Today we examine how we are not only facing an environmental crisis, but an economic one as well, both stemming from the same neo-liberal assumptions and the same privatized world that removes most of us from any influence on how things are done. This post also proposes a solution: democratizing business and commerce.
An Epic Crisis with Only Two Possible Outcomes: Democratize or Cease to Exist. It May Be That Simple
A few days ago, a group of students descended on Senator Diane Feinstein’s office. They were polite, but insistent. They were advocating for her to embrace the Green New Deal and were not willing to accept more modest solutions proposed by Feinstein. They politely objected to Feinstein’s dismissive tone. At one point, Feinstein objected to what she characterized as their “my way or the highway” tone. Bill McKibbon of 350.org noted that: “Feinstein is, in fact, right: on most questions, a ‘my way or the highway’ attitude doesn’t get you very far. If I’m a lawmaker and I think that the minimum wage should be thirty dollars an hour, and you’re one who thinks that eight dollars is generous, we’ll probably try to pass a law that sets the mark somewhere near fifteen dollars, and then argue about it again after the next election. There would be no point in holding out for what I can’t get. But, in the case of the environment, the opponent is not the Chamber of Commerce. The opponent is physics, and physics doesn’t negotiate. It’s not moved by appeals to centrist moderation, or explanations about the filibuster. And it has set a firm time limit. Scientists have told us what we must do and by when, and so legislators must do all they can to match those targets. The beauty of the Green New Deal legislation is not that it’s shiny or progressive or a poke in the eye to the oil companies. Its beauty is that it actually tries to meet the target that science has given us.” And so this is today’s point of departure.
As this post makes clear, the environmental crisis and our economic crisis are not unrelated. The forces that are driving us toward environmental extinction are the same that enslave the world economically. And so, this post examines this issue and points to the urgent need not just to do more but also to do “different.” We need to democratize our resources and our decision-making. Relying heavily upon research done by Johanna Bozuwa from the Democracy Collaborative, this post summarizes why and how we must democratize not just our utilities, but many other community functions currently operated by the private sector.
Bozuwa writes: “In the effort to better combat climate change, municipalizing electric utilities is a strategy to shift away from a reliance on fossil fuel extraction. And municipalization is gaining traction across the world. From Berlin to Boulder—communities have initiated campaigns to take back their power from investor-owned (private) utilities and create publicly owned and operated utilities. Moreover, such efforts are increasingly taking on the perspective and language of energy democracy.”
This is language we hear from our ally New Energy Economy all the time, that the tyranny of utility monopoly served us once, when a century ago we had few alternatives to light communities, fuel economic growth, and allow transportation to connect commerce and people nationally and internationally. But whether we like it or not, whether it is inconvenient, we need to begin changing how we manage our resources on all levels and as this post describes, municipalizing our utilities is one strategy for doing so.
The municipalization of utilities is one of many areas where the public sector could and should manage functions that have been bequeathed to the private sector in the name of progress, in service to neo-liberalism and to the immense profit of the 1% and no one else. To advance justice and the public interest, many are now proposing to municipalize or more accurately re-municipalize our prisons, healthcare, education, banking, utilities, and transportation. Wherever the private sector assumes control of any enterprise, profit becomes the primary, if not the sole, driving force for decision-making about resource use, personnel, location of operations, environmental impact. While this has never served the public interest, until the last 40 years it had not become apparent how devastating that economic system has become to our environment and our future. As Naomi Klein famously penned: This Changes Everything. Except that, to date, for all the protests in the street, things really aren’t changing that much.
While an increasing number of people begin to recognize the critical importance of dramatic shifts in how we manage our resource,s and as a younger generation, alarmed at their long-term prospects, becomes increasingly strident and insistent, some are getting the message. But, we still have dinosaur Democrats dismissing or ignoring pleas to embrace the Green New Deal; we still have gas and oil industry tightly limiting (more accurately eliminating) NM’s policy options in relation to energy; we still have big pharma managing our medications to their obscene benefit, not to ours; we still have Wall St. managing our monetary system and manipulating regulations to further concentrate wealth; we still have grocery stores replete with one-use plastics that are choking our planet. And the majority can only watch, as the levers of power are out of sight and the range of options that are even discussed are tightly controlled. We may be able to vote, but how often is our choice between the lesser of two evils, and how often are our leaders, especially at a national level, entirely distanced from those they represent? Are you listening Rep. Lujan? We’ve been to your office three times now about sponsoring the Green New Deal and have not heard anything but template, tepid responses about how you share our concerns and daily emails asking for our money. If you shared our concerns, you’d sponsor the Green New Deal. But I digress.
We need to make not just incremental change; we need to make a 180-degree turnaround or frankly, we are doomed — choked by methane, buried in plastic, and strangled by economic injustice. And so, at the same time that we focus on municipalization of many important communal functions for environmental reasons, we need to also recognize the myriad of ways that the public would benefit tremendously from many enterprises being democratized and managed with the public’s interest. For decades we have heard the elite tell us we need small government; we need to live within our means, while they live in obscene wealth.
While the 12-year time limit imposed by climate change may more easily grab our attention, the shocking accumulation of wealth experienced across the world is driving the refugee crisis, as populations can’t make a living in their home countries—precisely why there is a flow of refugees from Central America. An entire generation of young Americans is enslaved with impossible levels of college debt. Tens of millions of working families, often working two jobs, still struggle with inadequate income and public systems that fail to provide affordable health care, early childhood programs, and public transportation. Seniors worry that Social Security and Medicare could be undermined, in the interest of “living within our means.” Housing has become entirely unaffordable in large parts of America while luxury condos sit empty until a billionaire wants to spend a weekend in a town they fancy. This is self-aggrandizing greed, pure and simple.
Many would argue that all of this is due to the cascading effect of the management of our resources and the manipulation of our democracy in a neo-liberal capitalist system that is benefiting the 1% and the 1% only. For some time in this blog, I have argued that we need to invent new systems to manage a crisis of epic proportion. And I have often pointed to The Next Systems and the Democracy Collaborative as a tremendous resource for ideas and deep dives into how such systems could be implemented. So let’s return to The Democracy Collaborative’s Johanna Bozuwa who wrote a most worthwhile analysis of how municipalizing our utilities would democratize our decision-making and our choice of resources used to power our communities. Her words could easily be applied to many other community enterprises, as suggested above.
From the Executive Summary of Energy Democracy: Taking Back Power, Bozuwa writes that: “Energy democracy seeks not only to solve climate change, but to also address entrenched systemic inequalities. It is a vision to restructure the energy future based on inclusive engagement, where genuine participation in democratic processes provides community control and renewable energy generates local, equitably distributed wealth (Angel, 2016; Giancatarino, 2013a; Yenneti & Day, 2015). By transitioning from a privately to a publicly owned utility, proponents of energy democracy hope to democratize the decision-making process, eliminate the overriding goal of profit maximization, and quickly transition away from fossil fuels.”
As we think about our battles with PNM and El Paso Electric here in NM, these words echo. While our Roundhouse is advancing many tremendous bills in the area of energy and resource management, the gas and oil industry has a stranglehold on everything — increases in royalties and penalties, and limitations on fracking all are defeated. The effort to shutter the San Juan Coal Plant and securitize PNM’s transition to renewable energy is mired in an utterly incomprehensible bill (SB 489) with bill sponsors and the governor unwilling to even consider anything but the most cosmetic changes. Even with vigilant advocates engaged and armed with skilled regulatory attorneys, they are not even able to gain access to conversation about needed changes.
From the Democracy Collaboratiive: “Utilities are traditionally profit-oriented corporations whose structures are based on a paradigm of extraction. Following the path of least resistance, they often burden communities who do not have the political or financial capital to object to the impacts of their fossil fuel infrastructure. Residents living within three miles of a coal plant, for instance, are more likely to earn a below-average annual income and be a person of color (Patterson et al., 2011); similar statistics have been recorded for natural gas infrastructure (Bienkowski, 2015).” Does this sound familiar?
More from Democracy Collaborative: “These utilities are in a moment of existential crisis with the rise of renewables. From gas pipelines to coal power plants, their investments are turning into stranded assets, as political leaders and investors realize that eliminating fossil fuels from the energy mix is paramount to creating healthy communities and stemming climate change.” Sound familiar?
The Democracy Collaborative full paper explores the extent to which publicly owned utilities are reticent to take on the new energy paradigm and evaluates their ability to provide energy democracy compared to investor-owned utilities.The results of their study not only identify what principles of energy democracy currently exist in publicly owned utilities, but also provide strategies to reorient and rebuild publicly owned utilities with strong foundations in energy democracy.
Five utilities in three states—Virginia, Ohio, and Nebraska—were selected as case studies to represent a range of regulatory, political, and geographic contexts. Data was gathered through 25 in-depth, semi-structured interviews as well as additional primary and secondary sources.
From the Democracy Collaborative: “Our study shows that publicly owned utilities meet more of the conditions for energy democracy than investor-owned utilities, but still fall short in many respects. However, their structures provide a better platform to change their orientation to an equitable, community-controlled utility. The results of this study not only identify what principles of energy democracy currently exist in publicly owned utilities, but also provide strategies to reorient and rebuild publicly owned utilities with strong foundations in energy democracy. By looking to the strengths and pitfalls of these studied publicly owned utilities, energy democracy activists who take on (re)municipalization campaigns can intentionally build out energy democracy and create a more just energy future.”
Outlined below are some of the major findings. As you review this, please consider how these issues manifest themselves here in NM. If you are interested in taking a deeper dive, click here to review the Executive Summary of Democracy Collaborative study. You’ll also find a link to the full study there, which I highly recommend. As you read, consider how the municipalization or democratization of other sectors might benefit the public and consider how our continuing to operate within the constraints of neo-liberalism are limiting options that might advance justice and public interest. From the Democracy Collaborative:
Energy Portfolio: The publicly owned utilities studied in this paper have higher levels of renewable energy than private utilities. While one of the publicly owned utilities gains the majority of its renewable energy generation from wind, a significant amount of the publicly owned utilities’ renewables come from large-scale hydro power, which has significant environmental and community repercussions. To further energy democracy, publicly owned utilities should enable much more ambitious renewable energy goals from such sources as solar and wind.
Political: Community members’ lack of understanding of their utility’s decisions and the energy system as a whole is a pervasive problem with all utilities studied, though to varying degrees. This has a direct negative impact on participation in democratic actions—like voting or public meetings—and is particularly troubling from an equity perspective because it leaves an elite few to make decisions. Investor-owned utilities use their economic power to further capture political systems and implement their desired policies. Publicly owned utilities allow for a much larger scope of people who could participate and therefore limit elitism, while still suffering from some inequalities. To further energy democracy, publicly owned utilities should identify ways to increase community understanding and counter elitism by increasing the participation of diverse voices. This could be accomplished through such methods as input from local neighborhood assemblies and diversifying utility boards through seat allocations.
Economic: Neither utility structure studied has expansive decentralized renewable energy in their service area. A system based on decentralized renewables would require a drastic change from current business models, but this shift is much more manageable for publicly owned utilities than for investor-owned utilities that pursue profit for shareholders through constant expansion and capital-intensive—often fossil fuel-based—infrastructure projects.
The publicly owned utilities studied that own renewable energy are going through processes of partial privatization. Existing regulation has led them to rely heavily on power purchase agreements (PPAs) with large corporations—even investor-owned utilities—for their renewable energy needs. This is a double-edged sword. On the one hand, PPAs with for-profit entities can increase the long-term costs of renewable energy for a community (i.e. over the long run, it could be significantly cheaper to use bond financing to build and own renewable energy infrastructure directly). On the other hand, PPAs could be used to further distribute ownership of renewable energy if utilities entered into contracts with local community members. However, none of the utilities studied are currently pursuing this strategy.
Revenues from publicly owned utilities studied are generally paid to local governments and not shareholders, allowing profits to benefit local communities directly. This aligns well with energy democracy values, specifically keeping value local and redistributing wealth within a community. Publicly owned utilities also distributed wealth internally in a more equitable fashion. The highest-paid employees at publicly owned utilities studied never makes more than ten times the average lineman, while the highest-paid executives at investor-owned utilities makes more than one hundred times as much.
Lots to think about. Thanks to the Democracy Collaborative for their continued work on issues related to democracy and economic, climate, and social justice. Click here to visit their home page. Once the Roundhouse session ends, Retake Our Democracy will be facilitating conversation with other progressive leadership across the state to begin to imagine a New Mexico that more thoroughly considers how best to incorporate Next Systems thinking and solutions. We are running out of time for incremental change and since new models are being developed for managing our resources, we need to incorporate that thinking far more boldly in our public policy. Stay tuned.
Paul & Roxanne