WHAT IS PUBLIC POWER?
Public power utilities are community-owned, not-for-profit electric utilities that safely provide reliable, low-cost electricity to more than 49 million Americans. In contrast to the Investor Owned Utility (IOU) model, in which a private company holds a monopoly over electricity in their service area, publicly owned utilities do not exist for the purpose of shareholder profit, but rather to serve the local community.
Most public power utilities are owned by cities and towns, but many are owned by counties, public utility districts, and even states.
Investor Owned Utilities (IOU's) like PNM, EPE and SPS have a fiduciary duty to their shareholders to make as much money as possible - to raise rates, to discourage energy efficiency, to choose expensive generation sources that will yield higher guaranteed returns on capital from ratepayers and minimize expenses like customer service, repairs, upgrades and innovative investments in the grid. Public Power boards are responsible to safeguard the values and the welfare of the public.
Public power ownership is not a new concept. More than 1 in 7 Americans are served by a community owned electric utility, ranging from small entities like rural co-ops to large municipalities like the Los Angeles Power Authority, to the entire state of Nebraska. Public power ownership is a proven driver of lower rates, increased reliability and clean energy implementation, and can take many forms.
WHAT ARE THE BENEFITS OF PUBLIC POWER?
A public power alternative would allow municipalities and tribes in New Mexico to own or contract with generation facilities to serve their communities, and could allow the state to export energy to growing markets in the west through a publicly owned grid. The revenue potential for local governments and the state is significant, but revenue is not the only benefit of public power ownership.
Like public schools and libraries, public power utilities are owned by the community and run as a division of local government. These utilities are governed by a local city council or an elected or appointed board. Community citizens have a direct voice in utility decisions, including the rates it charges and its sources of electricity.
Public power utilities are not-for-profit entities that provide electricity to customers at the lowest rates. Homes powered by public power utilities pay 12% less than homes powered by private utilities. Businesses that get electricity from public power utilities also pay less than businesses that get electricity from private utilities.
Customers of public power utilities lose power less often. Customers of a public power utility are without power for an average of 62 minutes a year, compared to customers of private utilities, who lose power for an average of 150 minutes a year — provided there are no major adverse events.
Public Power entities are drivers of innovation in electricity distribution and efficiency. Lowering rates, incentivizing efficiency, adopting lower cost generation technologies, increasing employment, maximizing customer service and investing in preventative safety measures - all of these are antithetical to the profit incentive that drives IOU's. Public power entities are responsible for promoting the wellbeing and values of the community.
Invested in the Community
Public power utilities are embedded into the fabric of their communities and support a range of community programs including charitable, educational, and beautification programs. Public power employs 96,000 people in hometown jobs. On average, public power utilities pay 5.4% of electric operating revenues to the community — through taxes, fees, and special services. Public power gives 13% more to the community than private utilities.
Public power infrastructure projects are often funded through the issue of tax-exempt municipal bonds. Funding through municipal bonds means community members invest in their electricity infrastructure — such as new generation equipment, transmission lines, and distribution system upgrades — and receive interest as public power utilities pay back the loan.
Public power generates 10% of all electricity in the U.S. and distributes — or sells at the retail level — 15% of all power flowing to homes and businesses. In 2019, about 40% of that power was generated by non-carbon emitting sources. The six communities that have achieved 100% renewable energy in the United States have all been community owned.
A Proven Driver of Economic Development
Public power generates local jobs and local revenue through the generation and sale of energy for its customers, and if a state-owned grid exports energy, revenues can flow from outside the state to contribute to New Mexico general funds. Electrification and Renewable Portfolio Standards in California, Nevada and Arizona will exponentially increase the demand for energy from solar and wind generated in the Southwest in the next decade, and New Mexico is uniquely situated to capitalize on those opportunities. We only have to decide that we want to ensure New Mexicans benefit from those sales instead of PNM, EPE and SPS shareholders!
WHAT FORMS CAN PUBLIC POWER TAKE?
A municipality (a city or county), or a tribe creates its own utility. That utility handles one or more essential services (electricity, gas, broadband and/or water for its residents.
A municipality or group of municipalities (cities, counties, towns, or tribes) creates an entity that it owns to generate or purchase energy from multiple sources to serve its residents. Existing utility continues to transmit and distribute energy for a fee.
The state owns and administers the transmission grid and builds or purchases power from companies or municipalities to meet state needs or export energy for profit.
HAVE WE DONE IT BEFORE? YES!
More than 800,000 New Mexicans receive their electricity from three Investor Owned Utilities - PNM, EPE and SPS - which hold a monopoly in their service areas. But the Investor Owned Utility (IOU) Model is not a foregone conclusion. Communities continue to have the choice to create public electric utilities to provide electricity to their citizens with community ownership and local control of their power supply. The choice belongs to us.
CITY OF SANTA FE WATER AUTHORITY
In 1995 the City of Santa Fe purchased the Sangre de Cristo Water company from PNM. The figure to the right shows production from four sources of water through time, and highlights the results after the City purchased the utility and began to focus on conservation and shifting away from reliance on groundwater, even as the city's population grew significantly. Resilience, better infrastructure, more conservation, and a dramatic decline in water usage. Public ownership means sustainability is more important than profit!
RENEWABLE TAOS AND THE KIT CARSON ELECTRIC CO-OP
The story of Kit Carson Electric Cooperative (KCEC), a member-owned rural co-op serving Taos, Colfax, and Rio Arriba Counties since 1944, is illustrative of the power of community ownership. A group of activists concerned about climate change formed a group called Renewable Taos in X and began working in collaboration with the Board of KCEC to make sure that community values were reflected at their co-op. In 2016, KCEC bought its independence from the Tri-State Generation and Transmission Association, which limited coops to 5% solar energy production. In partnership with Guzman Energy, Kit Carson will reach its goal of 100% daytime solar energy by 2022, all while keeping rates lower than those of similar size co-ops in New Mexico.
PICURIS PUEBLO SOLARIZATION
Picuris Pueblo, the smallest of New Mexico’s 19 Pueblos, completed their renewable energy transition in 2017. The 1-megawatt solar array enables the Pueblo to meet their goal of becoming 100% renewable energy dependent and provides energy for up to 600 homes in the surrounding Peñasco Valley. Each month, Kit Carson Electric Cooperative pays Picuris for energy generated to the grid. The solar array generates revenue for the Pueblo, subsidizing reductions in household utility bills and funding the diversification of Picuris Pueblo's local economy. With its clean energy dollars the tribe is developing a travel center and projects like a baseball field, skate park, hiking and mountain bike trails, and a Boys and Girls Club. Profits are also directed towards the Tiwa Language Program, which is key to the preservation of sacred Pueblo culture.
PUBLIC POWER MODELS TO LEARN FROM
Nearly every state in the U.S. has a public power utility, but Nebraska is the only state served 100% by publicly-owned utilities. Nebraskans pay one of the lowest rates for electricity in the nation and revenues are reinvested in infrastructure to ensure reliable and cheap service in perpetuity. Learn more>
WINTER PARK, FL
Winter Park, Florida, formed a public power utility in 2005. Sparked by persistent problems with the reliability of service provided by their IOU, residents voted overwhelmingly–by 69 percent–in favor of the city’s plan to form a municipal electric utility. Rates have since remained about 5% to 10% below that of the neighboring IOU and the average number of minutes residents spend without power dropped from about 200 minutes annually to around 75 minutes in 2017. Learn more>
SILICON VALLEY POWER, CA
Silicon Valley Power (SVP), a 600 MW vertically integrated (owning generation, transmission and distribution assets) publicly owned utility and vertically integrated that serves 55,000 customers in and around Santa Clara, is an island of efficiency surrounded by PG&E territory, with an average of 66 minutes without power per customer compared to 170 for PG&E. Even as SVP provides more reliable service than its neighbor, its rates are about 48% lower. SVP ranks second place in the nation for Green Power Excellence from the U.S. Department of Energy. Learn more>
A coalition of Maine Citizens called Our Power Maine was formed to promote the creation of a community owned Pine Tree Power Company to take over electricity service in Maine after the IOU's Versant and Central Maine Power, owned by Avangrid, have failed to provide reliable electricity despite charging exhorbitant rates. A bill to approve the public utility passed the legislature in 2021 but was vetoed by the Governor and is now being pursued via referendum. Learn more>
A GUIDE FROM THE AMERICAN PUBLIC POWER ASSOCIATION
Public Power for Your Community is a comprehensive guide that outlines the steps to form a new public power utility. This guide also discusses how other types of utilities may respond to attempts to create a new public power utility. It addresses common myths, misinformation, and false charges that may come up in explorations to form or privatize a public power utility. Download the complete guide or click below for excerpts.
What is Public Power? - Explains the public power business model, how public power differs from investor-owned or cooperative utilities, and other basics.
Benefits of Public Power - Explores the many benefits public power utilities may offer, in 4 broad categories: local choice, reliable customer service, affordable prices, and local economic development.
Forming a Public Power Utility - Walks through the steps of forming a new public power utility, and common responses to expect from the incumbent utility.
Myths and Misinformation - Addresses myths and misinformation about public power and the process of forming a new utility that may come up during the municipalization process.
Successful Public Power Campaigns - Case studies of utilities that successfully formed new utilities, or got more favorable outcomes from the incumbent utility because they explored the public power option.