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Socialize the Grid

Energy companies are more concerned with raking in profits than delivering affordable, sustainable energy. We need to wrest control away from them — and socialize the electrical grid.

The sun shines over towers carrying electrical lines, August 30, 2007 in south San Francisco, California. Justin Sullivan / Getty

No market is less free than energy. Energy consumers have little choice in whether to turn on their heat or lights. They have even less say when it comes to who supplies their energy. In order to power their homes, the majority of US residents pays a privately owned utility monopoly and is forced to accept whatever rates and regulations that monopoly wishes to impose. By nature, an energy distribution model that prioritizes profit over resiliency, accessibility, and sustainability incentivizes utility corporations to cut corners, gauge prices, and eliminate competitors. Just as in health insurance, a profit motive for energy distribution is fundamentally at odds with the public good.

In health care, the consequences of the profit motive are obvious. Every year, scores of people in the United States die attempting to ration medication. Thousands more lose their lives from prescription drug overdoses. Hundreds of thousands file bankruptcy due to astronomical medical debt. Many of them die slowly from ailments for which they can’t afford treatment. It’s easy to connect the dots between private health insurance and its victims. Energy barons enjoy a degree of separation. Each year, a few of our neighbors die from residential gas line explosions, dozens more from wildfires and droughts, hundreds from heatwaves and hurricanes, hundreds of thousands from air and water pollution. In no minor sense, the existing energy system has deadly consequences, and we are politically, economically, and infrastructurally bound within it.

Theoretically, Americans can generate their own electricity. But utility profiteers have erected an array of barriers to limit our ability to do so. Say you want to install a photovoltaic system on your rooftop. You’re barred by law from exceeding a maximum size —and in many jurisdictions, this size is not based on the surface area of your roof or the capacity of your electric panel, but rather the amount of money you will save on your energy bill. In others, it’s an arbitrary kilowatt limit set by regulators or the utility. So even if you have a roof big and bright enough to power your whole block, the capacity limit prevents you from sending too much clean energy back to the grid.

Utility monopolies have other ways to safeguard their profits. In addition to maximum system sizes, they use inaccurate production calculators, battery storage restrictions, insurance requirements, waiting periods, fees, taxes, and just about every imaginable method to obstruct homeowners from going solar. While large-scale renewables have started to face less resistance (because they’re becoming more profitable), most utility corporations remain heavily invested in fossil fuel extraction and intend to get their money’s worth. It could take decades for utility companies to warm up to renewables — time that we simply don’t have.

As if energy monopolies weren’t making enough money already, they also rely heavily on public funding. The power they buy is artificially cheap, thanks to an annual $20.5 billion in fossil fuel subsidies (renewables receive $6.7 billion per year, with over half going to biofuel). The rates they charge are propped up by an additional $14.5 billion in consumption subsidies, and they commonly charge people for infrastructure investments and tax fees at higher rates than they actually pay. Rather than being allocated toward developing new renewable energy infrastructure, this money goes straight into the pockets of utility executives — who then turn around and use it to lobby legislators and undercut public access to clean energy.

When a fossil fuel plant that supplies a utility becomes unprofitable, utility monopolies lobby for public bailouts, deepening our reliance on fossil fuels. Every decision they make is motivated by short-term profits, even if it means running their own corporation into bankruptcy. Entire utilities have gone under in recent years, including San Francisco–based Pacific Gas and Electric Company (PG&E) in 2001, only to be bailed out by citizens. Today, PG&E is bankrupt again after being found liable for the loss of more than fifteen thousand homes in California wildfires. Again, it is lobbying for a bailout.

But this time people have another idea: democratize the grid by putting it in the hands of the public. From California to Puerto Rico and all across the world, movements are pushing for municipalizing local energy distribution, citing existing successes. Nebraskans already publicly own their grid and are one of the nation’s leaders in wind-power implementation. Germans recently transitioned their grid to public ownership and quickly became world leaders in renewable energy, often paying negative rates for energy usage.

Given the dire threat of climate change and the limited time for action, what we need now is a wholesale structural reform: a nationwide transition to public ownership of all utilities through a universal single-payer power program.

Why should power distribution be universal? First of all, because it would remove the need to pass tax hike referendums to fund investments — an obstacle to rural and inner-city communities that often need new infrastructure the most, yet don’t comprise a voting majority. More importantly, however, access to clean energy is not a luxury. It is a human right. Every household deserves the ability to cook a hot meal without burning fossil fuel or warm their home in the winter without financing drilling on public lands. A society that values equality and justice means a society that guarantees energy for all.

Under a universal single-payer power program, each home would receive a per capita energy dividend based on the average usage in their region. If they exceeded their dividend, they would receive a bill. If they greatly exceeded it, they would enter a new tier where they paid a higher rate per kilowatt hour. Tiers would be structured to penalize excessive consumption and reward efficiency. Revenues could be used to develop clean energy infrastructure and retrofit existing buildings to provide energy as efficiently as possible. We pay for it with taxes, but we eliminate energy bills. On net, we save money. Sound familiar? It’s the same proven model as Medicare for All: remove a predatory profit motive from an indispensable public service.

Of course, the nature of electricity provision demands careful planning and specific qualifications for every locality. However, the fundamentals of Energy for All are simple: The grid is a public resource, the grid should be publicly owned, and the grid should be operated to serve the public good.

We can make all the reforms and investments we want, but if we don’t own our grid, we will be left tweaking the broken distribution model that got us into this mess in the first place. If we intend to engineer a just transition to 100 percent clean energy, our Green New Deal must provide basic power for all people and abolish private profiteering from energy distribution. It’s time to socialize the grid.