Forum Post: The Breaking of a Power Monopoly: Community Choice?
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The Breaking of a Power Monopoly: Community Choice?
Thursday, 20 March 2014 09:27
By Dina Rasor, Truthout | Solutions
http://www.truth-out.org/opinion/item/22576-the-breaking-of-a-power-monopoly-community-choice
Pacific Gas & Electric has had a monopoly on the energy needs of the northern two-thirds of California since 1905. But a new state government entity called Community Choice Aggregation promises to turn over most conventional wisdom of who has the power.
Pacific Gas & Electric (PG&E), as an energy utility, has had a monopoly on the energy needs of the northern two-thirds of California since 1905. As an investor-owned power company, it has amassed great wealth, assets and political power over the years. However, there is a new state government entity, called Community Choice Aggregation (CCA), that promises to turn over most conventional political wisdom of who has the power.
The first attempt to break PG&E’s monopoly came in 1996, when Republican Gov. Pete Wilson pushed through a bill that loosened up the lucrative California energy market to the “Wild West” of a free market with few price regulations in the price of electricity sold to the state’s utilities. But it did not remove the restriction and cap on prices of what PG&E could charge to their retail customers for electricity. In 2000, drought and other problems put a strain on the California energy market. The notorious Enron Corporation artificially made the shortage worse by illegally shutting down their energy pipelines from Texas to California and manipulated markets to create an artificial power shortage in California. Enron began selling energy to a strapped PG&E at inflated prices but PG&E, by regulation, still had a regulatory cap restricting it from passing most of these energy costs to its customers. From April to December, energy rates increased an astounding 800 percent. Because PG&E was not able to require its customers to pay for most of this outrageous increase, its cash flow was drained quickly. PG&E was headed toward bankruptcy. The next year saw a series of infamous rolling blackouts, and the state had to step in and buy expensive power on the spot market because PG&E did not have the cash. The public did get stuck with paying for the state’s losses through taxes and the cost of PG&E’s bankruptcy that increased PG&E’s overhead and cost of doing business through higher electric bills. Billions of dollars were lost, with some estimates being as high as $45 billion.
After this ongoing trauma was inflicted on the state, PG&E emerged from bankruptcy with its monopoly intact. Many California communities were growing interested in renewable energy, but PG&E had gotten its rate of renewable energy only to less than 20 percent. In 2002, still smarting from the damage of the artificial market crisis, environmental and consumer groups looked for another way to try to infiltrate part of the PG&E’s power empire. This time, California legislators tried another route. They passed a law creating CCA. Communities now have the right to pool the citizens’ and businesses’ energy use in their cities or counties to purchase power for their aggregate unit. Communities such as cities and counties can also group together to form a larger CCA. CCAs are governmental agencies that generate income, similar to water districts.
How could these communities have their own power agencies compete with a powerful PG&E? To understand it, you need to think about PG&E having two monopolies. One is the ability to buy or make and sell electricity - that is, to sell electrons. The other is the infrastructure needed to deliver those electrons, through power towers and power lines, to your door. It would be ludicrous to think that a CCA could duplicate the infrastructure to deliver the electricity to your house or business. CCAs are just buying and/or generating the electrons. So PG&E still has a monopoly in delivering the electricity but the CCAs now have the ability to use PG&E’s power lines to compete and deliver electricity that has a higher percentage of renewable energy and perhaps even at a cheaper rate.
Many cities and counties, such as San Francisco, Marin County, Sonoma County and Berkeley, began to look and see if they could form their own CCAs, generate and buy the power and have a much higher percentage come from renewable sources. Marin County’s CCA, called Marin Clean Energy (MCE), ended up being the first one out the door. It was formed in 2008 and it started service in May 2010.
The Empire Strikes Back
My first reaction to the prospect of breaking up the energy monopoly of PG&E was that this investor-owned power giant born in 1905 would not passively sit back and allow these tree-hugging municipalities and counties to pick off some of its lucrative territory. My instincts were right.
On the June 2010 state ballot, a month after MCE had launched its service, PG&E financed the placement and support of California's Proposition 16. California has an extensive system of allowing the public, by turning in petitions, or the Legislature to put propositions on the ballot each time there is a statewide election. The public and special-interest groups are allowed to donate money for or against these propositions, and there has been enormous money in this propositions election process. This proposition would require any state municipality or county to get a supermajority of two-thirds vote from the citizens, rather than a majority from a town council or county supervisors before they could spend funds or efforts to form a CCA. As anyone knows, demanding a supermajority usually kills any initiative in our closely divided country.
The supporters of Prop 16 couched their argument as a taxpayers’ rights issue, but it was abundantly clear that PG&E wanted to drown the CCA babies in the bathtub before they had a chance to walk. PG&E spent an astonishing $46 million on the proposition against the less than $100,000 raised by the opponents. The CCAs, by law, were not allowed to get involved in the election because they are government entities, so it was just up to environmental groups to mount a web campaign to defeat this proposition to save any chance of trying the CCA concept.
PG&E ended up with mud on its face when Prop 16 was defeated 53 percent to 47 percent, especially when electric rate payers realized that it had used $46 million of its assets to try to defeat the CCA little guys. It was an amazing win for the CCAs.
With the specter of the supermajority vote banished, MCE launched its service. According to the law, every power customer is automatically enrolled in MCE, but customers have the right to opt out and continue to buy electricity from PG&E and its 20 percent renewable energy. But MCE went one step farther: Fifty percent of MCE’s basic service, called Light Green, comes from renewable sources. Customers also can “opt up” for an MCE program called Deep Green, where 100 percent of the energy is renewable.
You might think that this Deep Green program would be costly and that 100 percent renewable energy could not compete with the likes of a giant like PG&E. Yet, according to MCE, rates that are coming out in the next few months from PG&E and MCE show that the Light Green program actually is slightly cheaper than the PG&E rates and the Deep Green adds only $5 a month to the average electric bill. And when you add in the typical commercial electric bill, both the Light Green and Deep Green rates are lower than PG&E. Because these smaller government CCAs don’t have the lobby and advertising budgets of PG&E and the bloat of a large utility company that has not had competition for more than 100 years, they can beat or meet PG&E prices with much higher renewable percentages. This defies the conventional wisdom: A governmental entity is more competitive than an investor-owned utility, and renewable energy is able to compete against traditional and more polluting energy sources. Government outcompeting investors? It’s a world gone mad for the status quo.
Because MCE wants to generate its own power as well as buy power, it also has taken some of its generated income and plowed it back into local projects that will generate power for it. Its biggest example is at the San Rafael Airport, where it helped a private airport turn itself into a solar power source for MCE by putting solar panels on the buildings. There are other local projects that generate electricity and provide local jobs. MCE claims that as it matures, it wants to keep expanding its own renewable energy generation. It is interesting to note that the Deep Green program, with 100 percent renewable, is 100 percent wind energy bought from wind farms in Oregon and Washington. The solar percentage for Light Green is also only 1 percent versus PG&E’s 2 percent, so MCE has the incentive to grow this part of its business on the rooftops of customers.
You would think that the billing for MCE’s income, while still charging the customer for the use of PG&E’s delivery infrastructure, could become very complicated, but it is all listed on one bill. MCE’s power is just a line item on a typical PG&E bill. I live in El Cerrito, and my town has not yet joined MCE. So I am still a PG&E customer. The MCE bill looks just like the bill I pay PG&E, only with an MCE line item.
MCE does have its detractors in the environmental community. To start service and have enough electricity to sell, MCE also contracted with Shell Energy North America; they have a contract until 2017. Sandy Leon Vest of the nonprofit Solartimes.org is one of MCE’s opponents, for this reason. She insists MCE and San Francisco CCA, which also has contracted with Shell, are allowing this large oil-based energy company to distort the purity of going completely renewable and MCE is subsidizing the beast.
It is a chicken-or-egg dilemma for the environmental purist. MCE would not be able to supply enough electricity without the Shell bridge contract so it can get to the point where it buys from more environmentally sound energy companies as these companies grow and MCE generates more of its own renewable power. Other environmental groups such as the Sierra Club and some chapters of the Green Party still embrace the goals of MCE and see the Shell contract as a bridge to get MCE started toward a more renewable future. The environmental movement will have to work out whether it wants the CCAs to begin operations now or wait until there are more clean producers of electricity.
MCE’s initial success has begun to snowball. Although Richmond, California, is a large city not in Marin County, the city and MCE decided to join to expand the customer base to 125,000 customers. In July 2013, Richmond joined MCE and has a seat on the MCE board. This is an interesting partnership with two localities that have very different populations. A closer look shows that the decisions of these two communities also defy conventional wisdom and stereotypes. (I have written about Richmond and its culture in another column on Sandy Hook.)
Marin County is one of the wealthiest counties in the San Francisco Bay Area, and Richmond is one of the most disadvantaged cities. The US Census shows that Marin is 86 percent white, is 55 percent college-educated, has a median household income of $91,000 and has a general poverty rate of 7.5 percent. Richmond is 31 percent white, is a majority minority city, is 26 percent college-educated, has a median household income of $55,000 and has an 18 percent general poverty rate. Yet, according to MCE, 25 percent of Marin County has opted out to go back to PG&E, compared with 16 percent of Richmond residents and businesses that have done the same. Also, Richmond has the most people willing to opt up to Deep Green.
A dominant stereotype is that well-off, well-educated people are the ones that take pollution and renewable energy most seriously and are the ones willing to pay more for a cleaner world. Once again this CCA experiment produces results that don’t fit the common wisdom of what and who will make the changes against a powerful monopoly and will invest in a renewable-energy world. I suspect that the citizens of Richmond, who live in the air and shadow of a large and accident-prone Chevron oil refinery, see up close what traditional fossil fuel energy can do to the environment and their health. A 2012 refinery fire at the plant sent up to 15,000 people streaming to local hospitals.
Other cities adjacent to Richmond, including my own El Cerrito, are exploring and seeking to join MCE. These towns are too small ever to consider their own CCA and look to support renewable energy by joining MCE. MCE spokesperson Jamie Tuckey and community affairs coordinator Alex DiGiorgio stress that MCE is not looking to build an empire by adding many more under its umbrella. The MCE board of directors wants to add only small cities within 30 miles of the county. It is interested in keeping MCE local but does advise and does do studies for other CCAs, such as the one that will launch in May for Sonoma County.
So are MCE and the CCA movement in California the solution to cleaner energy and competition for an intractable power monopoly? Time will tell, as more cities and counties decide to take the plunge. MCE has ambitious goals to generate more of its own power, yet PG&E still, in 2010 and 2011, has been caught spending $4 million to encourage their customers to opt out and sending barred letters to MCE customers. PG&E will have a hard time stopping the tide if the dozens of counties and cities across California continue to explore and create CCAs. It is a potentially effective solution with possible unforeseen consequences, but the launching of this new government option has had surprising and unpredictably hopeful effects in the march toward renewable energy and a competitive energy economy.
Next week I will explore how CCAs are succeeding in the other five states were they are being created.
Copyright, Truthout.
New Report: Fortune 100 Companies Have Received $1.2 Trillion in Corporate Welfare Recently
Thursday, 20 March 2014 10:04
By Aaron Cantu, AlterNet | Report
http://www.truth-out.org/news/item/22577-new-report-fortune-100-companies-have-received-12-trillion-in-corporate-welfare-recently
Military contractors, oil companies and banks are the biggest 'welfare queens' around.
Most of us are aware that the government gives mountains of cash to powerful corporations in the form of tax breaks, grants, loans and subsidies--what some have called "corporate welfare." However, little has been revealed about exactly how much money Washington is forking over to mega businesses.
Until now.
A new venture called Open the Books, based in Illinois, was founded with a mission to bring transparency to how the federal budget is spent. And what they found is shocking: between 2000 and 2012, the top Fortune 100 companies received $1.2 trillion from the government. That doesn't include all the billions of dollars doled out to housing, auto and banking enterprises in 2008-2009, nor does it include ethanol subsidies to agribusiness or tax breaks for wind turbine makers.
What Open the Book's forthcoming report does reveal is that the most valuable contracts between the government and private firms were for military procrument deals, including Lockheed Martin ($392 billion), General Dynamics ($170 billion), and United Technologies ($73 billion).
After military contractors, $21.8 billion was granted out to corporate recipients in the form of direct subsidies; literally transfers of cash from the pockets of Americans to major corporations. The biggest winners were General Electric (GE) ($380 million), followed by General Motors (GM) ($370 million), Boeing (BA) ($264 million), ADM ($174 million) and United Technologies ($160 million).
$8.5 billion in federally subsidized loans were also doled out to giant oil companies Chevron and Exxon Mobile, and $1 billion went directly to massive agri-business Archer Daniels Midland.
Of course, the banks also got their piece of the pie: $10 billion in federal insurance went to Bank of America, Citigroup, Wells Fargo, JPMorgan Chase, not including any of the 2008 bailout money. Walmart enjoyed its share of federal insurance backing as well.
Thanks to Open the Books, the curtain has been lifted and the whole country can now witness the great suckling of corporate America. As Open the Books founder Adam Andrzejewski put it: "Mitt Romney had it wrong: When it comes to the Fortune 100, it's 99%, not 47%, on some form of the government's gravy train."
This piece was reprinted by Truthout with permission or license.
New Study Shows Dangers of Trade Agreements That Help Corporations Sue Governments
Thursday, 20 March 2014 12:07
By Robin Broad and John Cavanagh, Triple Crisis | News Analysis
http://www.truth-out.org/news/item/22582-new-study-shows-dangers-of-trade-agreements-that-help-corporations-sue-governments
As the Obama administration negotiates new trade agreements with European and Pacific nations, a battle has emerged over the agreements’ egregious rules that grant giant corporations unreasonable powers to subvert democracy. These rules, dubbed “investor rights” by the corporations, allow firms to sue governments over actions—including public interest regulations—that reduce the value of their investments.
Oxfam, the Institute for Policy Studies, and four other non-profits are releasing a new study that explains why these rules are so dangerous to democracy and the environment. We are among the co-authors of this study, titled “Debunking Eight Falsehoods by Pacific Rim Mining/OceanaGold in El Salvador.” The report offers a powerful case study of everything that is wrong with this corporate assault on democracy.
“Debunking Eight Falsehoods” is a careful refutation of the arguments of a giant Australian/Canadian mining firm, Pacific Rim/OceanaGold, that is suing the government of El Salvador over that government’s decision to stop issuing new mining licenses. The Salvadoran government did this precisely because its citizens deemed the environmental and social costs too high. Pacific Rim’s proposed gold mine was in the fragile and already compromised watershed of the key river that supplies water to over half the country’s people.
Pacific Rim/OceanaGold is, according to a 2013 IPS study, one of 31 oil, gas, and mining corporations suing governments in Latin America in the International Centre for the Settlement of Investment Disputes (ICSID), based at the World Bank. ICSID is the most frequently used tribunal under existing pro-corporate, anti-democratic trade and investment rules.
Groups such as Oxfam, the Council of Canadians, and MiningWatch Canada that are releasing the study feel that this case should be a “poster child” of what is wrong with such existing rules and why trade agreements incorporating such rules should not be passed. The study shows how corporations use their 1% muscle (and threats of suits) to attempt to force governments into giving them mining licenses. If this doesn’t succeed, then they file the suits at ICSID and then attempt to distort reality to justify their view of why their rights to mine must prevail.
For example, the “8 Falsehoods” study details how Pacific Rim/OceanaGold, soon after filing its suit, attempted to paint its opponents as “rogue” NGOs that are “anti-development.” Yet, the reality is that El Salvador’s decision to stop issuing new mining permits came after strong public outrage over the devastating impacts of mining. As the study reveals:
An independent poll showed 62.4% of the public opposed to mining.
The highest echelons of the Catholic Church publicly came out against mining.
The government’s office of Ombudsman for Human Rights opposes mining.
Over 260 international groups have called for the dismissal of the suit.
In other words, as the study stresses, the groups inside and outside of El Salvador opposing the mining are anything but “rogue.” Moreover, the “rogue” label used by Pacific Rim/OceanaGold is reckless amidst the conflict that Pacific Rim’s proposed mine has brought to the area. Indeed, since 2009, at least four people opposed to mining have been assassinated in the area where the company wants to mine.
The study also refutes Pacific Rim/OceanaGold’s claim that it went above and beyond the guidelines required for mining permits back when the government was still issuing them. Instead—and this should be key to the World Bank-based tribunal hearing the case—our study found that the firm never completed or submitted a feasibility study, nor did it ensure it had purchased ownership or authorization to use the surface land over the proposed mine. Rather, Pacific Rim relied on lobbying government officials to try to get the permit.
The study’s authors contend that for those concerned with democracy and basic rights, this El Salvador case stands as a potent reminder of how important it is that we fight such unjust corporate lawsuits. It is vital not only to support the people in El Salvador and other countries under assault, but to rally the groups and governments trying to halt new trade and investment agreements built from this same cookie-cutter mold. The governments of Chile and other countries are already raising critical questions about these pro-corporate rules in the proposed Trans-Pacific Partnership (TPP). Social movements in several European nations are making common cause with their governments in raising similar concerns in the trans-Atlantic talks. The Pacific Rim/OceanaGold case is an advertisement of the dangers of such rules.
As we write these words, the Canadian mining company Infinito Gold has filed a suit (again in the World Bank’s ICSID) against the government of ecotourism powerhouse Costa Rica. Infinito claims that Costa Rica’s executive, legislative, and judicial branches are all incorrect in banning open-pit mining and denying the corporation a license.
It is time to stop the expansion of undemocratic agreements and support the governments that are seeking alternatives that respect their sovereignty, their peoples’ rights, and their environment.
This piece was reprinted by Truthout with permission or license.
The Secret Affair Your Lawmaker Wants to Hide From You
Thursday, 20 March 2014 12:16
By Jim Hightower, OtherWords | Op-Ed
http://www.truth-out.org/opinion/item/22583-the-secret-affair-your-lawmaker-wants-to-hide-from-you
Getaways for members of Congress and lobbyists showcase the prostitution of our legislative system.
How bad will it get? The public approval rating for Congress has sunk to 9 percent, the lowest level since Gallup began to ask us about it.
But your lawmakers are bound to get even more unpopular.
Willing legislators have begun a scandalous relationship with corporate cash. The lovebirds are hooking up in secretive rendezvous resorts like the Dorado Beach Ritz-Carlton in Puerto Rico.
Lawmakers and lobbyists don’t like to talk about what they’re doing. They certainly don’t want voters or the media to see them. These getaways showcase the prostitution of our legislative system.
If you had wandered innocently into the swank Four Seasons hotel of Vail, Colorado, in early January, you might have witnessed these groups groping for each other’s support.
Assorted lobbyists, including one who represents the utility giant, PPL Corporation, had slipped tens of thousands of dollars into the political pockets of Rep. Ed Whitfield and four other House members for the pleasure of rubbing elbows, wining and dining, and whispering sweet legislative nothings to them for hours.
At one dinner, the cozy group dug into juicy — and expensive — Wagyu steaks and swilled $60-a-bottle wine as they played “scratch-my-back.” That’s Washington-style politics for you.
Whitfield, a Kentucky Republican, was especially popular with the utility lobbyists because he chairs the House committee that handles legislation affecting — guess what? — utilities.
Ed must have had a good time in Vail, because when he returned to Washington, he promptly introduced a bill to let PPL and other electric utilities build additional polluting, coal-burning power plants – an industry favor that would overturn health protections recently approved by the Obama administration.
And it doesn’t look like this manipulation game will cease anytime soon.
Regarding these surreptitious meetings, a corporate lobbyist recently admitted to The New York Times: “Everybody is embarrassed about it. Although not so embarrassed that they don’t do it.”
This piece was reprinted by Truthout with permission or license.
Democratizing the Global Food Crisis...
Monday, 24 March 2014 14:42
By The Daily Take, The Thom Hartmann Program | Op-Ed
http://www.truth-out.org/opinion/item/22664-democratizing-the-global-food-crisis
The dangers of climate change aren't down the road; they're already here. And they're fueling a global food crisis.
This week, more than 60 scientists from around the world are meeting in Japan, to finish writing a comprehensive report on the impacts and dangers of climate change and global warming.
The report, which is being written at a meeting of the Intergovernmental Panel on Climate Change - the IPCC - seeks to tell global leaders just how bad the climate change problem is right now.
And it's very bad.
While the report hasn't been released yet, leaked drafts have been, and they are painting a pretty frightening and disturbing picture.
According to the leaked drafts, the major risks and effects of climate change and global warming are far more immediate then was first thought. And those effects go beyond melting ice, rising temperatures, and threatened species of animals and plants.
Right now, climate change is driving everything from droughts and flooding, to war, disease, and hunger.
In fact, global-climate-change-driven food problems are behind most of the upheavals in the Middle East, from Egypt to Syria.
And, as climate change continues to worsen, those food problems and conflicts will become more widespread, and extend well beyond the Middle East.
That, according to the leaks we're hearing from this IPCC meeting this week in Japan, should cause the entire world to rethink how we produce our food.
Right now, much of America's – and the world's – food is produced by giant agribusiness companies.
Corporations like Cargill, ConAgra, Kraft, and PepsiCo dominate global food distribution, using large-scale homogenous single-product operations.
But as you can imagine, with just a few massive agribusiness corporations controlling food distribution for nearly the entire planet, the process is extremely inefficient, unsustainable, and fragile.
That's why there are 842 million people struggling with hunger worldwide.
In the face of global climate change and global food crises, common-sense - and now, apparently, the IPCC - tell us that in order to build a more resilient food system and future, we must decentralize global agriculture, break up the big agribusiness giants, and move towards local agriculture systems.
Cities like Detroit have already realized that.
Yes, the same city where the economy is in pieces and where people are struggling to make ends meet, has turned into one of the biggest success stories in local agriculture and community gardening.
Entire blocks of run-down and abandoned homes have been knocked down, and turned into community gardens.
In fact, there are now over 300 community gardens across Detroit, and that number is climbing by the day.
And city schools are getting in on the "urban farming" action too. Eighteen schools in Detroit have built school gardens.
In the face of economic despair, Detroiters have found a way to keep food local, to keep money in the local economy, and to remove the influences of giant agribusiness corporations.
And they're being environmentally friendly, too.
Our current food system, driven by giant agribusiness corporations, is incredibly destructive to our environment. It relies on toxic fertilizers and pesticides, not to mention all the fossil fuels used to grow, fertilize, and transport the food.
But local and organic agriculture doesn't rely on dangerous pesticides and herbicides, and sequesters carbon in the soil, rather than releasing it into our atmosphere.
And, local, organic agriculture produces higher yields and higher quality food too, which simply can't be matched by giant agribusiness corporations.
Climate change is making it abundantly clear that we need to rethink and reinvent our global food systems. The age of a few giant agribiz corporations controlling most of the world's food supply should come to an end.
Here in America, we can use the Sherman Act to break up giant agribusiness corporations, and the giant banks whose speculation is constantly increasing food prices. A few companies shouldn't hold the fate of billions of people in their hands.
And we need to encourage more local agriculture across America and around the globe.
Put control over food production and distribution back in the hands of the people.
Every home in America should have a garden, so that entire neighborhoods and communities can become more resilient and self-sustainable.
It's time to break the corporate stranglehold on our food system, and in the process help combat global warming.
This article was first published on Truthout and any reprint or reproduction on any other website must acknowledge Truthout as the original site of publication.