Electricity Illuminates
Ghost of George Norris

There is a ghostly presence abroad in the land. Sightings have been reported in many parts of the country, but mostly in California, where the apparition has been seen hovering near the darkened Sacramento office of Governor Gray Davis. The ghost is that of US Sen. George W. Norris of Nebraska, one of President John F. Kennedy's Profiles in Courage and the undisputed father of federal public power in America.

George W. Norris (1861-1944) is a figure in the progressive political pantheon worth remembering and also worth learning from, even a half-century after his death. One of a small band of Midwestern liberal Republicans who supported the New Deal and consequently became pariahs within their party, Norris spent the last two decades of his life fighting for the concept of public hydroelectric power over the objections of the private utility corporations, whom he christened the "power trust." From 1921 to 1933, the Nebraska senator almost single-handedly carried on a crusade to establish the Tennessee Valley Authority (TVA), the government entity that brought low-cost electricity to parts of six Southern states bordering on the Tennessee River. He was also primarily responsible for the Rural Electrification Administration (REA), created in 1935, which provided America's farms with cheap electric power by means of federally sponsored cooperatives.

When George Norris left the Senate in 1943, his lonely and courageous battle for public power at the national level had worked wonders. Consumers in the Tennessee Valley had seen their electricity bills cut by 70%, and because of TVA's effectiveness as a pricing "yardstick" -- a real competitor private utilities could not ignore -- residential electrical rates nationwide had fallen by a third. Over the same period, REA loans to set up nonprofit electrical cooperatives had tripled the number of US farms having electricity, farms that private power companies had said were uneconomic to serve because of their relative isolation.

Less well known, but equally compelling, is Norris' record on behalf of his own home state, where he engineered federal construction of a multi-county hydroelectric project on the Platte River during the 1930s. Together with rural cooperatives established under REA auspices and local public-power facilities, this so-called Little TVA brought Nebraska completely out from under the grasp of the private utilities. The end result, over a half-century later, is statewide electricity rates that are close to the nation's lowest, consistently ranking Nebraska among the top half-dozen or so cheap-power jurisdictions in the country. Its few competitors are states, chiefly in the South and the Pacific Northwest, having extensive cooperative networks or their own access to inexpensive federal hydropower -- either through the TVA or its Columbia River counterpart, the Bonneville Power Administration.

Needless to say, Nebraska's public-power system has not experienced California-style electrical shortages and price shocks brought on by deregulation, and neither, interestingly enough, have parts of California itself. In each case, it is because there is nothing to deregulate. Over two-dozen communities in the Golden State, including Los Angeles, Sacramento, Anaheim, and Palo Alto, do not rely on investor-owned utilities; instead, they have municipally owned electrical facilities -- "munis" in the argot of the power industry. These fortunate cities and towns maintain public distribution lines and either generate their own wattage, like Los Angeles and Sacramento, or buy it on the wholesale market and resell it at cost.

Despite periodic assertions by the private-power lobby that electrical munis represent "socialism" and are somehow illegitimate, they have a long and honored history in America. They originated in 1882, the same year private utility systems began and, by the turn of the 20th century, were firmly established in such places as Lansing, Mich., Austin, Texas, Tacoma, Wash., Columbus, Ohio, and Jacksonville, Fla. Over a thousand munis were founded during the first wave of public-power enthusiasm that accompanied the Progressive era of the early 1900s; the remainder date mostly from the 1930s and 1940s, when the needs of the Depression and the pro-public-power policies of the Roosevelt administration inspired a second wave of muni development.

Today, according to the American Public Power Association, there are over 2,000 government-operated systems across the country, a third of them with in-house generating capacity, providing low-cost electrical service to 40 million Americans -- about one in seven. The overwhelming majority of these energy providers are standard munis serving individual communities, but their ranks also include county systems and larger district or statewide power authorities. In addition, there are roughly 900 rural electrical cooperatives, the legacy of REA, still in operation.

Altogether, the democratically governed nonprofit electrical sector -- publicly owned utilities plus private, member-owned cooperatives -- services 26% of American consumers; the remaining 74% depend on 240 investor-owned utilities (IOUs), most of them large, many of them controlled by interstate holding companies, and some of them having far-flung multinational interests. It is this latter profit-based sector, deregulated at the wholesale level by Congress in 1992, that is the source of California's special nightmare, as well as the cause of untold sleepless nights in other states similarly engaged in deregulating their retail markets.

The answer to the turmoil and excessive cost of electrical deregulation may seem obvious: re-regulation of the private system. Indeed, that is one solution, but there is another, better alternative: expansion of the public-power sector, In 1948, Carleton L. Nau, then executive director of the American Public Power Association, outlined the unique advantages the absence of private shareholders gave to publicly owned utilities at the municipal level. These included the substitution of community well-being for the profit motive as an operating ethic, the ability to dedicate earnings directly to plant improvements and quick debt retirement, the freedom to apply revenue surpluses toward lower rates and better service, and (because of exemption from federal taxation) significantly lower operating expenses.

To such beneficial characteristics, which remain valid today, might be added security of supply in times of economic uncertainty (for munis having generating capacity), preferential access to low-cost federal hydropower (where available), the right to issue tax-exempt bonds at reduced interest for upgrades in infrastructure, and public accountability and community control in place of absentee ownership. These virtues, most of which apply to district-level and statewide public-power authorities as well as munis, find concrete expression in the nation's comparative electric bills. US Department of Energy statistics reveal that customers of investor-owned private utilities pay rates that currently average 18% higher than those paid by public-power customers. Furthermore, even the commercial customers of IOUs, who get the best rates, pay 9% more than the beneficiaries of public power.

These bottom-line figures don't lie and, together with the ongoing deregulation debacle, suggest that the time is ripe for a revival of the public-power movement. War, it's been said, is too important to be left to the generals, and electrical service is too important to be left to unsupervised corporate utilities, whose primary objective is financial gain. George Norris would certainly agree.

Wayne O'Leary is a writer in Orono, Maine. For more information on public power, or advice on how to form a community-owned electric utility, contact the American Public Power Association, 2301 M Street, NW, Washington, DC 20037; phone 202-467-2900; www.appanet.org.

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