Nationalize The Grid!
Your fridge. Your lamp. Your video games. The device you’re listening to this podcast with. What do they all have in common? That’s right — Electricity.
Now imagine a world without electricity — Would be pretty hard, right? It would be like imagining a world without zinc. But what if the very thing we depend on for pretty much every facet of our lives — from dialysis machines to the doorbell to pornography — was actually poisoning the very earth we inhabit. Would be pretty dark, right? Well, good news! That’s in fact what’s happening. But it doesn’t have to be that way.
Hi, I’m Max Rivlin-Nadler. And this is the second episode of Nationalize This! a podcast about public ownership, democratic control, and the successes and failures of nationalization projects. This week’s episode: The Grid.
The perils of climate change cannot be overstated, but they can be downright depressing. Last year, the world’s leading climate scientists warned there is only a dozen years for global warming to be kept to a maximum of 1.5C before the worst impacts of climate change become irreversible. Clearly however, the disaster is already here — from the recent flooding in Mozambique, to the destruction of Puerto Rico, to the Central American families currently massing along our southern border after the soil in their home villages became too arid to farm on.
Over the past few years however, amidst the all the doom and gloom, there have been some positive developments — the lowering costs and viability of low emission technology, like solar and wind, and a growing youth-led movement to make clear just how urgent the problem is.
Clip of Feinstein telling the kids to get lost
Well, that’s been met mostly with a re-entrenchment by the powers that be, but I still count it as a positive.
The ugh, can’t believe I’m going to say this but, the “inconvenient” truth, is that there’s no actual way to stop runaway climate change within the mechanisms of the existing marketplace, which has had only limited answers for the externalities that accompany the wildly profitable fossil fuel industry. In fact, the US government has only served to prop up those profits, contributing to energy companies bottom lines and helping them escape responsibility for the most glaring disasters they’ve wrought on the environment. President Obama, who signed on to the Paris Climate Accord, cheered on the development of fracking, which has since ended the fantasy of a day when energy companies experience diminishing returns from oil fields and forces the entire sector to shift to alternative sources of energy. As reported The Economist in February, Exxon Mobil plans to pump 25% more oil and gas in 2025 than it did in 2017.
Without something drastic happening, fossil fuel and coal companies appear committed to burning everything in the ground they can get their hands on until the vast majority of flora and fauna on the planet are wiped out of existence. Uplifting, no?
To many, this is a clear signal that there is no existing answer to climate change that includes the continued operation of privately-held energy companies that are uninhibited from extracting as much profit out of the ground as possible.
And it’s not like the energy market as a whole is working for most people in the first place — deregulation has often left energy unaffordable to many, with energy generation, like power plants and hydroelectric, now able to be held by separate companies from those that distribute the power through the power lines that run across the nation and into your home.
This hasn’t led to a competitive market for customers, however, as the big energy generation companies have maintained their grip on most major metropolitan areas while ultimately passing the cost of their worst behaviors to both the people who pay their electricity bills as well as taxpayers (which, I should add, are functionally the same, because despite the deregulation, most of these companies operate in near-monopolies).
And the monopolies themselves are failing regularly. Con-Edison in New York City is a great example of this, just asked the hundreds of thousands of people plunged into darkness this weekend.
Take, for example, the largest utility in California — the Pacific Gas and Electric Company. PG&E first declared bankruptcy in 2001 after deregulation set off a cascading series of events, where companies like Enron were able to manipulate the energy market and take advantage of a massive drop in hydroelectric power (caused by a then-abnormal drought caused by…. Well you can connect the dots).
The gouging of PG&E by companies like Enron led to bankruptcy and PG&E was only able to claw itself out of bankruptcy by charging above-market rates to customers for years to come. Essentially, PG&E was able to save itself by passing on the buck to ratepayers.
In return for this munificence from the public, PG&E rewarded the state by….burning it down.
PG&E’s power lines have been tied to several of the wildfires that have devastated the state in recent years, including the Camp fire last November, which was the largest wildfire in California’s history, and killed 85 people, and also destroyed the town of Paradise. Camp fire, paradise… this time line’s just a little too on the nose but that’s besides the point I guess.
PG&E has said that the fire started at a 100-year-old transmission tower the company estimated was at least 25 years beyond its useful life. So even with a consumer bailout pumping money into the company, the company was unable to keep its own infrastructure up to code. So where did that money go instead? To the pockets of the hedge funds that own the vast majority of the shares in the company, including BlackRock, and The Vanguard Group. These groups drove leadership at the company to skimp on measures like replacing old equipment and cutting back tree branches in favor of maximizing profit.
And now PG&E is bankrupt again, as a result of the liabilities placed on it from lawsuits stemming from the wildfires. And where is it turning to get itself out of bankruptcy? Well, the ratepayers of course! And they’re not alone. Earlir this year, Southern California Edison and San Diego Gas and Electric Company, the other two investor-owned utility companies in California, joined PG&E to ask state officials to let them raise rates by up to 25% to not only pay for some safety improvements to their equipment, but to make the company’s profit-margin attractive enough to investors who might have been turned off by the liabilities that stems from… burning down the state.
Without this electricity bill-funded bailout, the company might never recover from its financial tailspin. So Governor Gavin Newsom has stepped in with a bold proposal….
The state would take over the…. Wait for it…. Financial liabilities of the company.
Earlier this month, Newsom proposed the creation of two state funds to pay for the damage caused by wildfires. Last week, the state legislature passed a bill creating the funds and allowing the companies to raise rates to pay for wildfire liabilities. This was done over the loud objections of politicians in the city of San Francisco, who are eager to move forward with seizing the grid from PG&E after a study commissioned by mayor London Breed found it to not only be feasible, but cheaper and safer for residents.
So just to recap, the US government spends billions every year subsidizing an industry that profits from the increasing extraction and burning of non-renewable energy sources, and locally, we have a billpayer funded scheme that keeps hedge-fund-backed energy companies profitable while in return they burn down their cities.
And then the governor of the country’s most progressive state says billpayers should help them pay for the damage caused by both the climate change created by these multinational oil companies and the negligence of these local energy concerns. Got it.
You’ll get sick of me saying this, BUT — a lot of people think that it doesn’t actually have to be this way. And in fact, in many places, it isn’t. It’s not the case at the largest municipal utility in the United States.
Clip from Chinatown: https://www.youtube.com/watch?v=ppGd-2nEOVQ
Los Angeles Water and Power’s reputation precedes it, and its history is as ruthless and sordid as any other imperialist-backed venture in the American west. Although initially privately held, the company was bought out by the city of Los Angeles decades ago and is now completely under public control. It is run by a five-member board of commissioners, appointed by the mayor and approved by the city council. One current commissioner, Aura Vasquez, is a climate activist and holds open office hours in the community. Because LA water and power is able to respond to the needs of community members and not just shareholders, it can make decisions like the one it made earlier this year to not replace three natural gas plants that are coming offline in the coming years. It can also keep costs lower by replacing the profit motive with putting money towards the upkeep and replacement of equipment. Californians who get their money from public utilities pay $20-$40 less per month than those who get it from investor-owned utilities. Los Angeles is not alone — the United States has over 2,000 community-owned electric companies and 900 electric cooperatives, which help drive down the price of electricity by buying it in bulk. Nebraska’s grid is entirely publicly owned.
But democratic control is just one part of the equation. If energy is still coming from dirty sources, then it’s nice and all that communities in Los Angeles are being spared some air pollution, but replacing those natural gas plants that are being decommissioned with an existing coal plant in utah, doesn’t do much to help stave of the environmental apocalypse. Even in the publicly-owned grid of Nebraska, only 17% of its electricity was from renewable sources.
But a spectre is haunting this introduction — it’s the spectre of the Green New Deal. The Green New Deal takes a lot of what’s already happening in local energy markets and consumption — in terms of local control, cooperatives, and shifting to renewable sources, and it tries to supercharge it, so that instead of getting to 100% renewables in thirty years in the country’s most climate-friendly state, it will take just ten years, and it will be nationwide.
That means to work, it will need a massive amount of federal investment to drive down the cost of renewable energy sources, as well as a mechanism for sidelining the oil companies, either through simply putting them out of business by making green energy wildly cheap, or more directly just taxing them into oblivion. Either way will be extremely difficult or, given current global hegemony, impossible. But a lot of people think it’s worth a shot, at least.
We start today’s interview with a really important facet of this, however, and probably the starting point for any conversation about groups pushing for what’s been called “climate justice.”
Green technology in of itself is not climate neutral, and risks creating much of the same exploitative systems that fuel dirtier energy sources. Mining will certainly be needed to at least get the first generations of large-scale solar and wind battery storage technology off the ground, and while not only relying on natural gas to power that mining, will expose workers to extremely hazardous conditions. For it to be truly successful in its aims, the proponents of the Green New Deal believe that it has to be one for the entire world. Not only by destroying the existing energy companies, but by making sure not to replace them with something they consider just as hazardous to the life and limb. So that’s where we’re going to start today’s conversation, and then we’ll circle back to some of the efforts to increase democratic control of the grid that are happening nationwide.
My guest today is Thea Riofrancos and she’s going to help walk us through this. She’s an Assistant Professor of Political Science at Providence College. Her research focuses on resource extraction, radical democracy, social movements, and the left in Latin America. These themes are explored in her forthcoming book, Resource Radicals: From Petro-Nationalism to Post-Extractivism in Ecuador (Duke University Press), as well as in essays that have appeared in n+1, The Guardian, The Los Angeles Review of Books, Dissent, Jacobin, and In These Times. She is a member of the Democratic Socialists of America, and serves on the steering committee of the Ecosocialist Working Group. She is currently co-authoring a forthcoming book for Verso on the Green New Deal, which will be out this fall.