Anyone who has taken a business management class has probably filled out a strengths, opportunities, weaknesses and threats, or SWOT, analysis. These can be helpful to visualize the values your organization brings and what challenges it is up against. Some attributes likely appear in multiple columns.
Put simply, our strengths can also be our vulnerabilities. That is certainly the case with public power, where the tenets that define our model can also be those used to challenge it. For example, public power benefits from having local governance with open, transparent processes, but this could also present as a disadvantage in that those with an agenda that might be counter to the utility’s goals could position themselves to have a voice in various decision-making processes, or be disruptive during public meetings. The scale of the issue could ultimately be anywhere from a minor nuisance to something that could skew the long-term horizon for the utility.
The same goes for communicating a utility’s value. While utilities want to be sure to regularly remind their customers and other stakeholders about the various ways community ownership benefits their service areas, doing too much self-promotion – or doing it the “wrong” way – can lead to criticism about use of public funds for such purposes. This dichotomy can require a careful balance for public power leaders and could make a situation ripe for inaction out of fear of making the wrong choice.
Another area of potential vulnerability is in regard to the financial contributions that the utility makes to the city, often in the form of a general fund transfer. These funds often are a significant portion of city budgets and help municipalities to do everything from improving parks and other facilities to reducing local taxes for citizens. We know that public power utilities contribute more to their communities than investor-owned utilities, with our latest survey suggesting that public power contributes an average of 20% more, when tax equivalents and other contributions to state and local government are considered. Local revenue means local investment and local jobs. However, some have taken this aspect and turned it around to criticize the utility as charging a “hidden tax” on the community, especially when the utility serves customers outside of the formal boundaries of the city. This argument is what spurred on state legislation in Texas and Florida that sought to undermine public power’s local governance.
It seems that the number of communities looking into transforming their utilities into public power entities is on the upswing, yet this interest in municipalization in no way lessens the threat of buyouts and other privatization efforts.
Keeping a utility well-run requires a lot of time and resources, and buyout or privatization offers can be presented as a simple solution to complex challenges. Small utilities that don’t have backstop support, whether from a joint action agency or state association, can particularly feel like islands unto themselves, which can make them vulnerable. Looking at the communities that have sold their utility over the past few decades, the result does not always match the upfront promises.
Regardless of the challenges you are facing, we are here so you don’t have to figure them out on your own. We focused this issue of Public Power magazine on threats not to scare, but to highlight the ways that public power utilities are countering these threats and to offer more insight into how related challenges emerge. As you face the new opportunities our increasingly electrified future offers, it is APPA’s goal to help utilities of all sizes address any weaknesses, be prepared to counter threats, and, ultimately, build on our collective strengths. That’s what’s behind the promise in our tagline, “powering strong communities.”