Public Power Advocates Have Learned From Past Failures

As electricity affordability has become the issue on every politician’s lips, a coalition of New York state lawmakers and organizations in the Hudson Valley have proposed a solution: Buy the utility and operate it publicly.

Assemblymember Sarahana Shrestha, whose district covers the mid-Hudson Valley, introduced a bill early last year to buy out the Hudson Valley’s investor-owned utility, Central Hudson Gas and Electric, and run it as a state entity. That bill hung around for a while before Shrestha reintroduced it to committee in January. It now has more than a dozen co-sponsors, a sign that the idea is gaining traction in Albany.

With politicians across the country in a frenzy to quell voters’ growing anxieties over their power bills, public power advocates are seizing the moment to make a renewed case that investor-owned utilities are to blame for rising prices. A victory for public power in the Hudson Valley would be the movement’s biggest win in decades — and could serve as a blueprint for other locales.

Shrestha’s proposal, while ambitious, draws on a long history of public power campaigns in the United States, stretching from the late 1800s to the New Deal 1930s to the present. Most recently, a 2023 referendum in Maine would have seen the state take over its two largest utilities; organizers argued the move would improve service and lower rates. But as Emily Pontecorvo covered for Heatmap, Maine voters rejected the referendum by a nearly 40-point margin. Public power advocates chalked up the loss to Maine’s investor-owned utilities outspending the proposition’s supporters by more than 30 to 1.

The current Hudson Valley campaign has a lot in common with Maine’s. In both, utilities rolled out faulty billing systems that overcharged customers, fueling resentment. Both targeted utilities owned by foreign corporations (Central Hudson is owned by Fortis, a Canadian company; Central Maine Power is owned by a subsidiary of Iberdrola, a Spanish company, while Versant, another utility in the state, is a subsidiary of Enmax, a Canadian corporation). And both took place amid rate hikes.

Shrestha has spent the past year working her district, holding town halls to sell the bill to her constituents. At each one she presents the same schpiel: “I gave people a little brief story of each of the different notable fights, from Long Island Power Authority to Massena to Maine to Rochester,” she told me, “because I also want people to understand that our fight is not happening in isolation.”

Public power advocates in the Hudson Valley are certainly applying lessons from the Maine defeat to their own campaign. For one, the venue is paramount. This time, public power campaigners are gearing up for a fight in the statehouse rather than the ballot box.

Unlike a ballot proposition, state legislation typically doesn’t attract millions of dollars in television and radio advertising from deep-pocketed utilities. Sandeep Vaheesan, a legal scholar and public power expert, told me that passing a law may be a more feasible route to victory for public power.

“Legislative fights are more winnable because referenda end up being messaging wars,” Vaheesan told Heatmap. “And more often than not, the side that has money can win that war.”

The message itself is also key. One lesson Maine organizers walked away with is that affordability is a winning strategy — an insight that has only gotten more robust over the past several months.

The Climate & Community Institute, a progressive climate think tank, released a report in November reflecting on the Maine referendum that put numbers to the campaigners’ intuition. “While climate change was an issue for many in our polling,” the report states, “it often took a backseat to problems Mainers continue to experience, like rising costs and power shutoff risks.” The group also pointed me to a survey it did in the fall of 2023 — years before data centers and energy demand became top-tier political issues — in which 69% of voters said they were worried about climate change, but 85% said they were worried about energy costs.

So how could public power lower costs for ratepayers?

“If you take shareholders out of the picture — if you replace private debt with cheaper public debt — you can lower rates pretty quickly and bring energy bills down,” Vaheesan argued.

The proposed Hudson Valley Power Authority wouldn’t have a profit motive; its return on equity, currently 9.5% for Central Hudson, would be reduced to zero. As a public entity, HVPA could also access capital at much lower interest rates than a private company and would be exempt from state and federal taxes.

Investor-owned utilities also inflate customers’ bills with unnecessary capital spending, Shrestha told me.

“The only way they can drive up their profits is by expanding their capital infrastructure, which is a very rare and unique characteristic of this industry,” she said, noting that a company like Walmart can’t make a profit by overspending. “So we’re stuck with a grid that is unnecessarily bloated and cumbersome and not at all efficient.”

A feasibility report commissioned by HVPA supporters and released in December estimates that ratepayers would see their bills go down by 2% in the first year after the public takeover — and result in 14% lower bills by 2055. A competing report, issued by opponents of the legislation, claimed the delivery portion of charges could increase by 36% under HVPA due to the cost of buying out Central Hudson, though advocates criticized the report for failing to publish any data.

Hudson Valley public power supporters can take another lesson from Maine to counter a combative utility. The two Maine utilities estimated the cost for the state to acquire them would be billions of dollars more than what public power advocates estimated — though in a televised debate, an anti-referendum representative refused to defend the stated numbers until the moderator instructed her to do so.

Lucy Hochschartner, the deputy campaign manager for Pine Tree Power (Maine’s proposed state-run utility), said she often assuaged voters’ concerns over the acquisition price by comparing it to buying a house.

“Right now we pay a really high rent to [Central Maine Power],” Hochschartner told us. “We pay them more than a billion dollars in revenue a year through our electric grid. And instead we could have moved to a low-cost mortgage.”

With a public acquisition, the cost of buying the electrical and gas systems would be funded through revenue bonds, paid off through customers’ bills over time. However a spokesperson for Central Hudson, Joe Jenkins, said the company would launch a legal battle rather than agree to sell its assets to New York State.

“Fortis has made no inclination that the company is for sale,” Jenkins told me. “So to take over a company by means of eminent domain, I believe that our parents would want to see this through a court.”

While a legal battle could be costly, public power advocates say the cost of inaction is also high. Winston Yau, an energy and industrial policy manager at the Climate & Community Institute, told me that publicly run utilities are better equipped to lead the transition to carbon-free power and adapt to a warming and more turbulent climate.

“Climate disasters and extreme weather events and heat waves are a major and increasing cause of rising utility bills,” Yau said. “In the coming decades, a significant amount of new investment will be needed.”