Noah Berger/AP Photo
The threat from privately owned utilities was felt last week when a swath of Northern California endured blackouts at the hands of the state’s largest investor-owned utility, PG&E.
The power seems to go out every so often in our largest cities these days. New York City experienced two blackouts over the summer during heat waves, and the Bay Area saw random, lengthy power outages to 2.5 million residents as a precaution against wildfires just last week. The commonality between these crises is that investor-owned utilities were behind them. These monopolies, driven by short-term financial pressures, resist equipment upgrades and maintenance, leading to a lack of preparedness during climate-fueled disasters like fires, hurricanes, and extreme heat. The Wall Street mentality of cutting corners has made our power systems dangerously unstable.
While spurned ratepayers, blackout victims, and environmental activists have joined a chorus of discontent on privately held utilities—flanked by presidential candidates Bernie Sanders and Elizabeth Warren, both of whom have featured public ownership of utilities as a plank of their Green New Deal proposals—private utilities themselves are charging ahead with even more corporate consolidation. The year 2019 has seen a spate of mergers within the industry, none larger than the proposed $67 billion merger between Connecticut-based Avangrid and Pennsylvania’s PPL, reported on last Friday by the Financial Times.
The proposed merger between PPL and Avangrid, which is still being discussed by the two firms, would form one of the largest investor-owned utilities in the country. Avangrid, a multibillion-dollar firm based in Connecticut, provides gas or electricity to more than three million customers across New York and New England. The company is also a major player in the renewable-energy sector. It’s the third-largest wind power provider in the country, and owns wind and solar farms across 22 U.S. states.
PPL, itself the product of the merger of eight electric companies across the state in 1920, was formerly known as Pennsylvania Power and Light. It’s worth roughly $23 billion, with operations across Pennsylvania and Kentucky, as well as an electric distribution company in the U.K. It serves roughly ten million customers in total.
The PPL/Avangrid union, which would create an energy behemoth across the eastern United States, is far from the only major transaction in the utility industry this year, which has seen a rash of consolidation. In the Southeast, Dominion Energy acquired Scana for $14.6 billion, while NextEra Energy acquired Florida-based Gulf Power for $6.5 billion.
Those regional monopolies don’t just serve millions of customers, they’re also central players in developing new energy infrastructure, from pipelines to nuclear power projects. Meanwhile, the state of South Carolina is currently taking bids for its state-owned utility Santee Cooper from Duke Energy, NextEra Energy, and others.
For anyone interested in a Green New Deal or climate resilience planning of any form, this wave of mergers should be particularly troubling. Some of these newly minted utility companies are among the largest producers of fossil fuel infrastructure. Dominion Energy, for example, is behind the highly controversial Atlantic Coast Pipeline. Avangrid and PPL, on the other hand, would become one of the largest players in the wind power industry, tethering wind’s fate to a portfolio full of fossil fuels, and leaving an entire sector of the renewable-energy economy vulnerable to the whim of just one corporate board. That all means that just a handful of deep-pocketed companies, with the ability to convert those resources into outsize political power, will be able to exercise undue influence on the necessary changes to the national energy program, while holding millions of ratepayers hostage as bargaining chips.
In recent years, public power has been identified as a low-hanging-fruit–type solution to both environmental and energy justice. To meet even the mildest of decarbonization goals, a major overhaul of the American grid is going to be an utmost priority, as older fossil fuel infrastructure is swapped out for renewables. And even beyond the environmental necessity, public ownership could well prove to be a boon for consumer protection, as ratepayers have frequently been saddled with accelerating costs to cover for utility’s mismanagement, as well as escalating executive salaries and returns to shareholders.
The poster child for this type of multitiered disaster is Pacific Gas and Electric, California’s largest investor-owned utility. PG&E’s lines were found to have played an essential role in sparking the deadly 2018 Camp Fire, the state’s deadliest on record. Instead of investing the necessary funds in maintenance and tree trimming, PG&E was recently revealed to have paid executive bonuses and shareholder dividends. “This current operation is unacceptable,” California Governor Gavin Newsom said Thursday. “The current conditions and circumstances are unacceptable.”
Ahead of wildfire conditions last week in Northern California, PG&E saw no alternative but to shut down power to 2.5 million California residents. That decision left much of the region, from the state’s northern border to the outskirts of Silicon Valley, blacked out for at least 48 hours starting last Wednesday. It took until Monday for power to be fully restored. The state of California was forced to open its emergency center normally saved for natural disasters, while PG&E’s communications and computer systems faltered and its website crashed as customers tried to figure out whether they were indeed going to be in the blackout zone. One man died when power to his house shut off and he could no longer use the oxygen tank he relied on to breathe, though an autopsy refused to assign fault to PG&E.
The California Public Utilities Commission sanctioned PG&E over the length of the blackout, which was supposed to be only 12 hours, while the company is being forced into an emergency session with the regulator on Friday. Governor Newsom has (somewhat ludicrously) demanded PG&E pay a paltry $100 per person to those affected, with $250 for every small-business owner who lost power.
The debacle surfaced questions of whether rolling blackouts are going to become a routine event for Northern California’s ratepayers, especially as climate change makes wildfires more frequent and intense. It’s also added urgency to calls for municipalities, at either the local or state level, to transfer utilities to public ownership, as investor-owned groups seem unable to contend with the scale of the challenges posed by the climate crisis.
Predictably, PG&E has proven resistant to those calls for public ownership. The city of San Francisco recently made a $2.5 billion bid to take over the company’s power lines within the municipal area (a cash offer that, given PG&E’s ongoing bankruptcy hearings, one would think might be quite compelling), which the company rejected.
The growing push for public power is also part of the motivation for this wave of mergers. For Avangrid and PPL in particular, mounting political pressure in the U.K., where PPL is an asset holder, is part of the calculus. There, the Labour Party has also made nationalization of the country’s electric grid a political priority, which would threaten the company’s position.
The maneuvers toward consolidation can be read as preparation for a battle over the future of America’s power, perhaps an attempt to make private utility behemoths “too big to fail.” Of course, consolidation could also make the remaining companies easy targets for nationalization, especially as climate-related crises mandate public money for bailouts. If public power is key to mitigating a warming planet, the investor-owned utilities maybe shouldn’t make themselves so ripe for public takeover.
