The American Public Power Association is pleased to present this in-depth, three-part Public Power Current newsletter series to celebrate public power’s past, present, and future. Thank you to the utility systems for their contributions about public power’s founding and evolution (Part 1), the benefits of modern public power systems (Part 2), and how public power’s best attributes, and discussions about municipalization and community choice aggregation, have touched local communities (Part 3).
The public power business model has embodied an American tradition deeply rooted in local communities: neighbors working together to provide an essential local service. A service that must be reliable, where rates are reasonable and cost-based, and electricity is distributed on a not-for-profit basis under the fiduciary oversight of local governing boards. Just like your local school or fire department, public power utilities belong to a local or regional governmental structure that effect the day-to-day lives of 49 million people today. This is our story.
The Founding Days of Public Power
The very first public power utility was established 141 years ago. Shortly after 8pm on the evening of March 31, 1880, mechanics in the farming community of Wabash, Indiana hitched a threshing machine engine to the west wall of the Wabash County Courthouse, sending motive power to a generator in the basement. Lights atop the courthouse bathed downtown Wabash in a brilliant light within minutes. One eyewitness account described the nighttime scene as follows:
“People stood overwhelmed with awe, as if in the presence of the supernatural. The strange, weird, light, exceeded in power only by the sun, rendered the square as light as midday. Men fell on their knees, groans were uttered at the sight and many were dumb with amazement. We contemplated the new wonder in science as lightning brought down from the heavens.” – Museum of Electricity, citing an excerpt from a newspaper account in Men and Volts: The Story of General Electric
The Wabash City Council’s decision to own (instead of franchise) its new electric lighting system created America’s first municipal utility – a model that still thrives today. Wabash later relinquished the title of America’s oldest public power community to Butler, Missouri, when it sold its utility to a private company.
The City of Butler prides itself as “electric city.” A local delegation including Captain F.J. Tygard had attended the 1876 Philadelphia Centennial Exposition featuring the Corliss Centennial Steam Engine at the world's fair. The Brush Electric Light and Power Company was later formed in Butler, with local financing.
Butler became the first city west of the Mississippi River to have electricity when, on the evening of December 6, 1881, an electric lighting plant powered four burners atop the copula of the Butler Courthouse, illuminating the town square and the buildings surrounding it. Reportedly, people would take the train from Kansas City just to see the Butler Courthouse lights. (Note that Thomas Edison’s commercial Pearl Street Station in New York did not become operational until nearly a year later, in September 1882.) Tygard later became Butler’s mayor and, in 1900, the city acquired the lights and the power plant.
Today, the Butler Electric Department is America’s oldest continuously operated public power utility.
“For the Benefit of the People”
The New York Power Authority was an early experiment in large-scale public power. In 1907, New York Governor Charles Evans Hughes first declared that the state’s undeveloped run-of-the-river waters “should be preserved and held for the benefit of the people and should not be surrendered to private interests.” Ultimately, it would take 25 years and then-Governor Franklin D. Roosevelt to gain public and political support for a Power Authority “to give back to the people the waterpower which is theirs.” On April 27, 1931, Roosevelt signed into law the Power Authority Act, declaring, “It is my earnest hope that this is the forerunner of cheaper electricity for the homes and farms and small business people of the state.” It led to the development of what is today known as the St. Lawrence-Franklin D. Roosevelt Power Project and the Niagara Power Project.
The Public Power Model Spreads Nationwide
Public power utilities were being formed at a rapid pace in the early 20th century. The “golden days” came in the early 1920’s, when more than 3,000 municipal utility systems were in operation, according to David Schap in “Municipal Ownership in the Electric Utility Industry: A Centennial View.”
Several factors led to the establishment of so many municipal utilities. In some communities, it was a practical decision made by local leaders who wanted to better the lives for local citizens. Smaller communities were simply not viewed as attractive, compared with the profit potential in larger cities, to private electricity companies. When the private sector failed to meet their needs, these communities took the task upon themselves. As a result, public power became a real threat to private electricity companies. The number of municipal utilities then shrank under the pressures of an aggressive private industry and rapidly changing technologies. By 1930, the number of public power utilities fell nearly 40%, to approximately 1,900, according to Schap. Still, public power utilities were able to survive in frequently unfavorable political and economic environments.
This downward spiral was reversed in the early 1930’s. By the end of that decade there were approximately 2,000 community-owned and operated electric utilities – a number that still stands today and is a continuing testament to the value of public power. Several factors contributed to this more modest wave of municipal ownership. The development of diesel technology made small-scale municipal generation more efficient. But the growing resentment against private utilities, with excessive rates and absentee owners who exported profits at the expense of the utility systems, also stood out.
The Federal Government Embraces “Public Power”
Increasingly active federal involvement also played a major role in promoting public power. In his famous “Portland Speech,” on September 21, 1932, now-President Franklin D. Roosevelt said that inexpensive public power would serve as a yardstick against which to judge private utilities.
“The very fact that a community can, by vote of the electorate, create a yardstick of its own, will, in most cases, guarantee good service and low rates to its population. I might call the right of people to own and operate their own utility something like this: a ‘birch rod’ in the cupboard to be taken out and used only when the ‘child’ gets beyond the point where a mere scolding does no good.” – President Franklin D. Roosevelt
With the backdrop of a nation suffering from the Great Depression – especially in the hard-hit Tennessee valley – the Tennessee Valley Authority (TVA) was created by congressional charter in 1933 to improve the quality of life of valley residents by modernizing a rural economy. In the 1940’s, with the world now engulfed in war, TVA embarked upon one of the largest hydropower construction programs ever created, providing desperately needed jobs along with the electricity necessary to power new industries.
Public power’s strong ties to hydropower development – and economic advancement across America – had extended west as well.
What is now known as Hoover Dam was dedicated on September 30, 1935, spurring significant growth across the southwest. The United States Congress had authorized the “Boulder Canyon Project Act,” signed into law by President Calvin Coolidge in 1928, after significant advocacy efforts by local public officials, including with the City of Los Angeles, which had founded its own utility in 1902. Hoover Dam was completed in 1936 and was the largest hydroelectric plant in the world until 1948. From 1936 to 1987, the Los Angeles Department of Water and Power along with a collection of other power utility companies ran the dam’s power generators under contract with the U.S. Bureau of Reclamation. Today, those units supply hydropower to predominantly public power and tribal contractors across Southern California, Arizona, and Nevada.
The Future Is Bright
Public power utilities in the 20th century were integral parts of the nation’s electric utility infrastructure. Now they have capitalized on new techniques and technologies to provide low-cost, superior service to their communities. As President Franklin D. Roosevelt had envisioned nearly 90 years ago, public power systems have consistently served as the yardstick by which the performance of other utilities have been measured.
In Part 2, we will explore public power’s many successes to date – how the business model has continued to adapt to changing times while maintaining traditional “public good” values. Through the ongoing efforts of dedicated public power boards and city councils, employees, citizen owners, and advocates, public power utilities must continue to lead the industry by acting in the best interests of their customers, reflecting the needs of the communities they serve, and remaining strongly competitive. This continued competition benefits all electric customers, not just those served by public power.