[BETA] Fortnightly

Public power is competitive power, and that keeps IOUs on their toes.

There they go again. You know who I mean, the critics who fear us in a competitive electric utility environment, or who oppose, for ideological reasons, government involvement in the power business.

Charles E. Bayless, in his article "Time's Up for Public Power" (Public Utilities Fortnightly, July 1, 1998), offered up just the latest of these below-the-belt blows.

It's tempting to respond in kind to these critics. Why? Because they torture the facts and distort the record.

Let me raise the bar of the debate.

Despite what Mr. Bayless or anyone else writes, the time is not up for public power. In fact, public power is right for the times, and the time is right for public power.

Public power has been around since the start of the electric industry. Data collected annually by the federal government for nearly 50 years demonstrates an enviable record of lower rates for public power's customers. Despite our minority status and lack of funds to grease the gears of Washington's political machines, we have been incredibly successful in the legislative and regulatory arenas.

Our opponents argue that public power is a thing of the past, an outmoded idea from the New Deal. Nonsense. This year, the Long Island Power Authority became the newest and second-largest (by customers served) public power system in the country. Dozens of communities across the country are trying to create public power systems, despite being thwarted by investor-owned utilities and their allies.

A century ago, public power was right for the time because private power company rates were high, service was poor, and the market wasn't working to remedy these problems. Sounds a lot like today, no?

From Red Scare to Restructuring

Some of our opponents concede reluctantly that public power played a useful role in the past, then say it has no place in the more competitive future. These public power critics are simply spinning the debate on restructuring to advance their goal of eliminating public power. They did that in the 1940s and 1950s using the Red Scare, when they called for the abolition of public power because it was creeping socialism. They did it in the 1980s and early 1990s when they argued that the serious federal deficit justified the sale of the PMAs and TVA, the elimination of tax-exempt financing, and taxation of public power revenues. Today, they argue public power has no place in a competitive environment.

In fact, the continued presence of public power is necessary to achieve that environment.

As noted economist Alfred Kahn wrote 25 years ago, "there is strong evidence in the public utility arena that competition between the two systems of organization [public and private power], like competition among private businesses, is highly conducive to improved performance." (The Economics of Regulation, Vol. II, p. 105.)

Improved performance is exactly what federal and state legislators and regulators are looking for from competition in a restructured environment.

In addition to being an actual competitor, public power plays an important public policy role