Public Power - November/December 2007 - (Page 13)

. . .Richardson and Tom Kuhn, president of Edison Electric Institute, engage in a “heated” debate. with Mike Browder of Bristol, Tenn. with Jan Schori of Sacramento, Calif. competition for new licenses, we simply couldn’t get past the perception that this was a power grab. It’s a bit ironic that Congress gave preference to the incumbent licensees with the expectation that those licensees would continue to serve their existing customers and that, of course, hasn’t happened. As the industry has evolved, those companies have changed rather dramatically and now the economic benefits of some of those hydro projects in some parts of the country are no longer benefiting those existing customers. The Rostenkowski amendment [to the 1987 continuing budget resolution], which prohibited the use of tax-exempt financing to acquire facilities owned by investor-owned utilities, was another disappointment. We were blind-sided on this one. It arose in the context of a strong public power movement in Chicago. Rep. Dan Rostenkowski [DIll.,] then chairman of the House Ways and Means Committee, demonstrated that he was more sympathetic to the views of Commonwealth Edison Co., the target of the Chicago movement, than to Mayor [Harold] Washington and the Chicago constituency that would be served by public power. The amendment made the creation of new public power systems through the acquisition of facilities owned by private companies considerably more expensive and essentially cut the legs out from under the public power supporters in Chicago. In the end, Mayor Washington suffered a fatal heart attack and the public power initiative lost momentum. www.APPAnet.org 4 Another big disappointment was also tax-related. In the name of “reforming” the use of tax-exempt bonds, Congress imposed tighter restrictions on public power issuers than on other issuers of tax-exempt bonds. Our private use limits, that is, the amount of private use permitted in facilities financed by tax-exempt bonds, was restricted to the lesser of 10 percent or $15 million. “Reform” actually had little to do with this. It was intended to make it much more difficult for us to develop new generation and transmission facilities, thereby keeping us captive to private power companies from whom we needed to buy power at wholesale or obtain transmission access. How has public power’s role in the electric utility industry changed over the three decades that you have worked in the industry—or has it? I believe public power has grown in both size and stature. Despite obstacles placed in our path, our ownership of generation and transmission facilities over the last three decades has increased dramatically as more and more individual public power systems have worked together through joint action agencies. As a result, we have a larger presence in the industry now than we did when I joined the staff. In another sense, however, we haven’t changed all that much and our consistency of purpose has enhanced our stature. We have remained true to our mission and our business model. We have always existed for a purpose, not a profit. Our mission has been and continues to be to provide the best possible service at the lowest possible rates while protecting the environment. In contrast, some investor-owned utilities have lost focus of their mission. In the 1980s they were distracted, for example, by diversification. That was the 1980s argument they used to argue for repeal of the Public Utility Holding Company Act of 1935. PUHCA restricted holding companies from diversifying into ventures not functionally related to the utility business. Private utilities argued that they needed to diversify in order to attract investors. As it turned out, utility diversification was a failure. Those utilities that stuck to their knitting did much better than those utilities that diversified. I think we may have saved a lot of the private power companies from themselves by urging Congress not to repeal the Holding Company Act in the early 1980s. Public power’s mission was never to diversify for profits but rather to remain dedicated to serving our communities. Deregulation and the promise of tremendous profits was another industry distraction for the industry. Again, public power remained focused on its primary mission and demonstrated its value to its own customers and to others. Our business model in the time of turmoil in the Western states, the energy crisis, demonstrated that we had it right. We knew what we were doing and that the focus should be on keeping rates down and providing service. Some utilities NOVEMBER-DECEMBER 2007 13 http://www.APPAnet.org

Table of Contents Feed for the Digital Edition of Public Power - November/December 2007

Public Power - November/December 2007 Contents Washington Focus 10 Questions Connecting with the Customer Through Automation AMR or AMI? The High Court’s Antitrust Thunderbolts California’s Push for Demand-Response Plug-In Partners Get Plugged In Wiring Up for Double-Digit Growth For Engineers Safety Community Broadband For Governing Boards DEED Customer Service Hometown Connections Index to Advertisers Parting shot

Public Power - November/December 2007

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