The Power of Community Utilities

Publicly and cooperatively owned electric utilities (community utilities) have the potential to demonstrate what an equitable, clean energy system looks like in the United States. They could become powerful “anchor institutions” in their community by grounding their decisions in democratic governance and community partnership, affordable energy and community wealth building, and access to renewable energy.

The United States urgently needs to transition off of fossil fuels and onto clean sources of energy (especially renewable energy) to maintain a livable climate. As of 2020, only around 20% of US electricity generation is from renewable energy sources. Energy utilities – the companies that run our power systems – have enormous control over the scope and scale of the transition, but have often dragged their feet or even fought against clean energy. Not only does their inaction imperil the very future of humanity, but it directly harms families – often Black, Indigenous, low income, or otherwise marginalized – who live in the shadow of toxic power plants. The current US energy system is dirty and expensive. 31% of households in the country have to make the choice between buying groceries or paying their energy bills. In response, communities across the country are beginning to mobilize to demand an energy transition.

​We have a powerful tool to accelerate the energy transition in a way that builds community wealth and energy justice in our communities: publicly and cooperatively- owned energy utilities. In this report, we refer to these types of utilities as “community utilities” because they are owned by the local community. Around thirty percent of households in the United States get their energy from community utilities. This is no small part of our energy system. As non-profit utilities without faraway shareholders that are ultimately accountable to the local community, these utilities have the potential to be an example for what an equitable, clean, and democratic energy system could look like. Collective action and organizing to push community utilities toward the intersections of clean/ renewable energy and community development can be more tractable than in corporate utility areas because community utilities’ mandate is to provide a public good, not to maximize profits for shareholders.

Community utilities and cooperatives have a radical history. In the early days of electrification one hundred years ago, residents across the country rose up against profiteering private utilities who provided poor (or nonexistent) service at high prices by creating their own publicly and cooperatively owned utilities. In the state of Nebraska, for instance, they kicked all private utilities out of the state for good. To this day, there are no private utilities providing electricity to Nebraskan homes. This cause was, in turn, taken up by national leaders. For instance, Franklin D. Roosevelt started the Rural Electrification Administration (REA) after rural communities pushed for access to light in their regions. Before that, corporate actors didn’t want to enter rural areas because they didn’t see how they could profit from such unpopulated land. The REA program took electrification from ten to ninety percent in ten years as groups of farmers banded together to start their own electric cooperatives, run on cooperative principles. However, today some community utilities have forgotten their past and are not living up to their potential. Many still rely on fossil fuel energy and some have even pushed back against important climate resiliency approaches like rooftop solar. In some places, democratic governance structures have deteriorated (or been manipulated by powerful interests) and residents don’t even know that they actually own their utility. It is time to reignite the radical history of community utilities to herald the transition to a genuinely democratic, equitable, and clean energy system.

As large non-profit entities that are rooted in place, provide a critical public service, and have a large economic impact, community utilities meet the classic definition of “anchor institutions,” and should embrace this by integrating an “anchor mission” into their mandate. An anchor mission is “a commitment to intentionally and comprehensively apply an institution’s assets in partnership with community to mutually benefit the long-term well-being of both.” In order for community utilities to achieve their full potential as anchor institutions and embrace their radical roots, we recommend the following:

1. Block Privatization: Block extractive and expansive “public-private partnerships” and other efforts to sell or lease community utility assets to for-profit corporations. Efforts could include ordinances or referendums banning sales or leases, amendments to state constitutions, or a federal-level prohibition on community utility sales.
2. Deeper Democratic Governance. Unite around increasing democratic governance
   and control. Community utilities should incorporate innovative democratic approaches such as autonomous, community-based observatories. In particular, amend existing laws and regulations to maximize democratic participation, accountability, and transparency, and block capture by local elites.
3. ​Renewable Energy Mandates. Set renewable/clean energy generation mandates that apply to community utilities, but which take into account both issues of scale and the additional economic and social benefits community utilities provide.
4. Renewable Energy Financial Incentives. Federal, state, and local governments should reconsider the tax credit approach to incentivizing the generation of renewable energy and, at the least, provide community utilities with equivalent incentives in the form of grants and no-interest loans.
5. Public Distributed Renewable Energy & Electrification. Invest in public distributed renewable energy, weatherization, and electrification programs. These should be done in-house with an explicit focus on providing local residents with pathways to quality employment in the utility; or in partnership with non-profit or democratically owned community-based organizations.
6. Procurement programs. In-source contracts wherever possible, especially as it relates to renewable energy generation. When procurement from private sources is still necessary, community utilities should establish or expand procurement programs and goals that prioritize local businesses – especially MWBE companies and democratically owned firms (such as worker cooperatives) – in collaboration with the community. Provide financing and technical assistance to help create local procurement supply chains where they don’t yet exist.
7. Public Banking & Finance. Establish public banks and other public financing mechanisms to provide services and support to community utilities, especially around decommissioning fossil fuel infrastructure and scaling up in-house renewable energy generation. Redirect community utility deposits and investments to non-profit community-serving financial entities like public banks and CDFIs where they exist.
8. Supporting Local Innovation. Establish laws and regulations, especially at the Federal level, that prevent states from blocking or “preempting” local innovations around community utilities, especially with regards to broadband internet services, progressive procurement and rate structures, and local municipalization campaigns.
9. Public Finance for Shifting IOUs into Public & Cooperative Ownership. Local, state, and federal policymakers should create new financial and technical institutions capable of facilitating and supporting communities if they wish to take their utility into public or cooperative ownership.

There is a growing movement to shift how community utilities operate in the United States. This is a crucial time to mobilize for a just transition from fossil fuels. If we leverage community utilities and transform them, they could help shift a sizable portion of the grid toward an equitable energy economy. These wins would resonate across the United States and abroad, laying the groundwork for how we reconstitute our utility system for good.