Public Power for Your Community Local control. Local priorities. A stronger local economy. 2 PUBLIC POWER FOR YOUR COMMUNITY Public Power for Your Community Local control. Local priorities. A stronger local economy. The American Public Power Association represents not-for-profit, community-owned electric utilities that power homes, businesses and streets in more than 2,000 towns and cities, serving 48 million Americans. With no divided loyalties, these utilities are focused on a single mission—providing reliable electricity at a reasonable price, while protecting the environment. These public power utilities generate, or buy, electricity from diverse sources. More at © 2016 American Public Power Association. All rights reserved. Public Power for Your Community Local Control. Local priorities. A stronger local economy. Prepared by the American Public Power Association MORE INFORMATION For additional information or resources on forming a public power utility, contact: Ursula Schryver, 202/467-2980, [email protected]; or LeAnne Sinclair, 202/467-2973, [email protected] American Public Power Association 2451 Crystal Drive Suite 1000 Arlington, VA 22202 Table of Contents Summary ..................................................................................................................................6 What is Public Power? ........................................................................................................7 What is the public power business model? ...................................................................................9 Where does the power come from? ............................................................................................10 Benefits of Public Power .................................................................................................12 Local control ...............................................................................................................................12 Reliable customer service............................................................................................................16 Affordable prices .........................................................................................................................20 Local economic development .....................................................................................................24 Forming a Public Power Utility ......................................................................................27 Rights and responsibilities ..........................................................................................................27 Steps in forming a new utility .......................................................................................................27 Incumbent utility reactions ...........................................................................................................31 Myths and Misinformation ..............................................................................................33 Myths about public power ...........................................................................................................33 Misinformation about forming a new utility ...................................................................................36 Successful Public Power Campaigns .........................................................................47 Keys to success ..........................................................................................................................47 Rocking the boat ........................................................................................................................47 Successful public power initiatives ..............................................................................................48 PUBLIC POWER FOR YOUR COMMUNITY 5 Summary For more than 100 years, public power utilities have competition. When city officials investigate alternatives to remained true to their fundamental obligation to their their electric supplier, they learn more about the value of citizen-customers–the obligation to serve. Public power the franchise. Whether or not they ultimately decide to utilities offer local control and commitment, public form a public power utility, going through the evaluation accountability, low rates, and responsive customer service to process can yield great benefits to local consumers and the communities they serve. taxpayers. The electric industry is constantly changing, facing Incumbent utilities generally oppose the formation of new challenges from evolving customer preferences, new public power utilities because, for them, it means the loss technologies, increased government regulation, and of customers and profits. New public power utilities also utility workforce issues. These broad challenges affect provide high-profile examples of what communities can do the priority issues impacting utilities across the country, for themselves, and this may encourage other cities to form including investment in utility infrastructure, power public power utilities. supply options and the use of renewable resources, energy efficiency, demand response, distributed generation, For these reasons, incumbent utilities often employ an and environmental protection decisions. Electric utilities array of tactics to fight the formation of new public power also have growing obligations to ensure the reliability utilities. The most common tactic is to try to discredit and security of the transmission grid and other electric public power and create doubt and fear about forming a infrastructure. As they face these challenges, public power new utility. But their arguments do not hold up to scrutiny. utilities’ special relationship with their customers helps In fact, public power has been so successful at its focused them set a course that best serves their customers’ interests mission that it has earned the praise of industry analysts, and the long-term needs of their communities. the financial community and, most importantly, electric customers. The public power option is not new. Since the earliest days of electric utility service, in the 1880s, local communities This document explains public power and how it benefits have exercised their right to own and operate a public communities. It outlines the steps in forming a new public power utility. Communities without public power may grant power utility and how the incumbent utility will likely a franchise to a private investor-owned utility or citizens respond. It also addresses many false charges commonly may form a rural electric cooperative. This freedom of leveled against public power and gives examples of choice in how electric service is provided is a local rights successful public power campaigns. issue and a cornerstone of consumer protection and 6 PUBLIC POWER FOR YOUR COMMUNITY What is Public Power? More than 2,000 cities and towns in the United States light up their homes, businesses and streets with “public power–electricity that comes from a community-owned and -operated utility. Public power utilities are like our public schools and libraries: a division of local government, owned by the A public power utility: community, run by boards of local officials accountable to the citizens. Most public power utilities are owned by cities and towns, but many are owned by counties, public utility • Brings electricity to homes and businesses districts, and even states. • May generate and/or buy power While each public power utility is different, reflecting its • Is a not-for-profit entity hometown characteristics and values, all have a common purpose: providing customers in the community with safe, • Is owned by the community reliable, not-for-profit electricity at a reasonable price while protecting the environment. • Is usually a division of local government • Is transparent (subject to sunshine laws) Public power today is an important contemporary American institution. From small towns to big cities, wherever public • Involves citizens in decision-making power exists, it is an expression of the American ideal of local people working together to meet local needs. It is a manifestation of local control. Who does public power serve? • More than 2,000 community-owned electric utilities serve more than 48 million people.1 • Public power utilities serve small communities as well as large cities, including Los Angeles, San Antonio, Nashville, Orlando and Seattle. • Public power serves customers in 49 states–all but Hawaii–and five U.S. territories. • Three million businesses receive their power from a publicly owned electric utility. 1 Based on U.S. Census Bureau statistics of 2.54 people per household/meter. PUBLIC POWER FOR YOUR COMMUNITY 7 What are the other utility ownership structures? There are three types of electric utilities: public power, rural electric cooperatives and investor-owned utilities. Three types of Electric Utilities PUBLIC POWER RURAL ELECTRIC INVESTOR-OWNED UTILITIES COOPERATIVES UTILITIES Not for profit, Not for profit, For profit, BUSINESS community-owned member-owned share-holder owned MODEL Very limited instances Some All REGULATED BY STATE PUBLIC UTILITY COMMISSION Elected/appointed boards– Member-elected boards Private boards GOVERNED BY mayors, city council members, citizens FINANCIAL Exempt from most taxes; instead May neither pay taxes nor other Pay taxes to local CONTRIBUTION TO make payments in lieu of taxes contributions to local government government LOCAL GOVERNMENT or transfers