Power to the People

Editor's Note: The following was written by Dennis Kucinich from the campaign trail in Iowa.

With an estimated 50 million Americans and Canadians left without power and in some cases water, common sense requires us to reflect on the absurdity of deregulation of public utilities. The right of utility franchise is vested in the people. We give utilities permission to operate, and enable them to set up a profit making business in exchange for the promise of affordable and reliable service.

In 1992, investor-owned utilities pushed the Democratic House to pass HR776, which granted electric utilities broad powers. The bill was supposed to restructure the electric utility industry to spur competition.

Instead, utilities used deregulation to effect a series of mergers limiting competition. In order to accelerate profits, cost cutting ensued, involving the layoff of thousands of utility company employees, including some who where responsible for maintenance of generation, transmission and distribution systems. A number of investor-owned utilities stopped investing in the maintenance and repair of their own equipment, choosing to cut costs to enhance the value of their stock rather than spending money to enhance the value of their service.

A prime case in point is FirstEnergy Corp., late of Ohio. FirstEnergy formed through a merger of utility companies that owned nuclear power plants that often were neither used nor useful, and as a result incurred huge debt. FirstEnergy's predecessor, the Cleveland Electric Illuminating Company (CEI) in the 1950s and '60s was a high performing blue chip stock until it invested in nuclear power.

FirstEnergy tried without success to keep online a very troublesome nuclear power facility at Port Clinton, Ohio, the Davis-Besse plant. Davis-Besse is currently shut down and has been for some time. FirstEnergy and federal regulators failed to properly monitor the plant's operations; boric acid corroded the head of the reactor, threatening to breach the reactor vessel.

Millions of people in the Midwest and the water supply of the entire Great Lakes region were at risk because of First Energy's negligence, improper maintenance, and actual cover-up of the degradation of the reactor. Further, federal regulators decided that despite the danger to one of the largest populated areas of the United States, FirstEnergy's financial condition required the flawed reactor to continue operation. The regulators put profit ahead of public interest.

If there ever was an example of an unholy alliance between government and industry, this is it. If there ever was an example of the failure of necessary regulation by the government of an investor-owned utility, it is the government's failure to regulate FirstEnergy. Now, according to published reports, the blackout that affected an estimated 50 million people may have begun in the FirstEnergy system.

I've been familiar with First Energy and the challenge of utility monopolies for over 30 years. Early in my career, in the 1970s, I watched FirstEnergy's predecessor, CEI, as it was hard at work trying to undermine the ability of the City of Cleveland to operate its own municipal electric system. CEI conducted a tireless crusade to attempt to put the city's publicly owned system, Muny Light, out of business. Muny Light competed against CEI in a third of the city and provided municipal power customers with savings on their electric bill of 20-30 percent. It also provided cheaper electricity for 76 city facilities and thousands of Cleveland street lights, saving taxpayers millions of dollars each year.

An antitrust review revealed that CEI had committed numerous violations of federal antitrust law in its attempt to put Muny Light out of business. CEI worked behind the scenes to block Muny Light from purchasing power from other power companies. CEI became the only power company Muny Light could buy from. At that point, CEI sharply increased and sometimes tripled the cost of purchase power to Muny Light. And, as a result, Muny Light began to lose money. CEI used Muny Light's weakened operational and financial condition (which they created) as evidence of the public system's lack of viability and as proof that the only way the people of Cleveland could have reliable power was for the city to sell its electric system to CEI. Throughout this period, the Cleveland media, which received substantial advertising revenues from CEI, crusaded against the city's ownership of a municipal electric system.