Songs of Power

by John on July 3, 2008

One of the really strange things about today’s renewable energy market is that some utilities are complaining that there is a lack of renewables to meet their government obligations to purchase green energy, and they certainly don’t want to compete with counties like Marin who want to buy their own green power. The way they are talking sounds remarkably like the excuses the utilities gave in the 1930’s about not providing rural electrification and development of power for the southern and western states.  In response, Roosevelt started our climb up out of the great depression with massive federal power programs from Tennessee to Washington State, all funded by local and regional bonds and guaranteed loans repaid out of power revenue.  We could do the same today. We could even call them “Independence Bonds”, considering that the U.S.  borrows approximately $700 billion per year to pay for our oil imports.

Roosevelt saw that there had been a market failure of the utilities to provide power to the country, much like the current failure of the private power generators to switch to renewable energy in a timely manner.  There was a huge pushback by the utilities, who cried ’socialism’ and claimed the government was competing unfairly with private industry.  Roosevelt said he was only doing what private industry had failed to do, and pointed out the role of the collapse of the utilities trusts in bringing about the great depression. The parallels to our current situation are striking, especially considering how the Bush administration stripped virtually all the regulatory oversight of utilities which had been put in place to protect both investors and consumers.

Looking to stimulate employment, manufacturing and irrigation for farming, Roosevelt launched massive power generation projects all across the country, such as the Tennesse Valley Authority (TVA).  He asked Congress to create “a corporation clothed with the power of government but possessed with the flexibility and initiative of a private enterprise”, charged to deliver electricity to the people, not for profit but at the cheapest price commensurate with production costs.   Roosevelt’s federal power projects such as TVA and the Bonneville Power Authority succeeded in provided depression jobs for tens of thousands of workers and supplying all the massive amounts of hardware led to a resurgence of American industry.

The Federal Power systems stabilized electricity prices, especially in the west, for half a century until the extraordinary deregulatory foolishness of the late 90’s and the rise of Enron.  Dozens of industries who had previously generated their power with small dirty coal plants switched to federally supplied electricity.  The Rural Electrification Program, created in 1935 when Roosevelt signed Presidential Order 7037, brought power to thousands of farm communities with the capital cost paid back by the users at the rate of $1 per month, admittedly in 1935 dollars.  The REA default rate on bonds for these projects, which paid an attractive return backed by the federal government, was less than one percent.  (Eat your heart out, all you clever Wall Street complex derivative folks…you should have been investing in infrastructure)

We could do the same today, starting with a massive federal power program to generate renewables using utility grade solar thermal power plants across the southwest, some of which are already being built to supply power to more enlightened utilities.  The peak demand for electricity occurs on hot, sunny days when people turn on their air conditioning, right when the electricity output from solar plants is highest. In this market, accounting for as much as twenty percent of the electricity in the southwest, solar power is more than competitive with fossil fuel peak load plants. There is an interesting National Renewable Energy Lab study that shows how this would reduce power costs, prevent gaming of the electricity markets, and minimize the use of fossil fuel burning power plants.

Roosevelt’s federal power programs show that the Government can do things right, contrary to decades of propaganda from the free market true believers in Washington.  Especially in the western states, we still rely on these projects for much of our power and water. Roosevelt’s programs even gave birth to some really great music.  Pete Seeger’s classic paen to the American working man, “Roll On Columbia” was actually commissioned by the Bonneville Power Authority and became the official state song of Washington in 1987.  Perhaps Bruce Springsteen could give us a modern renewable version.

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