It's Electrifying!

Supporters of electric deregulation promise low prices. But can they deliver? And at what cost to communities?

JEFFERSON COUNTY, OHIO

Bob Holland grew up in this rural county along the eastern border of the state. He traveled all over the country as a construction worker, but when the time came to settle down, he moved back to the place where he was born.

"This is the best area to live," says Holland, 44, the head custodian at Edison High School and a member of the Ohio Association of Public School Employees (OAPSE)/AFSCME Local 4. "I’ve tried everywhere else."

But many of the things that Holland holds dear — good schools and good jobs, to name just two — are threatened by the deregulation of the electric industry. He fears that if deregulation comes to Jefferson County and a new, faraway company produces the electricity, millions of dollars in tax revenue could be lost.

"This community is out of work the way it is," Holland says. And, with deregulation, "our school district is going to lose a little better than $4 million."

NATIONAL PROBLEM. Ohio is not alone in facing the threat of deregulation. A number of states — including New Hampshire, Rhode Island, California and Pennsylvania — have already begun deregulating their utilities. Others are seriously considering doing so. Even Congress has started kicking around national legislation.

In most cases, deregulation would remove price controls and other consumer protections from the electrical industry and allow electric companies to compete for business. The electrical company that provides your electricity today would be forced to compete with other producers without local ties. Since local utilities are often a large — and sometimes the only — source of local revenue, towns and schools stand to lose a lot.

Advocates say that competition would be good for consumers because it would drive down rates. But opponents point out that U.S. consumers already enjoy some of the cheapest, safest and most reliable electricity in the world. Deregulation, they argue, is simply a gift to big business. They believe that big users of electricity will be able to buy in bulk and demand the best service. So they’ll get the low prices while household consumers will be stuck with the same or higher rates.

Meanwhile, labor officials fear that deregulated power companies will improve their corporate bottom line on the backs of workers: cutting jobs, reducing benefits, skimping on safety, reducing training.

AFSCME has joined a coalition of labor, industry and consumer groups to fight deregulation. The battle is being waged in key states where the Utility Workers Union of America has organized deregulation summits to dramatize how much consumers and workers have to lose.

PUBLIC SAFETY THREAT. John McFarling, a member of AFSCME Local 1624 (Council 42) and a utility worker in Austin, Texas, fears that worker layoffs could pose a threat to public safety. He asks, "If you don’t have enough full-time, qualified linemen, what’s going to happen when a line comes down? How long is it going to lie there before someone comes to fix it?"

In addition, utilities now provide electricity to everyone, no matter how remote, at a reasonable price. And conservation programs funded by the utilities benefit everyone, because less electricity usually means less pollution. Public utility commissions can urge electrical companies to continue these consumer programs. But in a deregulated, profit-driven market, local companies would have little incentive — and fewer dollars — to spend on the public welfare.

TEAMWORK. You wouldn’t think McFarling and his co-workers would have to worry about deregulation. The municipally owned utility where they work provides some $57 million a year to city coffers. But about a year ago, the city brought in consultants to see what it would take for Austin Electric to remain competitive under deregulation. Recommendations included reducing costs, increasing efficiency, restructuring pay, and making the utility more of a stand-alone operation. If Austin Electric was to remain viable, the consultants said, it would have to change dramatically.

And if that change was to be successful, Local 1624 asserted, it would have to come from workers as well as managers. Though public employees in Texas don’t have collective bargaining, some 350 of the 1,000 workers at Austin Electric are AFSCME members.

"If you alienate the workforce, the restructuring won’t work," says McFarling. "If you get the employees involved early on, morale will stay high. Where morale is high, productivity is high."

Bowing to pressure from the union, the city manager called for the creation of an employee advisory team, a panel of 15 workers which advises management on the restructuring of the utility and serves as a liaison between workers and management. McFarling, who is a member of the team, believes managers are listening. "We really can make a difference," he says.

The utility now also has implementation teams, groups of managers and workers who are experts in the area to which they are assigned. These teams are responsible for carrying out the redesign of the utility. And the utility’s general manager, Milton Lee, believes this worker involvement is the key to success.

"We fully want input from our employees because they’re the experts," Lee says. "I think employees will come to work and be more productive if this is a better place to work." Lee lists worker safety and training as two of his top priorities.

HOMEGROWN. This cooperative effort, though brand-new, seems to be having tangible results. Many of the changes being made are based upon the knowledge and experience of workers. And the union and management have interest-based bargaining scheduled for this winter. Even though these workers aren’t legally entitled to collective bargaining, the utility has recognized the union as their representative and will sit down at the table with them to work out the best possible deal for the workers, the utility and the city of Austin.

Under the cloud of deregulation, it’s clear to workers and managers how the interests of workers, the utility and the city coincide. Workers need the utility to keep their jobs. Managers need the expertise and involvement of the workers to keep the utility viable. And as members of the Austin community, all of them understand that it serves the city to keep this utility homegrown.

"The utility is a major moneymaker for the citizens," says McFarling. "A lot of our prime real estate is being used by the state and the university. Our tax base isn’t what it might be. We are still a good investment."

"Because we are local, there’s no big brother, big mama, big sister telling us what to do," says Lee. "We can be more responsive to our citizens, we can react quicker to any issues that might come up. We can be more involved with the community. Our ratepayers are our stockholders, they are one and the same."

In other words, when utilities stay under local control, citizens and consumers still have power over the power companies.

By Alison S. Lebwohl