles and wires but also so-called stranded assets, or investments made in things like power plants on the assumption of needing to provide service for a certain number of customers.
Aside from cost, towns must often battle the utility, which usually packs significant political and financial muscle. Sometimes, towns must push to change the law. In Massachusetts, the ultimate decision of whether to sell is left to the utility; lawmakers have been trying for nearly a decade to change that rule, citing high rates and the poor maintenance and performance of private utilities after storms as the main impetus.
Today we accept as normal public ownership of gigantic capital instruments like mass rail, subways, government office buildings, universities, water systems, and power systems. These government-owned enterprises and services could be transformed into competitive private sector companies managed by Private Facilities Corporations with the use of the asset or facility leased to the normal using body. The wages of the Private Facilities Corporation(s) are passed through to the leasing body. This would allow us to build the ownership of what is now public capital into individuals and reduce the cost of government, including public pension systems. Thus, when you build the ownership into the employees of the Private Facilities Corporation(s), who now have a vested interest in its quality of operation and maintenance, the contracted lease rental fee committed by the government entity will give the employee stockholders a reasonable return and lesson or replace the need for supplemental redistribution programs.
Consumer Stock Ownership Plan financing can simultaneously build the ownership into the consumers of monopolies such as telecommunications, water and power companies, mass-transit, and even cable and satellite television, who are the source of all their funding, and dividends paid out to the consumer owners would become an offset to their utility bills.
Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
