The NewStandard ceased publishing on April 27, 2007.

Home-heating Hardships

Communities Establish Affordable, Sustainable Energy Alternatives

Part Three in a Series

by Catherine Komp

As privately owned energy companies continue to gouge American consumers, local populations are banding together to form relatively cheap and green power-supply schemes.

Feb. 17, 2006 – Residents of the small village of Solvay, New York brace for long, cold winters like most Upstate households. But unlike their neighbors in Syracuse and Rochester, who are paying historically high heating bills this year, thousands of Solvay’s electricity customers pay base rates less than half those in nearby towns.

Solvay’s publicly owned utility charges four cents per kilowatt hour, while the investor-owned company National Grid, servicing most neighboring communities, charges its customers about 9 cents for the same unit of electricity.

"Obviously the benefits are local control," said John Montone, superintendent of Solvay Electric. "The people own the system."

The public utility, one of several hundred marking their centennial over the next few years, is an example of "democratized energy systems" promoted by the Institute for Local Self-Reliance, a national organization that helps communities find alternatives to privately owned utilities. John Bailey, research associate for the Minnesota-based group, said their goal is to enable "people to become energy producers rather than energy consumers."

While Americans contend with soaring heat and utility costs, some communities, like Solvay, are constructing alternatives to bring consumers reliable, affordable energy. Cities and towns that have maintained control over their utilities are strengthening their operations, while others wage campaigns to take over private utilities to form new public power systems.

While Americans contend with soaring heat and utility costs, others are constructing alternatives to bring consumers reliable, affordable energy.

Nationwide, there are about 2,000 publicly owned utilities, serving about 19.6 million people, or just under 15 percent of the population, according to the American Public Power Association (APPA). Director of customer programs for APPA, Ursula Schryver, explained that in contrast to for-profit utilities that answer to investors, nonprofit public power organizations are owned by consumers, and are consequently more accountable to the people they serve.

According to an APPA study, residential customers served by public power utilities paid an average of 8.2 cents per kilowatt hour for electricity in 2004, about 10 percent less than customers of for-profit utilities.

Advocates of public power say increased reliability is just as important as lower rates. Residents of Winter Park, Florida, one of the most recent communities to transition to public power, cited frustrating electricity outages as the impetus for their six-year struggle to take over Progress Energy, a North Carolina-based company. Despite Progress Energy’s advertising blitz opposing the city’s efforts, residents voted 69 percent in favor of forming a public utility.

Five months after Winter Park "flipped the switch" to community-owned power in June of last year, the city listed numerous improvements to the system, including new power lines, circuits, poles and underground cables – much of which had been neglected by the previous investor-owned utility.

Residential customers served by public power utilities paid about 10 percent less than customers of for-profit utilities in 2004.

Schryver counts an increase in communities considering public power options, but says the process is long and difficult; communities must be prepared to fight well-financed commercial utilities unwilling to yield control of the market without a fight.

In Portland, Oregon, a city victimized by Enron’s swindling practices, utility companies Pacific Gas & Electric and Pacific Corp. provided nearly $3 million to fund a group called "Citizens Against Government Takeover," and was ultimately successful in defeating a public power referendum in 2003.

Community Aggregators

While publicly owned utilities generate their own electricity, another choice for communities seeking more control over their energy market is community choice aggregation (CCA). In some states where energy markets have undergone deregulation CCA laws enable communities to combine their utility needs and purchase gas or electricity at discount bulk prices, usually from a profit-driven supplier.

As with public utilities, lower rates are just part of the incentive for communities pursuing CCAs, which also allow consumers to pursue energy efficiency, conservation and increasing renewable sources as priorities.

According to the Public Utilities Commission of Ohio, since the program began in 2001, 170 cities, counties and townships in the state have formed aggregations; the largest serves about 350,000 customers.

Households buying power from Green Mountain Energy, a supplier offering some electricity from wind, solar, water, and natural gas sources, are guaranteed lower generation rates, according to the Northeast Ohio Public Energy Council (NOPEC), the first major aggregator in the state. The council estimates that each household using green energy prevents 400 pounds of carbon dioxide emissions each year. NOPEC also reports that even with wholesale natural gas prices rising, its customers saved between $25 and $33 per year on electricity and gas bills.

Some consumer advocates call on the government to help families make energy-efficiency improvements to their homes, resulting in cheaper bills, less consumption and greater self-sufficiency.

California also recently passed a CCA bill, and several communities are at various stages of implementing programs. Pat Stoner, program director with the Local Government Commission, a nonprofit organization that helps local governments with environmentally friendly initiatives, told The NewStandard that CCAs are by their nature more accountable to the consumers they serve because they are run by governing boards appointed by elected officials.

Stoner said there is also more of an interest in investing in suppliers that could bring economic development to the community, such as new jobs created through alternative-energy projects.

"With [investor-owned utilities], that’s less of an issue for them," Stoner said. "They’re more interested in making money for their investors."

Tribal innovations

Many Native American communities are spearheading initiatives to take back control of their power systems and invest in alternative sources. Dozens of tribes across the country are pursuing alternative energy projects, with financial help from the Department of Energy.

Colville Indian Power and Veneer, located in Northern Washington, uses wood waste to generate 12 to 15 megawatts of renewable electric power. The tribe satisfies its own electricity needs and has enough surplus left to sell on the grid.

Similarly in Arizona, the Ak-Chin Electric Utility Authority is looking at technology that would use poultry manure from an egg farm to generate electricity for use on the reservation and for exporting to the power market.

On the White Earth reservation in Northern Minnesota, tribe members are looking to enhance their single, 20-watt wind-turbine source by adding a windmill fleet that could provide electricity to all 4,000 residents. With a recently awarded $1 million grant from the federal government, White Earth alternative energy organizer John Shimek said the area, recently labeled by the state as having "commercial-grade" wind power potential, is ripe for energy alternatives.

"I see it as a way that the people around here can do something for themselves and not have to ask anyone else for it," Shimek said. "It will be theirs and theirs alone. To produce our own energy would be great, liberating."

Green Choices for All?

Leading the nation in renewable wind, solar and biogas programs is Austin Energy, a publicly owned utility that boasted green energy sales exceeding 251 million kilowatts in 2003. The company’s Green Choice program has become so popular that the city announced a lottery last month to add a limited number of new subscribers who will pay a fixed rate for ten years. Residents who locked into rates when the program began in 2000 are still paying 2 cents per kilowatt hour, about half the price of area customers using conventional energy services.

While many Austin, Texas residents have benefited from their city’s innovative program, in most places, green power costs 1 to 2 cents more per kilowatt hour than electricity generated from fossil fuels or nuclear power.

Bailey, of the Institute for Self-Reliance, says that most green power is purchased by individual, environmentally conscious people willing to pay a premium for a small amount of renewable electricity – an exchange that fails to make critical investments in large-scale renewable energy systems. However, when public utilities or cooperatives purchase large amounts of green power for their members, they spread the costs over a greater number of people.

San Francisco is one such example; in 2000, voters there approved $100 million in revenue bonds to finance solar, wind and energy-conservation projects. Last month, the California Public Utilities Commission announced a ten-year, $2.9 billion program that aims to install 3,000 megawatts of rooftop solar electricity on homes, businesses and public buildings.

The program will pay participants $2.80 per watt of solar electricity generated, an incentive that will decrease 10 percent annually over the next decade; it will also direct 10 percent of program funds to low-income customers and "affordable housing installations." Advocates say the program is key to reducing greenhouse-gas emissions and promoting energy independence.

Savings for Everyone

Many Americans are also saving on heat and electricity costs this winter from federal Low-Income Heat Energy Assistance Program. But some consumer advocates say the government needs to increase resources for programs that help families make long-term energy-efficiency improvements to their homes, resulting in cheaper bills, less consumption and ultimately less reliance on government help.

Yet, both energy-assistance and -efficiency programs are slated to be cut under President Bush’s 2007 budget recommendations, failing to meet the levels of funding laid out in the controversial Energy Policy Act of 2005. A coalition of 60 environmental, business and faith-based groups called on US lawmakers earlier this month to reject the tens of millions in cuts, calling them illogical, irresponsible and a "strategic mistake that is totally unacceptable."

Signed by Greenpeace USA, the Michigan Environmental Council, the Pace Law School Energy Project and others, the letter reads, in part: "Options such as expanded oil and gas drilling, ‘clean’ coal, and nuclear power are, at best, long-term strategies that will offer no immediate or even near-term relief from the energy problems now confronting the US. Moreover, many of these technologies entail unacceptably high economic, social and environmental costs that will limit, if not completely preclude, their use over the long term."

While Bailey and the Institute for Self-Reliance believe more community control of utilities will result in more efficient, economical systems, he says the federal government has responsibilities in actively researching and developing alternative energy technologies.

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The NewStandard ceased publishing on April 27, 2007.


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This Feature Article originally appeared in the February 17, 2006 edition of The NewStandard.
Catherine Komp is a contributing journalist.

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