The Long-Standing Struggle for Public Power

Democracy in Power is valuable as a primer on the history of political struggles over private versus public power in the United States. The wide-ranging sources in the footnotes run to nearly eight pages and demonstrate an impressive research project that will point readers to a veritable library of historical and contemporary analysis of the industry.

After a short introduction, the book is organized into three parts. Part 1, “Past,” offers a history of the development of the electricity industry through World War II. Vaheesan skillfully recounts how electricity was attached at the hip with private capital from the start. Indeed, Thomas Edison’s first-of-its-kind Pearl Street power station was located in Lower Manhattan near Wall Street with the express purpose of attracting investors.

Almost as soon as private electricity companies began connecting businesses and residences to electric power, progressive reformers, workers, and socialists alike recognized electricity as less a normal commodity and something more like an “essential service.” In 1894, Richard Ely wrote “Natural Monopolies and the Workingman,” arguing it made sense to allow one entity to manage these services for the benefit of the people.

Vaheesan situates the movements for the municipalization of electricity systems — taking public ownership at the city level — as part of a broader movement for “sewer socialism” and progressive “public utility” law. While investor-owned electric utilities maintained their grip on most of the system, Vaheesan explains how “municipalization” represented what one illustrative cartoon called a “big stick” looming over the industry.

To stave off the threat of municipal socialism, private utility interests conceded to a different model of state-based regulation under the auspices of “public utility commissions” (PUCs).  Although many in the industry resisted such an idea, the corporate titan Samuel Insull saw it as a necessary step in maintaining private control. As Vaheesan recounts, Insull argued this concession to regulation would “insure to the investor the permanency of the undertaking.”

With the municipalization movement neutered, Vaheesan shows how Insull and friends proceeded to construct a wholly corrupt system of financial control through the method of “holding companies” that maintained mega-profits for investors and uneven and costly service for everyone else.

By the 1930s, this pyramid scheme collapsed along with much of the sector and gave an opening for Franklin D. Roosevelt’s (FDR) vision for public power. FDR and New Deal reformers imagined a much broader and ambitious program of federal public power agencies like the Tennessee Valley Authority (TVA) and the Bonneville Power Administration (BPA) to develop public water resources into hydroelectricity and set low “yardstick” rates meant to force the investor-owned utilities to also keep their rates low by comparison.

While private utilities deemed rural areas unprofitable to serve, the Rural Electrification Administration provided cheap loans to rural communities to set up their own consumer-run-and-owned electric cooperatives and electrified the countryside in the process. Yet Vaheesan makes the important point that the “self-liquidating” nature of these loans — the projects were required to generate enough revenue to pay back their loans entirely — placed undue debt constraints on the ambition of these co-ops.

In part 2, “Present,” Vaheesan first takes us through these public power models and critically examines their democratic and sometimes less-than-democratic attributes. It’s striking to learn about the incredibly undemocratic, if not feudal, nature of some of these rural cooperatives. One example, the Black Warrior co-op in Alabama, rigged election rules and has not had a real open board election in more than sixty years.

Part 2 also examines both the continued domination of the investor-owned utilities — who serve over 70 percent of American retail consumers and are still regulated by PUCs — even as their power has been eroded through deregulation and the establishment of supposedly “neutral” wholesale markets run by regional transmission organizations (RTOs). Despite their public intent in the Progressive era, Vaheesan shows how public utility commissions continue to fall prey to utility influence and corruption. He argues this leads both to higher rates for consumers and environmental destruction for communities and the planet (despite the many attempts to regulate pollution and greenhouse gas emissions he reviews in chapter 7).

Part 3, “Promise,” is Vaheesan’s bold vision for reforming (or perhaps revolutionizing) the US electricity sector. In chapter 8, his affiliation with the Open Markets Institute comes most clearly to the fore in his proposals, channeling Elizabeth Warren, to revive the tradition of public scrutiny over the basic “corporate charters” that structure our economy at large.

In chapter 9, “Public Power for the Whole Country,” Vaheesan’s analysis culminates with impressive ambition. He maps out a nationwide vision for public power wherein federal charters make it easier for municipalities or rural co-ops to take public ownership of their local utilities. In a similar vein to what Fred Stafford and I call “Big Public Power” and proposals from the People’s Policy Project and the 2020 Bernie Sanders campaign, Vaheesan proposes the abolition of RTO areas in favor of “regional power authorities” like the TVA or BPA to manage both the decarbonization of electricity and reviving the “yardstick” method to make for cheaper rates for the working class. All in all, his vision is nothing less than multi-scalar public takeover of the electricity sector.

This Is What Energy Democracy Looks Like?

On the surface, Vaheesan presents a robust vision of socializing the power sector with public power at its center. However, the details reveal some ideological blinders. First, the most glaring issue is the near-complete invisibility of labor, unions, and workers in Vaheesan’s history and analysis. I should say, Vaheesan does suggest a role for workers in his proposed plans for “locally controlled” utilities, wherein “30-40 percent” of the votes for board seats will go to workers. He rightly asserts “principles of economic democracy require [workers] have [a] voice in the governance of utilities” and cites principles of “industrial democracy” to justify such an assertion.

Yet this proposal is somewhat jarring given the absence of workers and unions in the preceding two-hundred-some odd pages. Vaheesan’s historical story is mostly one of progressive politicians and reformers calling for public ownership, and it’s less clear whether workers have any agency or interest in the struggle for public power. (Many of his interviews cite “public power employees,” but we learn little about what these employees actually do as workers.)

In a rare mention, Vaheesan discusses coal power-plant workers opposing a large generation and transmission cooperative’s (G&T) plan to phase out a coal plant (G&T co-ops provide wholesale electricity to downstream distribution co-ops to resell to customers at retail rates). But he seems to imply the workers have less legitimate democratic weight compared with the distribution cooperatives the G&T serve, even though the workers’ livelihoods and communities depend on keeping the plant open.

Of course, we know closing coal plants is crucial for decarbonization, but worker concerns should be at the forefront of any democratic process to negotiate this. If climate advocates downplay such concerns, they should not be surprised when promises of a “just transition” fall flat among fossil fuel workers themselves. Moreover, as the above quote suggests, in Vaheesan’s vision of energy democracy, workers are simply one “voice” alongside other groups and interests (and a less-than-majority voice at that).

Second, the barometer of Vaheesan’s assessment of “energy democracy” seems to hinge on “public participation and input on decision making.” When it comes to public power institutions, this does entail important requirements of transparency (e.g., public hearings) and democratic board elections. Yet this vision seems to rely on a kind of folk theory of American democracy — perhaps most famously articulated by Alexis de Tocqueville and now familiar from memed Norman Rockwell representations — where town hall meetings shape the goings-on of small New England villages.

That is to say, Vaheesan assumes ordinary people have a great desire to actively participate in the governance of their electricity systems, but he never exactly explains why that might be. It’s important to point out that electricity is not, for instance, like public schools, where public participation can actively shape and improve the nature of the schools. Electricity is a homogeneous service: it’s either on or off. I would suspect the vast majority of ordinary working-class people have little interest in “participating” in the governance of their utility, but rather simply want reliable and affordable service (two things that currently existing public utility commissions nominally aim to achieve).

Indeed, Vaheesan himself cites many examples where attendance at public power meetings is sparse. When the undemocratic Black Warrior co-op mentioned above sent a proposed bylaw change to members, it got around one hundred phone calls where members “say that they do not understand what to do. Many do not fully understand that they are members and are entitled to vote on the by-laws and other matters.” I’m sure Veheesan would prefer they did understand their role in co-op governance, but we can also presume these are busy people with already complicated lives as it is.

Third, Democracy in Power gives little sense that “energy democracy” is primarily about governance of a complex industrial system of production requiring an outsize role for engineers and other electricity-system experts (including the workers themselves). Rather, Vaheesan seems to equate democratic agency with things like “environmental and economic justice groups” or “climate justice advocates.”

As recent debates within the Democratic Party suggest, however, the other word for these “groups” is NGOs, who are arguably key agents in the erosion of democratic institutions over the last few decades of neoliberalism. As Benjamin Fong and Melissa Naschek argue, NGOs often claim to be democratic representatives of “communities” in their fights for “justice,” but in reality they are usually quite top-down organizations funded by wealthy donors, with little in the way of democratic membership bases.

Vaheesan seems to conflate these groups’ advocacy with democratic input into the electricity system. In some cases, he implies group proposals are on the right side of democracy even when they advocate controversial and hotly debated initiatives. He appears to side with “protests by climate justice advocates and owners of rooftop solar panels” against the Sacramento Municipal Utility District’s plan to reduce “net metering” rates paid to solar owners, even as many argue these initiatives subsidize affluent solar homeowners at the expense of working-class ratepayers who must pay for wider grid maintenance.

When the Roanoke Electric Cooperative supports a voluntary “demand response” program — a program that means, in Vaheesan’s words, “during periods of very high demand, Roanoke can remotely shut off the high-load appliances and equipment of members” — it is praised for its democratic credentials. But, while this sort of policy is cherished by green groups, it is not likely to attract broad democratic support (imagine you must wait to wash your kid’s dirty underwear until peak demand dies down).

And if labor is merely one “voice” among others, these groups fashion themselves as just-as-legitimate additional voices in democratic decision-making. The environmental NGOs behind New York State’s public power campaign and the “Build Public Renewables Act” praised by Vaheesan, for instance, attempted to insert themselves into the original law as key (unelected) decision-makers over funding and energy-mix decisions for New York’s “clean energy hubs”: a program announced by Governor Kathy Hochul in 2022 to hand out $52 million in state funds to NGOs to “provide a holistic, multidisciplinary approach to ensure that all New Yorkers have equitable access to the benefits of the state’s clean energy transition.”

Fourth, in relation to the climate crisis, Vaheesan often treats democracy as an effort by “communities” to have the right to decide their power supply. Notably, this idea combines the “consumer” and “community” visions of democracy described above. For example, Vaheesan laments the ways in which local communities represented by small-scale distribution utilities are trapped in long-term contracts with large-scale G&T co-ops or even the beacon of public power, the Tennessee Valley Authority.

The problem for Vaheesan is the communities can’t switch their power supply to renewable energy and are trapped with a dirtier mix from the TVA or other large utilities. Yet this focus on consumers being “free to choose” (as Milton Friedman put it) is often woefully out of step with the material realities of the grid as large-scale and interconnected industrial infrastructure. Small cities or towns can break their contracts with the TVA or a large G&T co-op and claim to power their activities with 100 percent renewable energy. But such claims are fictions made possible by purchasing “renewable energy certificates” (RECs) — credits sold by renewable generators, sometimes thousands of miles away, to allow consumers to simply “match” their real-world consumption from a much dirtier electricity grid.

More concerning, when municipal utilities or co-ops want to break off from large-scale providers, it often means they venture into liberalized wholesale markets. Vaheesan positively cites New Mexico co-op Kit Carson leaving its G&T “Tri-State” but fails to mention its new supplier, Guzman Energy, is a financialized energy trader who actually owns no physical assets, but rather buys and sells “renewable energy” under the guise of RECs. Environmental groups have also boosted attempts by the Memphis municipal utility to break off from the Tennessee Valley Authority on the premise of acquiring more renewables (via markets). In both cases, public or cooperatively managed institutions get broken up in favor of deregulated markets in the name of “energy democracy.”

The fact is, decarbonizing the grid is a project that exceeds the community or local scale. In the lower forty-eight states, there are only three “grid regions” and roughly sixty-nine “balancing areas” — each of which draws on a massive interregional mix of generation resources that must be managed as a single system to keep the lights on. Any local community should be concerned not only with the individual choice over its power supply, but how its own local demand (or “load”) fits into the needs of the wider production and infrastructure system.

Indeed, one of many sources of the catastrophic and deadly blackout caused by Winter Storm Uri in Texas was that the state uses its own grid and cannot draw power from other regions. Ultimately, Vaheesan himself has argued we need to “nationalize the grid” as part of a national-scale decarbonization plan. This entails a vision of energy democracy focused on a complex system of production, not simply local communities. The fact the TVA is actually a federally owned entity — the slogan “Built for the People of the United States of America” is on all their facilities — suggests the right kind of model for a wider form of energy democracy.

These critiques aside, Vaheesan’s book is well worth studying. While there are already many useful historical accounts of electricity in the United States, Vaheesan’s stands apart with his laser focus on the long-standing struggles between private and public interests. This broad historical perspective allows Vaheesan to end the book with an optimistic outlook: “The United States undertook two major restructurings of the electric power industry in the twentieth century — in the 1930s and the 1990s. It is time for a third.” On that, I couldn’t agree more.