Let There Be Light: Part I

Residential electric power in America’s big population centers is dominated by giant, investor-owned, for-profit utilities that operate in monopolies regulated by public service commissions. New York has Con-Edison; Atlanta, Georgia Power; Birmingham, Alabama Power.

But come down to little old DeKalb County, Ala., population 71,109, and you’ll find not one, not two, but three names in the phonebook under “electric company.”

The Fort Payne Improvement Authority (FPIA) provides power to the city and its environs, while the rest of the county is divvied up between Sand Mountain Electric Cooperative (SMEC) and Marshall-DeKalb Electric Cooperative (MDEC).

FPIA is a “municipal public corporation,” or “muni,” a power distributor created and regulated by the city for the benefit of its residents. SMEC and MDEC are member-owned cooperatives (“co-ops”), a nonprofit business model adopted by hundreds of underserved rural communities during the New Deal era to bring themselves out of the dark and into the 20th century.

Three power companies for a place DeKalb’s size (“784 square miles of scenic beauty,” according to the county’s website) may make it sound as if consumers have a lot of choice about their electric service. They don’t.

Though, unlike the for-profits, they are exempt from regulation by the state public service commission, like the big players, DeKalb’s three little electric companies operate in little monopolies of their own. All three buy electricity from the Tennessee Valley Authority (TVA), then distribute it to individual turfs carved out at the dawn of electrification and protected ever after by law and tradition, not just from each other but from competition by the private sector.

“These are territories that were historically established decades ago,” said Michael Sznajderman, a spokesman for Alabama Power.

A subsidiary of generation giant The Southern Company, Alabama Power provides electricity to 1.4 million residential and industrial customers in the southern two-thirds of the state. And that, says Sznajderman, is how matters are likely to stay.

“I’m not aware that we have any plans at this time to expand our territory,” he said.

Sznajderman said for-profit utilities like Alabama Power, Duke and Entergy can do business with each other with relative ease. “Those are two investor-owned utilities that may decide to merge, or one buys another,” he said. “But as far as coming in and purchasing, let’s say, a municipal system or a rural electric cooperative, I think there’s a lot more hoops you have to jump through to do that.”

He explained that Alabama’s co-ops and munis operate within a TVA territory defined long ago by the federal government, from which his company withdrew in the 1930s and into which it had no plans to return. “I’ve never heard in the 14 years I’ve been with Alabama Power of us ever even sort of exploring that notion,” he said.

Sznajderman said that in Alabama, big power consumers such as auto plants, factories and shopping malls do have some choice; they are allowed to buy electricity on the free market from whichever provider can cut them the best deal, be it a co-op, muni or IOU (investor-owned utility, such as Alabama Power), and regardless where situated. Power providers these days are tied in to each other and can “wheel in” electricity, he said, transferring it easily across territories wherever it needs to go.

This wheeling-in capability, said Sznajderman, allows power providers to sell wholesale to each other or otherwise transfer electricity as needed. Alabama Power and TVA, for example, have connections that would enable them to come to each other’s rescue in case of cataclysmic failure, he said.

“So there are a lot of different cooperative arrangements that can be devised across these territories,” said Sznajderman. “But as far as who serves the retail customers in those territories, those are kind of etched in stone.”

Are they?

There’s an adage that change is the only constant, and history has shown that the adage applies even to the Deep South (though sometimes it takes a bit longer). And today, change is rife in the world of electricity.

Chicago opened its utility market to competition early in this century, and by 2011, residential customers in the Windy City could choose among four companies that supplied electric power. In sunny California, the solar energy industry is growing like a weed. Across the nation, some householders have chosen to go off the grid altogether with home generation systems of their own.

And right next door in Tennessee, two TVA-supplied electric cooperatives merged in recent years with the two municipal authorities they abutted to deliver power more efficiently and economically to the customers both served. It can be done.

Also in Tennessee, a U.S. Congressman named Jim Cooper published in The Harvard Journal on Legislation an article entitled “Electric Cooperatives: From New Deal to Bad Deal.” Rep. Cooper’s article questioned the consumer-friendliness of the rural electric cooperative in a modern America that is decreasingly rural, and in which member ownership has become in-name-only, with members participating only to the extent they write monthly checks. Today, wrote Cooper, it is co-ops’ managers and employees who are calling the shots, and their interests lie in preserving the status quo.

“NRECA [The National Rural Electric Cooperative Association] has long admitted that many small co-ops keep electric rates artificially high simply because of their refusal to merge with other co-ops,” Cooper wrote.

But the relevance of institutions spawned in the Great Depression was not the question that inspired this series of articles. That question was much simpler: “Why is my light bill so high?”

Like many simple questions, this one led to no simple answers but instead a number of other questions. How come there are three electric companies in DeKalb County? If we have so many, why can’t we choose another one if we’re mad at the one we’ve got? Who is watching over the electric companies to protect our interests? If we’re the owners of our co-op, does that mean the watcher should be us?

This series will examine a few of those questions, attempting, in the process, to shed a little light ...

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