by Gregory Lebens-Higgins
Rochester for Energy Democracy demands the funding of a study to determine the feasibility of a public utility as the path out of the RG&E crisis. We cannot brush this option away on the basis of speculation. Only through bold action will we create a long-term solution to expensive and unreliable billing, poor customer service, and an absence of democratic control. We must not shrink from this responsibility.
In the Rochester Beacon, Kent Gardner has provided his own “exploration” of a public utility (he uses the term “community utility”). Gardner attempts to size up a public utility against Rochester for Energy Democracy’s stated goals: affordability, accountable and democratic governance, local economic benefit, green energy, and a just transition for energy workers. His guesses provide few answers, and only underscore the necessity of funding the proposed study.
Gardner seemingly concedes the price benefits of a public utility by giving the example of a friend who lives in Fairport—a customer of the municipally owned Fairport Electric—receiving electricity for less than one-third of the cost paid by Gardner to RG&E for the same amount. Yet somehow Gardner remains doubtful that these results could be reproduced elsewhere.
Attempting to justify the difference between RG&E and Fairport Electric, he points to lower energy costs, cheaper delivery charges, and an exemption from state taxes. Noting, first of all, that if RG&E were a public utility it would also be exempt from state taxes, the remaining reasons are unconvincing.
Fairport Electric’s energy costs are cheaper, says Gardner, because it receives “very inexpensive energy through a fixed allocation of hydro power from the Niagara Power Project,” a power plant owned and operated by the New York Power Authority established by Governor Franklin D. Roosevelt in 1931. Signing the Power Authority Act into law, Roosevelt called it the most important action taken during that year’s legislative session, and declared in a speech his “earnest hope that this is the forerunner of cheaper electricity for the homes and farms and small business people of the state.”
While public utilities get preferential treatment for Niagara’s power, “the incumbent munis have a contract with NYPA that extends to 2040,” so a public utility in Monroe County is not guaranteed this immediate benefit. However, in the context of energy infrastructure, 2040 is not that far away.
In addition, we must aspire to new projects for the generation of similarly affordable electricity. This opportunity has been presented by the passage of the Build Public Renewables Act earlier this year. To become fully renewable by 2030, the BPRA directs NYPA to phase out non-renewable energy generation and to build renewable energy projects across the state. Public utilities will be the prioritized recipients of this low-cost energy.
“The big difference in the bills … is in the delivery charge,” Gardner says. RG&E “charge[s] a flat rate of $22 per month plus 5.3 cents per kWh. The delivery charge is also subject to a 2 percent tax. Fairport Electric’s delivery charge is a flat rate of $4.67 per month (and no tax).” As the reason for this difference, Gardner points to the density of Fairport’s service area as compared with RG&E’s “sprawling” territory that “encompasses seven counties, six of which are predominantly rural.” This is not a fair comparison when discussing the municipalization of one of these counties, more than one-quarter of whose residents live in the City of Rochester.
This delivery fee also includes “acceptable profit.” Such “acceptable profit” means a loss for many of our neighbors who suffer from RG&E’s exploitation; a loss that has become far too acceptable to our leadership. Instead of being used to improve our energy infrastructure, this money leaves our community to line the pockets of investors who contribute nothing in return.
In fact, RG&E is “guaranteed the ‘reasonable’ profit negotiated with their regulators,” as Gardner points out. Good service or bad, RG&E gets paid and customers cannot go elsewhere for their purchase. Despite its current deficiencies, RG&E has been approved for additional rate increases over the next three years of 16 percent for electric and 10.9 percent for gas.
Investor-owned utilities are incentivized to maximize profit by cutting spending on service provision while raising prices. A public utility would be focused on delivering reliable energy at an affordable price. Gardner speculates that “servicing the debt incurred to take over RG&E would likely leave the delivery cost in nearly the same place,” and that “addressing many of the complaints leveled at RG&E” would “drive up cost for ratepayers, not reduce it.” But debt payments will not be forever, and if a public utility “address[es] many of the complaints leveled at RG&E,” then at least ratepayers will get the reliable service they expect to be paying for!
Accountable and Democratic Governance
Given the centrality of utilities to daily life, “can we trust these functions to private firms?,” asks Gardner. History has shown that we cannot. Although investor-owned utilities “are governed by policies, regulations and assessments passed by the democratically elected state Legislature and implemented by the state Public Service Commission under the direction of the executive branch,” we have seen all too often the power of corporate influence over political decision-making.
Gardner describes that “without the information provided by a competitive market, firms and regulators are constantly negotiating.” This sounds like a terrible way to regulate and supply power for the benefit of ratepayers. Ratepayers should not be at the whim of this messy “dance” in the context of vital resources.
These negotiated prices “will not satisfy every constituency,” Gardner admits. “Given the cacophony of voices and their disparate perspectives, the decisions of the regulators will always have detractors.” However, the public’s role in the complex regulation process described by Gardner is limited. A democratically run public utility will ensure that diverse voices throughout the community, particularly those with the least power, are heard.
Local Economic Benefit
Since the demand for a public utility has gained support, RG&E has attempted to improve public relations with spending throughout the community. (This includes support for the anti-democratic Business Improvement District.) While “RG&E reports that it spent $11.6 million in economic development grants from 2019 to 2022,” similar spending under a public utility would be subject to democratic control, and the recipients of such funds would be selected by and for the benefit of the community.
Such spending could make a real, material impact in the community. Discussing climate policy, Gardner suggests:
“Funds supporting climate action from a community utility may be spent differently—perhaps more productively—within the region. Among many laudable projects and goals, the Clean Energy Fund may support ‘projects or investments in housing, workforce development, pollution reduction, low-income energy assistance, energy, transportation, and economic development’—which leaves a lot to the imagination of an agency executive.”
All of these projects would provide major economic benefits to the local community. A democratically governed public utility could be directed to focus on such projects, rather than funneling funds to shareholders.
In the meantime, the deficiencies in RG&E’s service have had negative economic impacts. Several small business owners have spoken to Rochester for Energy Democracy about the issues they’re facing. Erroneous billing and unreliable service have hurt their ability to run a business.
Gardner wonders, “would a community utility adopt a more aggressive climate agenda?” One cannot answer this question without acknowledging the role of corporations in influencing disastrous environmental policy. RG&E is among energy companies known to support lobbying against climate legislation.
Although the Rochester City Council voted unanimously to set aside $500,000 to fund a public takeover of RG&E, County Executive Adam Bello declared the issue is “extremely complex” and “beyond the scope of Monroe County.” This is a disappointment coming from the first Democratic Monroe County Executive in nearly 30 years, who claimed that his 2019 victory represented “a new chapter in our community’s history. A new era of progress” where Monroe County would “choose bold, new ideas and creative solutions.”
Bello’s response to the request for funding is based on nothing but weakness in the face of crisis. Gardner concludes his exploration with similar wavering:
“Were it possible to start over, many of us might choose a community utility over the current structure of ownership and management. But that is not a realistic option today. Even if it were, a community utility might not achieve the goals we wish to achieve. Direct public control of critical infrastructure has a mixed track record.”
Such uncertainties are the reason why a study is needed. Rochester for Energy Democracy does not deny the complexities of a public utility, but believes these complexities are worth addressing for the benefit of ratepayers not only today, but for decades to come. One must look no further than the Niagara Power Plant, opened in 1961 and continuing to provide power at a preferred rate sixty-two years later, for an example of what is possible.
We cannot depend on RG&E to do better. The incentive to maximize profit will continue to deliver only poor service at a high cost. We must do more, not less, to democratize control of our energy infrastructure. Fund the study!