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Consumer dissatisfaction with power companies is running high in the Washington region this summer after storms knocked out electricity for hundreds of thousands in late June. One local activist says the only way to to make our grids more reliable is to replace private companies like Pepco with publicly-owned utilities. We get a crash course in public power and whether it would be feasible in our region.
- Eric Hensal Activist; Founder and Creator, "Public Power for Montgomery County" (mocopublicpower.org); President Murray Hill
- Ursula Schryver Vice President, Education and Customer Programs, American Public Power Association
- Paul Breakman Partner, Duncan & Allen
- John Murawski Staff Writer, The News & Observer (N.C.)
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. Power companies aren't exactly among the most popular groups of people in town right now in Washington. Hundreds of people lost their electricity when a freak derecho storm ripped through the region in June, and the tornado of criticism politicians blasted back at the utilities, particularly Pepco, was just as fierce.
MR. KOJO NNAMDIOne pair of local lawmakers even wants to sue the company for $100 million. But some activists are pushing an idea they say is the only one that can truly make companies like Pepco accountable: get rid of them and replace them with publicly-owned and operated power utilities. It's a system in place in more than 2,000 communities across the country. This hour, we'll be exploring the concept of public power, what it would take to make it happen in an urban environment in Washington and whether that process is more than just a pipedream.
MR. KOJO NNAMDIJoining us in studio is Eric Hensal. He is an activist in Montgomery County, Maryland, and the creator of the website Public Power in Montgomery County. He's also the president of Murray Hill, a progressive communications and policy consulting firm. He joins us in studio. Eric Hensal, thank you for joining us.
MR. ERIC HENSALOh, it's good to be here.
NNAMDIAlso joining us in studio is Ursula Schryver. Ursula Schryver is the vice president of Education and Customer Programs at the American Public Power Association, a service organization for the nation's community-owned electric utilities. Ursula Schryver, thank you for joining us.
MS. URSULA SCHRYVERThank you.
NNAMDIYou can join the conversation by calling us at 800-433-8850. What should -- what do you think should be done to hold power companies and the people who regulate them more accountable to ratepayers? Is public power something you think the governments in the Washington region should consider? Call us, 800-433-8850. Send us a tweet, @kojoshow. Go to our website, kojoshow.org, make a comment or ask a question there, or simply send us a tweet, @kojoshow.
NNAMDIEric, you live in a part of our area that was hit particularly hard by the derecho in June. A lot of ideas have been thrown out since then to make power service more reliable, from replacing regulators to suing Pepco for as much as $100 million. But you say the only way to truly bring reliable power service to Montgomery County is for the county to take over for Pepco all together and start a public power company. Why?
HENSALWell, I think this is the only way we're going to get the control that we need to have a reliable electric service. I mean, I think I moved to the county in 2003, and my first summer here, I think I lost my power about seven times. And it just keeps going from there. And after the last storm, it just really occurred to me that Pepco simply has no answers in supplying a reliable electric grid for all of us.
HENSALThey -- it's just not something that they care to do, and we don't have a regulatory scheme that will make them do that. The way I see it, we've got a power problem in Montgomery County that's got three parts. We've got Pepco, obviously. We've got a public service commission that is not responsive. In fact, I think it's really built to not respond. And then we have politicians who don't take action that we need to be able to get control of our electric destiny.
HENSALThey like to talk tough about Pepco or talk tough about the PSC but then say, well, I can't do anything else besides that because it's really up to the PSC. So it's really a perfect system to avoid responsibility and to not provide reliable electric, and I think at the end of the day, we need energy independence in the county. And we can take control of our grid, and that's really the only way we're going to get the electric system we deserve.
NNAMDIWas it your personal experience this summer in the wake of derecho? Were you without power? What was the breaking point for you? Were the summer's outages maybe the last straw?
HENSALWell, I have been talking to folks about public power probably since 2010, and, you know, I come from, you know, I come from Cleveland, which has 100-year tradition of public power, so when I look at a system that just continually fails us, you know, I have a background that would make me that leads me to sort of say we should -- we can take control of this, and we can do it ourselves and do it better.
HENSALAnd that's really -- it's been cumulative, but I think my personal experience with a very successful public power system has led me to sort of talk to other people about this in an area we don't have a traditional public power. I mean, there are five public power utilities in Maryland, but it is more prevalent in the Midwest and the West. And it's time just to talk to people and give them options.
NNAMDISo there was no particular point for you. This idea has been percolating in your mind for a while. You didn't suddenly wake up in the middle of the derecho and said that's it.
HENSALNo. I have been thinking about this for a while. I think other people woke up after the storm and said that's it. I think there are folks looking for options, wanting options, trying to figure out what to do. And, you know, I think this is what we should consider.
NNAMDIUrsula Schryver, public power isn't exactly all that rare. It's my understanding that there are thousands of publicly-owned electric utilities operating in the U.S. right now. What are some examples of the kinds of communities where this is able to work?
SCHRYVERWell, public power, like you said, it serves over 2,000 communities across the country, 46 million Americans or 15 percent of the nation's electricity customers, and, you know, it works all across the country. There's large communities like Los Angeles, Seattle, San Antonito, but public power also serves a lot of smaller communities, couple of thousand of customers and smaller.
SCHRYVERPublic power communities do tend to be smaller communities, about 70 percent served communities of 10,000 or less customers, but there are -- like I said, there are a lot of large cities that are very successful in serving their customers as well.
NNAMDIAre there public utilities operating in Maryland or in D.C.-Maryland-Virginia region, the DMV?
SCHRYVERYes. There are. There's -- like Eric said, there's five in Maryland, east -- in Hagerstown, a couple of other smaller ones, Manassas, Va. There are several in Virginia as well, so there are definitely some throughout the East Coast, certainly.
NNAMDIWell, you mentioned Los Angeles and Seattle, so I guess, power -- public power has been known to work in an urban setting because Montgomery County isn't exactly, as a British official would say, the middle of nowhere.
SCHRYVERRight, exactly. Yeah. And definitely, there's a lot of, like you said, large communities that are serving public power and have been for many years. It tends to be in smaller communities, but it certainly is manageable for a large community as well. Boulder, Colo. is a large community that's also looking at it currently. So, you know, we continue to see a lot of cities across the country looking at public power.
NNAMDIWe're talking about public power companies in the wake of Pepco's performance or lack thereof in the Washington region and inviting your calls at 800-433-8850. You can send email to firstname.lastname@example.org, or send us a tweet, @kojoshow. We're talking with Ursula Schryver, vice president of Education and Customer Programs at the American Public Power Association, and Eric Hensal, an activist in Montgomery County, Maryland, and the creator of the website Public Power in Montgomery County.
NNAMDIEric, you noted in your editorial -- well, no, Ursula, let me ask you a comparison first. How do both rates and reliability compare in places where public power is available to those places where like us it comes from a private utility?
SCHRYVERIn terms of rates, public power tends to cost less. Customers of private power utilities pay about 13 percent more on average than customers of public power utilities. Reliability, once again, public power tends to fare a little better, certainly at least as reliable because the crews live and work in the community. They're able to devote their resources specifically to the community, and the community decides to invest in infrastructure and improve the infrastructure of the utility if that's important to the customers.
NNAMDIEric, you noted in your op-ed in The Washington Post that council members in Montgomery County have at least talked about public power in the past. When did those conversations take place, and where did they go?
HENSALWell, you will see it will come up from time to time in comments. I know Council President Berliner and Mark Elrich and Hans Riemer have talked about it. And it's part of the conversation, but I think what I'm trying to say is it's the place to go. I mean, I think people are kind of -- they think it's an overwhelming project that, you know, it can't be done in a realistic world, and I believe it can.
HENSALAnd I think it's just a matter of doing shows like this and talking to people about what is possible. I mean, Pepco didn't get its franchise on stone tablets from a mountain. It got it from us. And we can control our electric destiny, and it is a large project. And people look at Pepco, and they think it's a large corporation. And it's a large electric grid. There's no way we can do this. But, frankly, we can, and we can do it better because we will care about our electric system in a way that Pepco does not.
NNAMDIOn to the telephones. We will start with Marcus in Washington, D.C. Marcus, you're on the air. Go ahead, please. Marcus, are you there? My fault, Marcus.
NNAMDIGo right ahead, please.
MARCUSCan you hear me?
NNAMDIYes, we can.
MARCUSYeah. I just recently came back visiting Los Angeles, and I will say about three, four days ago, the power blew out in a roughly eight-square-blocks radius. The power was on back within three, four hours, and I talked to my sister and found about the reason why. In California, they are required to put the electricity back on within 24 hours, and if they don't, they're responsible for reimbursing all the people the food that has been lost.
MARCUSI think that that is a really big part of this issue because once these private companies have to start paying back thousands if not hundreds of thousands of individuals the money that they lost for food, they'll find a way to fix it.
NNAMDIWell, your point is well taken, except that...
MARCUSI've noticed that the farther you go east, it seems, though, the jurisdictions seem to negotiate with these private companies way too much. Energy is something that we should not be negotiating with private companies considering that it is at the heart of our economy.
NNAMDILet me hear what Ursula Schryver has to say about this because I think, Marcus, you were in a city that has a publicly-owned electricity utility, correct?
MARCUSI wasn't 100 percent sure about that.
NNAMDIWell, Ursula is.
SCHRYVERLos Angeles is a public power utility. And overall just public power in general, you know, they're governed by a city council or elected or appointed boards, so they are accountable to the citizens. And so if a utility is not being run properly, if lights aren't coming on as quickly as they should be, citizens can vote the officials in and out of office. They can attend city council meetings.
SCHRYVERThey have a lot more say in how the utilities run. So I think that really can help in a public power utility. They're able to voice their concerns and explain why they would like different service than they're currently receiving.
NNAMDIMarcus, thank you very much for your call. But then, Eric Hensal, there's this: We had one of your council members on "The Politics Hour" broadcast last Friday. You mentioned his name earlier -- Hans Riemer. He told us that he would support public power, but that consumers have legitimate complaints about some of the government-run operations in our region that already exist, like Metro or the Washington Suburban Sanitary Commission, which provides water service. What lessons do you think we should take from how they do business?
HENSALWell, if we lost our water as often as we lost our electricity, you know, we would be having, you know, some major issues. I mean, clearly, we've got the ability to run large utilities and run them well. And if we take on electricity, we would do the same and because -- I think this is all about local control and having a community that is responsible for its own electricity and having the crews and enough resources committed to maintaining our lines.
HENSALI mean, the one thing that we do not have as -- we would not have as a publicly-owned utility is we would not have money going to shareholders, you know, money going to salaries. You know, the priority is the customers and the systems because there's no other...
NNAMDIYou think that money can go back into infrastructure?
NNAMDI800-433-8850. We're going to take break, but we are welcoming your calls. How would you rate the service that publicly-owned operations in the Washington region, like Metro or the Washington Suburban Sanitary Commission, provide us, oh, compared to Pepco? 800-433-8850. I'm Kojo Nnamdi.
NNAMDIWelcome back to our conversation on public power companies. We're talking with Ursula Schryver, vice president of education and customer programs at the American Public Power Association. That's a service organization for the nation's community-owned electric utilities. And Eric Hensal joins us in studio. He is an activist in Montgomery County, Md. and the creator of the website Public Power in Montgomery County.
NNAMDIHe is also the president of Murray Hill, a progressive communications and policy consulting firm. And joining us now by phone from Florida is Paul Breakman. He is partner at the law firm Duncan & Allen. Paul Breakman, thank you for joining us.
MR. PAUL BREAKMANThank you, Kojo. Good afternoon.
NNAMDIPaul, I'll have the first question to you come from Michael, who is on the phone in Takoma Park, Md. Michael, you're on the air. Go ahead, please.
MICHAELHi. Thanks for taking my call. Eric, I'm wondering what's the cost of taking over the grid in D.C.? I mean, how do you estimate that? I assume that you want to do it a depreciated cost. Pepco would want it replacement cost or something like that, and you'd have a big legal battle on your hand just there. And second...
NNAMDIWell, Paul Breakman -- Michael, that's why we have Paul Breakman on the phone to provide some of the legal aspects of this. So before Eric responds, I'll ask Paul Breakman to share his experience with us about how this is done.
BREAKMANThe process is very long and very expensive, but certainly not insurmountable. We are looking at right now in Boulder, Colo., as Eric mentioned. There's a few aspects that, you know, you have to consider, which is the cost of buying or condemning of facilities and then some stranded cost obligation, which is basically taking away the right of the utility to serve those customers. And so, you know, it's hasn't -- it's been done with not great frequency over the last number of years.
BREAKMANBut, you know, the time is right in a number of communities to really start looking at it, and Montgomery County is -- I think it's right to start really looking into it. And, you know, Eric will tell you that now is the right time to really start pressing Pepco for better reliability, and if they can't respond, then to really take it to the county and county council, the state legislator and see what our options are in Montgomery County.
NNAMDIEric Hensal, the question Michael raises is about cost.
HENSALWell, I think -- we're operating in an information vacuum right now. What I would ask county council to do is to, you know, one, take this seriously, and as a mark of taking that seriously, commission a feasibility study that can start looking at these questions of, you know, of costs and just the actual ability for us to be able to create a public power utility. You know, we're all, you know, I'm the person with the idea, right? And it -- I think it's a great idea. It might not be the best idea.
HENSALWe don't really know until we start doing an official feasibility study and legal analysis to sort of figure out exactly what are the parameters we're talking about. And that's something we can undertake that's not a substantial investment of treasure to be able to start creating a plan to move forward. And that's what we should do.
NNAMDIGo ahead, Paul.
BREAKMANWell, I just think Eric's right. Part of this is really making Pepco more accountable to its customers. And if that means, you know, pressing them into action by -- I don't know if threaten is the right word -- but just exploring what we call municipalization, which is local control of your distribution system, then that's something we should really consider.
NNAMDIUrsula Schryver, what are the kinds of cost that localities typically take on when they make this kind of move? You advised Montgomery County last year that they'd have to invest in power infrastructure to make this happen.
SCHRYVERWell, like Eric said, the first step is definitely doing the feasibility study which would evaluate the costs that would be involved in this particular situation. There are obviously cost of taking over the system from Pepco and then starting up operations, hiring crews, staff, those types of things. But, you know, in terms of cost, it is an investment in the future of the community. So you have to look at whether those costs make sense, but it is an investment, and over time, you would receive revenues from the utility.
SCHRYVERYou would be able to invest the profits that would typically have been going to shareholders. You can invest them back into the system to upgrade your distribution system or to reduce rates or invest in programs such as energy efficiency programs, renewable energy programs, whatever the community is looking for. So I think the feasibility study is really the first step in looking at the costs involved.
NNAMDIPaul Breakman, states, counties, localities, they enter into franchise agreements, contracts with privately -- with private power companies. What are typically the binding commitments of those franchises, and what do jurisdictions typically have to do to get out of them if they decided getting out of them is what they'd like to do?
BREAKMANWell, you know, Maryland is a home rule state as we know, and so by its own, you know, by definition, that's local control. In Montgomery County, we're talking about a franchise agreement with Pepco. And there's some at county council who's -- there's opinion that Eric has circulated that talks about, you know, a need by the general assembly to change the state law and then basically change the parameters of those franchise agreements.
BREAKMANIt just depends. For instance, in, you know, in Colorado, city of Boulder is exploring this. And their franchise, their 20-year franchise agreement with Xcel has expired which has given them the opportunity to start looking at exploring municipalization. It's a little bit different in Maryland, but Ursula can tell you that Maryland doesn't have any specific state legislation that allows for the creation of municipally owned system.
BREAKMANBut the right term in this project really resides at the local level. And so Maryland, probably like the Montgomery County, would first need a municipal chart that allows them to do this and relatively easy to do within the...
NNAMDIWell, Ursula Schryver can say a city in Montgomery County, Takoma Park, undertake to do this itself.
SCHRYVERIt would be the same process as far as I understand it. It would be the city itself would amend its city charter to allow the creation of a public power utility.
NNAMDIOK. On to Christine in Columbia, Md. Christine, you're on the air. Go ahead please.
CHRISTINEHi, Kojo. Thanks for having me on. My question for your guests is you've been talking a lot about, you know, the -- actually taking it over, and I'm wondering the utility itself, I mean, the amount, the ability to generate power doesn't seem to be the issue, it's always about the infrastructure. I was wondering if your guests could touch a bit more on what their plans would be if this were to be turned over to public power instead of Pepco as it is now.
NNAMDIIn terms of you mean how the infrastructure would be dealt with?
CHRISTINERight. I mean, we keep on talking about while we could put all lines underground because that seems to be better, but that would be billions and billions of dollars, which is the reason we haven't been. I mean, would that be easier to do if it fits the (word?) ?
NNAMDIWell, let me go to Eric Hensal because the point that Eric seams to be making is that what is handed over to shareholders now in terms of profit, if it were to become a publicly owned utility, that kind of money can be turned back into infrastructure, Eric.
HENSALExactly, I mean, what we're dealing with and amongst many things is that a privately held corporation that is really ultimately answerable to the stockholders and provides you a substantial dividend to the stockholders over $1 a year per share. And there's about 237 million outstanding shares in Pepco. So we're already paying our light bills, right? That money is -- a portion of that is sort of siphoned off for uses that had nothing to do with us.
HENSALAnd there is this also other decisions that are made with that money that aren't necessarily for the best interest of our infrastructure. So we could take that funding and make, you know, informed decisions about the future of our electric grid not just to, you know, keep ourselves up in the next storm, but really looking at the next 100 years to be able to say what kind of electricity do we want. You know, what do we need to do? How do we need to maintain this for us, for our community?
HENSALNot just for the residents but for our economic development as well. I mean, if your business is looking to relocate between Fairfax and Montgomery County and if all things are being equal, you know, Fairfax is doing much better in, you know, getting their electricity up and running than we are. So, I mean, it's not just about the residential user alone that's the most important. It's really about the long-term growth and development of our county.
NNAMDIChristine, thank you very much for your call. Paul Breakman, what are the biggest hurdles that you encounter most often on the legal front?
BREAKMANOn a legal front, we're talking about really the cost of condemning the system and your stranded cost obligations and varying views of resource planning and so forth. And, you know, you're talking about a company like Pepco that has very deep pockets that can fight the county, you know, a legal fight that can go on for anywhere from three to seven years we've seen.
BREAKMANI think over the last, oh, many years, you're talking about only a handful of cities have really, you know, wrestled control of the systems from their incumbents. I think there's Winter Park, Fla., and then we have Hermiston, Ore. Ursula might be able to enlighten us a little bit on that. But there hasn't been very many takeovers, if you will, but that doesn't mean we can't do it. And the Federal Energy Regulatory Commission, you know, allows us to explore going down that path, which is a right of a municipality to do so.
NNAMDIPaul Breakman, he is a partner at the law firm Duncan Allen. He joined us by phone from Florida. Paul Breakman, thank you so much for joining us.
BREAKMANThank you, Kojo. Something I want to ask -- talk to Eric about real quickly is he mentioned in Montgomery County, we're really talking about an increase in reliability and a better resource pool, you know, greener power. So that's something we really need to look at as well.
NNAMDIAnd it's my understanding that what you're dealing with right now in Colorado has less to do with the lack of reliability of service in terms of the system changing there to public and more to do with environmental issues. Is that correct?
BREAKMANThe -- yeah, in Boulder -- that's correct, Kojo. In Boulder they really want a better resource pool. They want, you know, they want to explore greener power, if you will, wind, solar and so forth. And their -- they want comparable reliability, if not better reliability. They want same or better rates, and they just want to -- no, the plan is for, you know, basically, reduce greenhouse gas emissions and increase renewable energy.
NNAMDIOK. Here's Eric.
HENSALWell, yeah, that's a very important point to touch on with public power. We would have, you know, obviously, it's our system. We would have a tremendous amount of control over the electricity that we bring in. One thing that people would say, if I talk about public power, they -- some folks seem to think we're building our own generation, right? And that's not the case. We're not building power plants.
HENSALBut we are purchasing electricity on the wholesale market, and you can purchase those sources from green sources if you wish to have. Also the other environmental issue that I know is very important to many people is we can treat our trees better. I think we can have better maintenance and trimming and more proactive. So we don't have crews coming through and scalping our trees every so many years. Or instead people can do the small trims over time and protect many more trees than Pepco does right now.
NNAMDIOn to Matt in Reston, Va. Matt, you're on the air. Go ahead, please.
MATTHi. Thanks, Kojo. Thanks for having me on your show. I thought I'd call in 'cause I used to own Pepco stock. My -- one of my family members purchased it for me early on. And my brother inherited from Ohio Power an electric stock that did a lot better than my Pepco stocks. I don't know if that's interesting to you. Anyway, my biggest point is, though -- is that you're talking about, you know, a public -- going with the public municipality and that's fine.
MATTYou were saying that you're going to take shareholder dividends and then reinvest it into research and development and all the infrastructure, blah, blah, blah. Well, what about just the idea that in Maryland, you have a lot more than just Pepco? You have SMECO. You have BGE. These are competitive companies. What do you guys think about the idea that even if it is a public -- even if it just public, it still has to compete with these other entities out there?
MATTAnd what's the benefit of going into a public municipality system rather than just having Pepco have to deal with competitive franchises coming in on their territory? And how is it better to go public rather than just put the bid up and then lose their charter, say? And I'm not sure if that's the right term, and I'll take the answer off...
NNAMDIHere is Eric Hensal.
HENSALWell, we have to realize Pepco is our distribution system, so, I mean, no matter where the power comes from right now, they get a piece of the action. And they do that and they're supposed to be able to maintain our lines and be able to -- for that privilege to be able to take our money. And that's really important. So, I mean, they don't compete. And, you know, we have to sort of get that across. What we need is a system where we can control it.
HENSALRight now, we have a system where they don't compete. We only have one set of wires. And we have, you know, it's a rigged carnival game is what we're dealing with right now. We can't win. And, you know, between Pepco and the PSC and everyone else, there's no accountability and there's no direct control. What I would say is that with the public power system, we would have direct control over the electric grid that we all rely on every day, again, not just for, you know, residential use but business use.
HENSALThere's countless number of people who have home-based businesses who aren't able to work when the power goes out. So it's not a competitive system right now. So we have to change it so it works for us.
NNAMDIHere is Diana in Greenbelt, Md. Diana, you're on the air. Go ahead, please.
DIANAYes. Hi. I'm very encouraged by this discussion. And I think it's about time we explore going into adopting a public utility. I would like to hear our county, Prince George's County, discuss this. I have only heard it from Montgomery County, and I applaud Montgomery County. And I think it's time for us to start exploring the changeover to public utilities in our county, in our state and strengthen the movement throughout the country.
DIANAAlso, another obvious reason for going public is that the utilities' priority is to serve the community, not stockholders or its bottom line. It seems to me the private for-profit enterprise such as Pepco has a first incentive to what translates as really cutting corners. They might call it efficiency.
NNAMDIUrsula Schryver, have you heard any conversation at all from officials in Prince George's County in general or the county council in particular about looking at the option of having a publicly owned utility?
SCHRYVERI have not from Prince George's County. I have heard from the District of Columbia. And there's communities all across the U.S. that are looking at it right now. There's some in New York, Santa Fe, N.M. You heard about Boulder. So I think it's definitely an issue that's being looked at across the country right now.
NNAMDIEric, you've hung your hat on fighting back against corporate influence on our politics. And from what I heard Paul Breakman saying a while ago, how do you measure the influence a power company like Pepco has on our state and local politics here?
HENSALWell, I think if you look at -- I'll give you a recent example. If you look at how gambling has advanced in Maryland, you know, the utility industry is like that times, you know, 10,000. You know, it's been a very sort of privileged relationship for 100 years where the state has carved out, you know, sort of areas of influence for utility to be available to provide the money.
HENSALSo, I mean, it's thick with politics, and that's what makes it -- one of the things that makes it so difficult to be able to move forward because there is a tremendous and entrenched opposition to this idea, you know, in Annapolis and across the state. And, you know, it would be an uphill battle to move forward because there is a lot of money on the table, and it would take an investment of, you know, a community's time and energy and grassroots ability to be able to overcome that.
NNAMDIThank you very much for your call, Diana. We got an email from Mike in Baltimore, who says, "I've lived all over the U.S. for the past 32 years, both coasts, North, Middle and South, the Midwest and Plains. The best and most reliable power I have had was always with a power cooperative. The power co-op is owned by the people who use the power. It was also the cheapest over the long term, but not necessarily the most cutting-edge for sustainable power generation.
NNAMDI"The worst and most expensive power I have ever had was always owned by a publicly traded company, and it was not in Maryland. It was in Connecticut, CLT, which has the worst record for outages in the United States, and PG&E in California, which fell victim to the Enron manipulation and cost me a bundle," says Mike.
NNAMDIGot to take a short break. When we come back, we'll continue this conversation on public power companies, taking your calls at 800-433-8850. How would you measure the influence that private companies like Pepco or Dominion Power have on our politics in the Washington region? You can send email to email@example.com. Send us a tweet, @kojoshow, or go to our website, kojoshow.org, and join the conversation there. I'm Kojo Nnamdi.
NNAMDIWe're discussing public power companies with Eric Hensal. He's an activist in Montgomery County, Md. and the creator of the website Public Power for Montgomery County. He's also the president of Murray Hill, a progressive communications and policy consulting firm. Ursula Schryver is the vice president of education and consumer programs at the American Public Power Association, which is a service organization for the nation's community-owned electric utilities.
NNAMDIAnd joining us now by phone from Raleigh, N.C. is John Murawski, staff writer at The News & Observer newspaper in Raleigh. John, thank you so much for joining us.
MR. JOHN MURAWSKIThanks for having me.
NNAMDIJohn, in just a few weeks, this show will be broadcasting live from the Democratic National Convention in Charlotte, where things have moved completely in the opposite direction of public power. Regulators recently approved the merger of two utilities there -- Duke Energy and Progress Energy -- that's created the largest private power company in the United States. But the state's attorney general has launched an investigation into how this merger was orchestrated. What's he looking into?
MURAWSKIWe have two investigations going. The North Carolina Utilities Commission and the attorney general are both -- both opened an investigation four days after the merger was closed. And what triggered the investigation was the merger was approved by the utilities commission on the understanding that the CEO of the combined Duke Energy will be Bill Johnson. Bill Johnson was the CEO of Progress Energy for about five years. And he was slated to become CEO of Duke.
MURAWSKIAnd when the merger closed -- the merger closed at 4:02 p.m. on July 2, which is a Monday. And about 4:50 p.m., Duke's board went into an executive session, and they voted to fire Bill Johnson.
NNAMDIPink slip within an hour.
MURAWSKIAnd -- well, they had a debate for about an hour, and the debate was between -- there were 10 legacy Duke board members and five that came over from Progress Energy. And the vote was 10-to-5. The five Progress board members were completely stunned by this motion to get rid of Bill Johnson. So then -- since then, we had public hearings at the utilities commission. Bill Johnson testified about his firing.
MURAWSKIJim Rogers, who was the previous Duke CEO who was reinstated, he testified, and four board members testified. And it pulled back the veil on the normally secretive deliberations of corporate 500 -- Fortune 500 corporate boards. And the investigation continues. The attorney general has one, and so does the utilities commission.
NNAMDIAllow me to be clear here. One of the conditions of the merger was that Bill Johnson as Progress would remain on as CEO, and, despite that condition, during the course of the board meeting, somehow he ended up being fired?
MURAWSKIIt wasn't a condition, technically. It wasn't written into the merger approval, but it was an understanding. It was the understanding of the shareholders who voted for the merger. It was the understanding of the regulators who approved the merger. And so it didn't work out that way, so now they're looking -- basically, the utilities commission is looking at whether they were deliberately misled by Duke Energy.
MURAWSKIThe attorney general is looking at several related issues, and one of them is whether any state laws were broken about -- state laws regarding, essentially, deceptive marketing, things like that.
NNAMDII suspect we'll find out more about that when we get to Charlotte. But how about the track records of these companies when it comes to consumer satisfaction and the rates they pay? Was there any consumer protest when the merger was going through the regulatory hurdles?
MURAWSKIThis merger had virtually no opposition when it was going through. The main opposition within the state came from two towns -- Rocky Mount and New Bern -- but they were also represented by the organization that represents municipal power agencies. So we have rural electric cooperatives, and we have municipal power agencies. And the group that represents the municipal power agencies supported the merger.
MURAWSKIBut two of the towns within that group hired their own lawyer. They hired a Washington, D.C. lawyer, and they opposed the merger. And the Federal Energy Regulatory Commission agreed with some of their arguments and required some, basically, modifications to the merger to alleviate some monopoly concerns. And so -- but in terms of any other broader opposition, there was not much -- there was really no opposition to speak of within the state.
MURAWSKIThere was a trade group that represents alternative energy producers like solar and wind. And they were concerned that the merger would basically create a giant company that would create nuclear -- build nuclear plants, so there wouldn't be much of an opportunity to build alternative energy. So that was in their main concern, but they were, in the main, looking out for their constituents.
NNAMDIWhen we get down there, we'll conduct our own unscientific survey about customer attitudes towards the utilities. But the politics behind these companies are complicated, are they not? The New York Times ran an article the other day about the connections that Duke's chief executive has to the Democratic Party and how that's become a sensitive issue ahead of the convention.
MURAWSKIYeah, that is a -- so Duke is, you know, making a lead role or Jim Rogers has taken a lead role. He's a very outspoken CEO who is often portrayed in the media as a white knight of green energy. He sits on many boards of organizations that support alternative energies. So he is a very unusual kind of CEO. He's very outspoken. He's very much in the media. And he took a leading role in helping to bring the Democratic National Convention to Charlotte and helping to do the fundraising.
MURAWSKISo, you know, there are Republicans and there are conservatives, and so that's naturally a divisive issue. So he has stepped on some toes by supporting a convention for the Democratic Party that's going to essentially, you know, support a sort of pro-Obama convention, essentially, right?
MURAWSKISo, yeah, so that's naturally going to -- if he had picked -- if he had backed the Republican National Convention, I think he would have had the same reaction because the policies in this is inherently divisive.
NNAMDIJohn Murawski is a staff writer at The News & Observer newspaper in Raleigh, N.C. John, thank you so much for joining us.
MURAWSKIWell, thank you for having me.
NNAMDIBack to the telephones. Here is Robert in Washington, D.C. Robert, you're on the air. Go ahead, please.
MR. ROBERT ROBINSHello, Kojo.
NNAMDIYes, this is me.
ROBINSThank you so much. This is Robert Robbins. I'm with turnoffpepcopayments.org in D.C. The question that I have for the guests, particularly for Ursula, deals with what type of reliability we're going to build into our infrastructure for the 21st century. In addition to just burying lines, aren't we going to need to look at local power solutions, energy efficiency for our large buildings, even things like battery storage? And is it likely that a group like Pepco is going to do that? Or is going to take more competition within our power nucleus here in D.C.?
SCHRYVERI think there's a lot of new technologies that utilities are looking at now, including energy efficiency and investments in the infrastructure and so forth. So I think, certainly public power utilities are looking at those technologies so are investor-owned utilities. I think the industry is just moving that way and getting more advanced, but I think, once again, public power has the ability to focus on the issues that are important to the community.
SCHRYVERSo if a particular community wants energy efficiency programs, then that's what the focus will be. And if they're interested in renewable programs, that's what the focus would be.
NNAMDIRobert, thank you very much for your call. We move on to Steve in Columbia, Md. Steve, your turn.
STEVEHey, Kojo, great program. Whether it's public or whether it's private, what concerns me, living in Columbia and viewing the outside areas, is, every time we have power outages of significance, it's always traced back to trees or other obstructions in the immediate area of the outage, which mostly are caused by the failure of local authorities to enforce reasonable and commonsensical oversight of these conditions. It doesn't matter who's going to deliver the power if they're faced continually with these types of difficulties because this generally is the cause many, many times.
NNAMDIEric Hensal, how would publicly-owned power companies be better able to coordinate the relationship between where wires are run and where trees are growing?
HENSALWell, I think it gets back to what we have talked about generally in terms of more of a greater commitment to reliability and preventative maintenance and doing the kind of work, before things are problems, that can make the system more reliable. But also, keep in mind, I remember when I was watching the PSC -- Public Service Commission meeting at -- that was held in Rockville, that the first, I think, four people that got out to testify about their power outages had underground lines, you know?
HENSALSo it's -- undergrounding is not the solution to everything because people are in undergrounded communities, communities that were built with underground utilities and they were losing. And they will have blue sky outages in those places. So it's not just the tree. Pepco likes to tell everyone it's the trees and complain about the trees, but it's really much more of a systemic problem.
NNAMDISteve, I'm glad you asked about trees because that's what Brian in Columbia, Md. wants to talk about, and I think Brian has some expertise in this area. Brian, you're on the air. Go ahead, please.
BRIANHey. How are you doing, Kojo?
BRIANOh, so good to talk to you. Yeah, I actually work for a contractor of Pepco in their vegetation management division, and what my job is to do every single day is to ride around and actually look actively for trees to trim and to remove. And these are almost always on public, you know, or private properties, so we literally have to go door to door and ask people to remove their trees. And a lot of people don't necessarily want to do that.
BRIANAnd, you know, kind of to what the -- you know, it's just -- it's very difficult to get people onboard. You know, we document that, but that doesn't seem to make it back into the reporting of, oh, you know, there is an outage. And I guess my question really was that, how would the public, you know, service do this -- do my job any better? How would they be able to convince people that some of their trees need to go down?
BRIANAnd when they say that there's underground lines and there are still outages, what happens is a lot of times is those underground lines are being fed off a feeder that's above ground some mile -- very far away from their house that is caused by a tree. So just because somebody has underground lines doesn't mean that they're underground coming out from a substation. So they're definitely still subject to being outages even though they're underground lines. And how would a public service really be able to do this better?
HENSALWell, I would say it gets down to -- and I don't know how often you see the same neighborhood or how much territory that you cover, but the essence of this is a distribution -- electric distribution is a very, very local process. And if you've got a larger group of folks working at maintenance in an area, a smaller area, you can do more trimming before trees become problems. You can do more work before they can become problems as opposed to cleaning up the mess, you know, after a storm. And I think that's the idea behind it.
NNAMDIIs that one of the areas in which you think that if shareholders do not have to see a company making a profit and draw dividends that the kinds of tree trimming that need to be done can be done, not only more regularly but more effectively, that people such as Brian will be able to devote more time, they'll have more people doing it, they'll have greater expertise in explaining to homeowners why these things have to be done?
HENSALYes, I believe so. I mean, right now, you're looking at Pepco at their latest investor call -- that was just a few weeks ago -- they were talking about how to cut $20 million out of their maintenance budgets for the last half of the year. So, you know, clearly, I mean, it gets down to what the priorities are. And as Pepco, as a for profit corporation, they have a great number of stockholders and that's our first priority.
HENSALAnd if they were, you know, selling widgets or nothing that was essential to us, that's a perfectly fine thing to do, but electricity is essential to our modern life. And, you know, I think if we control the maintenance of it, we would do a better job for ourselves.
NNAMDISam in Prince William County, Va., you're on the air. Sam, go ahead please.
SAMKojo, I like your show. I've watched it -- listened to it for a long time. I worked in an operations research group reporting to the chief executive officer of a utility in the Washington Area, and I grew up in the Washington area. And the public-versus-private issue begs a lot of questions.
SAMIf you look at publicly-run utilities, and if you include Metro as a utility, I've been -- really noticed an efficiently run public utility, whether it's in power or whether it's in transportation -- and these fellows that are -- the people that are proposing this seem to think that if you're a private corporation that you're automatically inefficient.
NNAMDIWell, we're running out of time very quickly, so, Ursula Schryver, I guess what Sam is saying is be careful what you wish for. But based on the evidence that you have observed so far, are there any significant disadvantages to publicly owned electric utilities? You have about 20 seconds.
SCHRYVERI think, overall, there are certainly -- there primarily are many advantages of local control being able to invest in rates, reliability, the issues that are important to the consumer, and I think all of those -- public power benefits the community with all of those, overall.
NNAMDIUrsula Schryver is the vice president of education and customer programs at the American Public Power Association. Eric Hensal is an activist in Montgomery County, Md. and the creator the website Public Power for Montgomery County. Eric, thank you so much for joining us.
NNAMDIUrsula, thank you for joining us.
NNAMDIAnd thank all of you for listening. I'm Kojo Nnamdi.
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