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Reclaiming the Energy System for the Public Benefit
Reclaiming the energy system for the broader public interest entails a threefold challenge. It involves: (1) returning to public control parts of the energy
sector that were once public but have since been privatized and/or marketized, (2) restoring principles of public service and responsiveness to public needs to energy entities that are currently publicly owned but are today run like private companies, and (3) reasserting the right to develop a new socially owned and fully unionized, renewables-based energy system that can begin to seriously address social and environmental challenges.
The fight for energy democracy can draw both insights and strength from the recent successes of the broader movement to protect and reclaim public services. Resistance to privatization has been intense in many countries, such as Argentina, Ghana, India, and Indonesia. Protests have halted privatization proposals in Ecuador, Paraguay, Peru, and South Korea. In Iraq, the Federation of Oil Unions (formerly banned under Saddam Hussein's regime) led a successful fight to halt the transfer of Iraqi oil operations to foreign multinationals. Even in China, workers have protested the sale of a public power plant in Henan. (See Chapter 12.)
Privatization has led almost invariably to underinvestment, loss of jobs, reductions in wages and union coverage, worsening working conditions, and falling quality of service. And where privatization has occurred, public control has normally been replaced by oligarchies. In the United Kingdom, six private corporations dominate the power generation sector, owning 71 percent of generating capacity and 96 percent of the residential electricity market. In the Philippines, the neoliberal-inspired Electric Power Industry Reform Act (EPIRA) “brought about a transition from government monopoly to an enhanced private monopoly—worse, a hundred percent increase in power rates.” In India, World Bank policies have produced disastrous results, including major power cuts and high levels of electricity theft.
The case for reversing privatization is stronger today than it was in the past. Unions and their allies can draw on the body of knowledge and experience that has accumulated over the past 30 years to build public support for reversing privatization. For many years, the London-based Public Services International Research Unit (PSIRU) has documented struggles against privatization. Moreover, public opinion is beginning to shift: in the United Kingdom, fully 69 percent of residents want energy to be renationalized, according to a September 2013 poll.
Efforts to oppose privatization can learn from the experiences in the water sector. Privatized water services have been “remunicipalized,” or taken back into public ownership, in a handful of U.S. cities and in several Latin American countries, including Argentina, Bolivia, Colombia, and Uruguay. Although the return to public ownership has not always been smooth, unions and local communities are developing new forms of public service delivery, such as “public–public partnerships” (PUPs), for which basic principles of operation were adopted in Paso Severino, Uruguay, in 2009. Groups like Public Services International, the Red Vida network, the Transnational Institute, and Food & Water Watch have been active in promoting PUPs as an alternative to privatization and to public-private partnerships.
PUPs in renewable energy are also possible. In Germany and the United States, many energy utilities are community controlled (roughly 20 percent of power in the United States is generated by municipally owned energy utilities). Renewable energy technologies lend themselves to the growth of energy cooperatives that can then network in a similar manner as has been witnessed with water. But more needs to be done to explore these possibilities and to build alliances with worker-community organizations focused on water rights and service provision.
Private-to-public reversals in the energy sector are rare in comparison to the water sector, but they have occurred in Argentina, Bolivia, and Germany. In Germany, the remunicipalization of energy has moved forward at a steady pace, and the country now boasts the highest share of renewable energy use in the European Union. Although German municipalities ceded control of power generation in the 1980s and 90s, many have since chosen to reclaim their local grids, resulting in a major expansion of direct municipal provision of energy services. PSIRU reports that between 2007 and mid2012, more than 60 new local public utilities (stadtwerke) have been set up and more than 190 concessions for energy distribution networks—the vast majority being electricity distribution networks—have returned to public hands. In total, about two-thirds of all German municipalities are considering buying back both electricity generators and the distribution networks, including private shareholdings.
The city of Munich, for example, has decided that all of its energy will come from renewables by 2025, and that all of it will be generated by the public sector, because the private sector cannot be relied on. This was articulated powerfully in 2011 by Dieter Reiter, a Munich city councilor, when addressing an international conference of economists: Energy supply was one of the key sectors affected by privatization of formerly public enterprises. Today, energy supply is characterized by oligopolies of private energy suppliers. There is practically no competition on price. The transition to renewable energies is made rather reluctantly and only as a consequence of massive state subsidies and regulatory requirements.… The example of Munich shows how the transition process can be sped up if a city owns a utility company. By 2025, our utility company aims to produce so much green energy, that the entire demand of the city can be met. That requires enormous investments—around 9 billion euros by 2025—and can only be successful if the long-term goal is sustainable economic success rather than short-term profit maximization.
Those who refer to Germany's successes in advancing renewable energy often appear unaware of, or perhaps reluctant to acknowledge, the role of public authorities in challenging privatization and intervening on behalf of the broader public.
The extent of the marketization of publicly owned or controlled entities, however, means that the task of building a democratic and sustainable energy system cannot be reduced to the issue of public versus private ownership. In the case of Argentina, the government moved to reclaim Repsol's 51-percent stake in the partially publicly owned oil company YPF in 2012, but then proceeded to enter into a partnership with Chevron in 2013 to exploit the country's considerable shale gas reserves. Under marketization, publicly owned companies are induced to behave as if they were private businesses. This means that they are focused on maximizing sales and profits and, in many instances, on investing overseas. Serving the public interest or the common good is not necessarily their principal motivation.
In South Africa, the state-owned energy company Eskom behaves like a private multinational; its operations are spread throughout southern Africa and other parts of the world. Eskom's assets totaled $33.1 billion at the end of March 2010, and it pays its CEO $1 million per year. The company's new power plants are being financed by a range of foreign banks based in Europe and South Africa, as well as by multilateral institutions such as the African Development Bank and the World Bank. Unions in South Africa are campaigning for Eskom and other state-owned companies to honor the commitments made in the Freedom Charter and to serve the public good. Similarly, the Chinese company Sinopec is a major overseas investor in the Canadian tar sands, shale gas, and other forms of extreme energy. In 2000, Sinopec emerged after the Chinese government invited Morgan Stanley to turn its most promising operations into a company that would be listed on world stock markets. Sinopec invests overseas as a means of ensuring that China has supplies of energy to meet its rising demand. Achieving energy democracy will entail a wholesale reorientation of existing public companies, a redefining of the political economy of energy around truly sustainable principles, and a new set of priorities. Some unions have talked in terms of reclaiming or resocializing entities that were once privatized or marketized, such as the National Union of Metalworkers (NUMSA) in South Africa and CUPE in Canada, but most unions remain locked in anti-privatization battles of a more defensive nature.
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