Public Power:
The Power of the Human Touch

Alan H. Richardson
Executive Director
American Public Power Association

Presented at the APPA National Conference
June 12, 2000
Orlando, Florida

Welcome to APPA’s annual conference.

Sixty years ago, 41 leaders from public power systems across the country met in Washington, D.C. They came from large cities, like Los Angeles and Seattle, medium size communities such as Kansas City, Kansas and Chattanooga, Tenn., and smaller communities like Muscatine, Iowa, Wallingford, Connecticut, and Wellsville, New York, (a small town 30 miles south of where I grew up.) They came from state agencies in South Carolina and Texas. Despite their diversity in size, structure and location, they shared a vision and purpose – to create an association to represent the interests of the nation’s publicly owned electric utilities.

This year, we are celebrating our 60^th anniversary. As part of that celebration, we commissioned Alex Radin, APPA’s executive director from 1951 until his retirement in 1986, to write a brief history of our origin. This booklet, appropriately titled "An Alliance for Light: The story of the formation of the American Public Power Association" has been embellished with photos from our archives.

It’s a fascinating story of remarkable people bound together by shared purposes and shared principles. It includes such national figures as President Franklin D. Roosevelt (although public power preceded the New Deal by 50 years), Secretary of the Interior Harold Ickes, and Leland Olds, Chairman of the Federal Power Commission.

In addition to these national figures of heroic proportions, our history includes some figures of equal stature that made their mark at the local level. Their names are familiar to us even if their accomplishments have faded with time. They include individuals like E.F. Scattergood from Los Angeles, James D. Donovan from Kansas City, Kansas, and Harold Kramer from Loup River Public Power District in Nebraska. So significant was their role in the history of APPA that awards have been named in their honor, and will be presented to truly distinguished individuals and utilities during this conference.

The communities they represented were fiercely independent. However, they were facing problems they couldn’t handle on their own. The leaders of these isolated systems were concerned over the growing complexity of electric utility operations. (If the industry was complex then, imagine what they would think of our industry today!) They were having difficulty obtaining materials and products to remain in business. (War was imminent and many municipal utilities couldn’t get copper conductor. Perhaps Hometown Connections could have helped them, had it been around at the time.) They were concerned over the persistent opposition to public power from the private power companies. And they were concerned over the escalating conflicts surrounding the public development and allocation of our nation’s waterpower resources. The times have changed, but perhaps not surprisingly, the problems that plagued our predecessors are still with us today.

These leaders were convinced that they needed to work together to advance common purposes. They wanted to protect the interests of existing municipal utilities, promote effective management practices, exchange information, and oppose detrimental legislation. For the past 60 years, this is precisely what APPA has done.

Our conferences, workshops and publications, statistical analysis and performance benchmarking promote effective management practices. Information exchange, always a central role for APPA, has taken a giant leap forward in the past three years as we have developed our web site (http://www.appanet.org/), and established electronic communications tools such as list servers to help you communicate with us and your counterparts across the country. Twenty years ago, we created DEED, our separately funded research and development program targeted directly at the needs of public power. (This is another anniversary that we celebrate this year.) Two years ago, we created Hometown Connections to provide products and services that will help give you an advantage in the more competitive utility industry of today and tomorrow. And, of course, we have consistently opposed legislation detrimental to our interests, and we have done a very good job.

Sixty years ago, with fewer than 50 members, no staff and no budget, even with a sympathetic President, about all APPA could hope to do was oppose bad legislation. We quickly discovered that wasn’t enough. There were things we needed Congress to do. As we grew, our ability to get things done in Washington, D.C. increased.

As APPA’s membership, resources and staff increased, so too did our political clout. Never before in our 60 year history have we been more politically powerful. And never before in our history have we needed to exercise our political muscle.

As industry restructuring legislation took hold in state after state, it quickly became apparent that the federal tax code imposed limitations on our operations that were inconsistent with the demands of a changing, restructured market. Simply stated, the way we are required to use our tax-exempt financed transmission and generation resources to serve our customers is out of sync with the new market. Only the U.S. Congress can fix this problem. So, less than two years ago, we set our sights on finding a solution.

We created the Campaign for Local Control, collected contributions, and began the very difficult task of devising, then enacting, a fair and equitable solution. We were determined to find an answer that permitted those with this "private use" problem to find a solution, while at the same time protecting the interests of those that did not have this problem.

It hasn’t been an easy task. We have encountered significant opposition every step of the way. But today, because of your hard work, we are very close to success.

More than 130 Congressmen and 33 Senators have co-sponsored the legislation we support – the Bond Fairness and Protection Act. To put this in perspective, since the 106^th Congress convened in January, 1999, over 3000 bills have been introduced in the U.S. Senate. Fewer than 3 percent have 30 or more co-sponsors. And of those that do, most are non-controversial. The Bond Fairness and Protection Act could hardly be characterized as non-controversial. This is a phenomenal accomplishment, and a tribute to your hard work.

What started as our problem, and our problem alone, is now recognized both within Congress and by a broad and growing group of industry stakeholders as one of the essential ingredients in any Congressional industry restructuring effort.

It didn’t happen because APPA is a financial powerhouse with millions of dollars to toss into political campaigns. Obviously, we aren’t. The funds we collect through voluntary contributions to our political action committee, PowerPAC, are a drop in the bucket when compared to the resources available to other major players in Washington.

We can attribute our success to the power of the human touch. You worked the political equation the old fashioned way. One on one, you contacted your representatives and senators. Public power capitalized on its most potent political resource -- local community leaders, public servants, who are committed to the cause and motivated to demand from their elected officials in Washington, D.C just and fair treatment for their hometown communities. Virtually on the strength of that asset alone, we are on the brink of success. For your commitment and your motivation, I say, thank you. Those who created APPA 60 years ago would be extremely proud of your accomplishments today. You have exceeded their expectations.

While we may be on the verge of success in resolving our "private use" tax code problem, there is another, equally significant, problem that we must address today. Within the next few days, the energy committees in both the House and the Senate are expected to mark up industry restructuring legislation. If the bills clear the hurdles in these two committees, they will move forward, possibly reaching the President’s desk later this year.

Will it happen? The hurdles are high, and enactment seems unlikely. But as they say, the republic is not safe so long as the Congress is in session. Nothing is certain. Anything can happen. Enactment is a possibility. If Congress doesn’t get it right, public power and all electric consumers are at risk.

We are at risk because a majority in Congress do not yet understand that the key to creating competitive wholesale power markets in interstate commerce is all about structure. This is a debate about industry restructuring, not simply deregulation. Congress must insist on the creation of an industry structure that protects both consumers and the market. To help us convince Congress, earlier this year APPA launched a new campaign, the Campaign for Real Competition. Using the same successful strategies employed in the Campaign for Local Control, we will use all the resources available to us to insist that Congress creates a proper wholesale market structure that will benefit all consumers.

The right structure requires the creation of new institutions – Regional Transmission Organizations – to ensure fair and non-discriminatory access to the interstate transmission grid in order to prevent abuses of monopoly power. The right structure also requires a mixture of regulatory oversight or intervention where necessary to protect consumers and the reliance on free market forces where appropriate.

Action in the House and Senate energy committees couldn’t have come at a better time for us. Collected here in Orlando are hundreds of public power’s leaders. We are powerful players in the federal legislative arena when we share a common purpose and speak with a single voice.

APPA has been preparing for this day for the last three years. APPA’s task force on industry restructuring, chaired by Mark Crisson of Tacoma, developed a series of policy resolutions that have been endorsed by this association. These resolutions call on Congress to take the steps necessary to enact restructuring legislation that will permit competition to flourish in the interstate bulk power market. We have asked Congress to give the Federal Energy Regulatory Commission the tools it needs to control abuses of market power by giant power companies that are more interested in preserving their monopolies than promoting competition. We have asked Congress to convert the Federal Energy Regulatory Commission from an arcane rate regulatory agency to a market monitor, a referee, to enforce discipline on market players so that all electric consumers can benefit from this great experiment of restructuring in which we are now engaged.

You can be proud of the positions you have adopted. They do reflect the public interest. They are widely accepted by the vast majority of participants in the restructuring debate. The proof of this lies in the broad based coalition that shares our views. Participants include national consumer organizations such as the Consumer Federation of America, the American Association of Retired Persons, independent power producers through the Electric Power Supply Association, large industrial customers through the Electricity Consumers Resource Council, and others such as Enron, and a coalition of power producers and consumers, the Americans for Affordable Electricity. Also included in this disparate coalition are several private power companies.

Who opposes the positions that we endorse? The answer will come as no surprise. On the other side of the debate are the giant private power companies and their national trade association.

We are aligned with the right friends. We are on the right side, the public side, the consumer side of this debate. But that doesn’t guarantee success. Politics is a contact sport. The human touch is crucial. We must make contact. That is your job. We want to help you do that.

We have established a phone bank so that you can contact your Senators and Representatives while you are here in Orlando. APPA staff will be available to assist you in placing calls to Washington. We have also drafted a resolution that we ask each of the elected and appointed officials to sign. At the conclusion of the conference, we will transmit a copy of this resolution to members of Congress. Your actions here in the next three days will have an impact. Please take the time to help your community and your national association represent your interests by placing these calls and signing the resolution.

Our coalition partners can help us advance restructuring legislation that protects the interests of all consumers, but it is up to us to insist that Congress also respect our rights and obligations. As Congress considers restructuring legislation, we must be sure that the nation’s 2000 public power systems, and the more than 40 million Americans who depend on us to deliver the most essential service in their daily lives, are treated fairly. That is why this association was created.

Like the founders of APPA 60 years ago, we are still faced with staunch opponents of public power. Federal legislation on industry restructuring presents an opportunity for them to impose on public power conditions that place us at a competitive disadvantage, or perhaps take us out of the market entirely.

We are still being attacked by some private power companies, their front groups like Citizens for States Power, which has received millions of dollars in hidden contributions from a few private power companies, and from ideologues who simply don’t believe that we have any business in the electric utility business. They complain about what they regard as the special privileges accorded public power, including our not-for-profit operations and our access to tax-exempt financing. They call on Congress to level the playing field.

Public power is an important part of the fabric of our national electric utility infrastructure. Members of Congress cannot avoid asking how we should fit into the restructured industry of the future. In one way or another, we will be included in whatever legislation is ultimately enacted. Some will argue for a "level playing field" with exactly the same rules for all players regardless of size or ownership. That is a simple and simplistic answer to a complex issue. It ignores the real differences between public and private power. Congress needs to understand these differences. We are not asking Congress for "special" privileges. We are simply asking Congress to recognize and respect our special characteristics.

We are in the electric utility business for a purpose, not a profit. Our special characteristics include our commitment to our communities and our commitment to public service. They include our commitment to the right of our citizens to control their own affairs through the democratic process. And they include our right to operate our systems on a not-for-profit basis.

Sixty years ago, our founders shared common purposes, and these shared purposes brought them together. But APPA would not have succeeded if behind these purposes our founders and you, their successors, did not also share common principles. Our founders, like you, believed in local control. They were, like you, public servants and publicly elected or appointed officials, and they believed in public service. They were committed to their communities. They were, like you, more interested in the human touch than the Midas touch.

This human touch of public power is more important than ever before in our history. It defines and supports our particular niche in this crazy and complex industry that is evolving today.

The human touch is how we succeed in the political arena. Personal contacts of mayors, elected officials and utility CEOs with their Representatives and Senators produce positive results, as we have seen.

The human touch is how we succeed at home. We are not in the electron business. Our customers don’t want electrons, they want what those electrons can do for them in their homes, businesses and factories. They want service. That puts us in the service business. Some of our customers have special needs, like enhanced reliability, or special interests, like "green" power. If we don’t meet these needs, they will soon have other options, including choice of power suppliers and self generation. It is our responsibility to understand what they want, and how we can help them get it.

The human touch is a very large part of what public power has always been about. It is what gives true meaning to local control. We must never lose sight of this very unique characteristic of public power.

The human touch also extends to our employees. While politicians are our most valuable resource in the political arena, our employees are our most valuable resource in maintaining relationships with our customers and keeping our systems running like a Swiss clock. How are we treating them? Are we providing wages that reflect their real market value? This has been an historic problem for public power. But it is not something that can be ignored as you prepare your utilities to meet the demands of the future. Your employees are your most valuable resource. From top management to lineman apprentice, treat them right. Pay them well. There is no better investment you can make.

So, this is my challenge to you as we move into the next decade. In all that you do, from politics to customer service to community relations to employee relations, recognize the power of the human touch.

Scattergood, Preston, Kramer and others created a wonderful, public service, consumer oriented association. I am extremely proud to be part of their legacy. Thank you for the privilege of representing you and your consumer owners over the past year.