Case Study: Taking Back Power

Black and white photo of two people holding signs picketing the Georgia Power Company

Edmund Marshall

Tan cover of magazine reading "Southern Exposure: Solving America's Energy Crisis, The Southern Syndicate Behind Watergate, Florida: Love it or sell it: Electric Utilities: the fight for public control, Special Report from Appalachia." And photo of coal miner next to drawing of electrical socket.

This article originally appeared in Southern Exposure Vol. 1 No. 2, "Special Report from Appalachia." Find more from that issue here.

For many years now, the South has retained its status as a colonized region. As Joe Persky has discussed in his article, industrial growth and development has traditionally been financed by northern capital and much of the region’s industrial base continues to be controlled by outside interests. The wealth of the region has also historically flowed towards the Northeast, either in terms of extractive industries such as timber or coal, or by means of holding companies and financial institutions that have been set up to extract the surplus capital generated by native southern industrial concerns.

Southern liberals, with their predictions of a “New Rich South: Frontier of the 70’s,” have traditionally ignored or have been reluctant to admit that the wealth of the region is controlled more from Wall Street than from Atlanta, or Dallas, or Birmingham. While southern businessmen continue to publicize their dreams for “regional industrial development,’’ multinational corporations, holding companies, and financial institutions will continue to line their pockets with tax-breaks and the wealth of the region. Consequently, the South will continue into the 70’s with the largest concentration of poor people in the country.

Any program for industrial development in the South must deal with the region’s historic neo-colonial relationship to Big Business, which is as true today as it was at the beginning of the century. A program for economic development must initially speak to such questions as: who controls the wealth of the region, how can it be kept within the region, and most importantly, how can it be brought under democratic control of the people in the region?

The Belgian economist, Andre Gorz, has discussed the need for alternative programs for economic development in his book Strategy for Labor. He raises the possibility of fighting for structural reforms within our present system, which would lead to the development of more democratic, publicly-owned corporations and financial institutions. He asks, “is it possible from within - that is to say, without having previously destroyed capitalism - to impose anti-capitalist solutions which will not immediately be incorporated into and subordinated to the system?” These anti-capitalist reforms are “not conceived in terms of what is possible within the framework of a given system and administration, but in view of what should be made possible in terms of human needs and demands.” The New Left’s counter-institution movement began as an attempt to build anti-capitalist alternatives through food co-ops, farming co-ops, alternative media, etc., as did the growth of Community Development Corporations (CDC’s). Both movements had difficulty in overcoming their localized isolation, in striking out at the real centers of power, and in building politically powerful organizational structures. Gorz sees the struggle around anti-capitalist demands as an opportunity “to control and to plan the development of society, and to establish limiting mechanisms which will restrict or dislocate the power of capital.”

One of the keys to the development of economic alternatives for an area is the struggle between public democratic control and private, monopoly control. In attempting to establish public, democratic control the focus of anti-capitalist reforms must be on a restructuring of the power relationships in the private corporate sector. Traditionally, private, investor-owned electric utilities have been one of the first areas around which economic alternatives have been built.


Public or Private Utilities: An Early Fight

During the turbulent years of the 1910’s and 20’s, one of the fundamental platforms of the Socialist Party called for the municipal ownership of public utilities as an initial positive step towards breaking

up the growing monopolistic control of utility companies and as a transitional step towards constructing a decentralized socialist society. Between 1919 and 1921, a group called the Municipal League of Georgia presented a plan for socializing the electric industry in the state with a distribution system through public ownership within individual municipalities. There was massive opposition from the Georgia Railway and Power Company, later to become the Georgia Power Company. The plan was defeated in the state legislature and called “wild, visionary, and ridiculous.”

Most of the municipal electric systems in the country began prior to World War I when private investors were reluctant to finance and build large electric plants. Cities had to decide between providing their own electrical power or not having any at all. Very successful systems started during this pre-WWI period in Los Angeles (1911), Seattle (1905), and Tacoma (1910). Even earlier than these, a municipally owned electric system was established by Jacksonville, Florida in 1893. This system is still operating, paying off the $30 million (1963) cost of a big coliseum, auditorium, city hall and street and sewer improvements and accounting for Jacksonville’s largest source of municipal income (19.9 million ~ 64% of the city’s operating expenses). Even with this surplus revenue for municipal services, the Jacksonville electric rates are still below those of investor-owned utilities in Tampa and Miami.

Another viable model for building anti-capitalist economic alternatives is the example of the Public Utility District (PUD) movement between 1935-1940. During the 1920’s electric power in the Pacific Northwest was monopolized by gigantic holding companies from the Northeast who were providing poor and expensive service for the people of Washington State. In 1926, The Washington State Grange attempted to fight the tenacles of the New York holding companies by appointing an “electrical power development committee” to study alternative power systems and draft a model bill for introduction in the legislature. The committee reported ominously in 1927 that the hydroelectric resources of the state “will either be developed by the public for the good of all the people ... or by private corporations for the exploitation of present and future citizens. . .It is the last great resource which may still be conserved for the common good.” The Grange Bill for establishing Public Utility Districts was defeated in the legislature, but passed the following year in a general referendum and was subsequently upheld in court. The PUD law authorizes a publicly controlled body to issue revenue-producing bonds, receive and disburse funds, acquire real estate (by condemnation if necessary), construct dams and other power generation and distribution facilities, and sell electric power. All PUD’s pay a specified amount of their receipts into the general revenue funds of their counties. As nonprofit enterprises, they are able to supply electricity to their customers at about half the rate charged by private utilities, while paying off their own indebtedness to bondholders. 

The rise of finance capital and holding companies, during and after this period, effectively curtailed the public power movement begun before World War I. These holding companies were always able to borrow money cheaply (since they were largely run by bankers) and found it quite easy to buy out municipal systems for exorbitant prices and retain control for the private sector. When much of the electric generating plant of municipalities became outmoded, and the small, isolated municipalities were not able to generate capital to finance improvements and expansion, the private companies rushed in and gobbled them up.

Utility companies continue to sabotage and discredit any attempts at developing publicly-owned utilities. For example, during the summer of 1970, a memorandum was accidently uncovered at a hearing before the Securities & Exchange Commission (SEC). It told of a two-day meeting in 1968 at which 100 executives representing 66 private power companies got together in a motel to exchange advice and experiences on how to kill municipal and co-operative electric systems. The private utilities trade association, the Edison Electric Institute, took a leading role in the conniving. As Robert Sherrill reported, “the good soldiers of capitalism discussed such tactics as refusing to sell power at wholesale prices to municipal power companies; lending money to communities with municipal plants, and then putting the squeeze on them; and refusing to let public utility companies come into pooling and joint power-supply arrangements.” One example, cited in Lee Metcalf and Vic Reinemer’s Overcharge involves a $50,000 payment by the Georgia Power Company during 1962 to the city of Rome, Georgia, for its agreement “not to establish a muncipal electric system in competition with” the company.


Taking Back Power

In attempting to develop an alternative program for economic growth in a region, research and organizing around local investor-owned utilities can provide a firm starting point for building a more. widespread macro-analysis of a region. Most private utility company hierarchies are made up of distinguished members of the local or regional ruling class. Investigating the members of a local utility’s board of directors can usually help answer the first question in developing economic alternatives: who controls the region now? Invariably, there is ample representation of local bankers, lawyers, industrialists, and politicians. For example, the Georgia Power Company, a subsidiary of the Southern Company (which is a regional utility holding company), is represented by the former governor of Georgia in its rate increase requests and has the presidents of Atlanta’s three major banks on its board of directors.

Furthermore, the financing of investor-owned utilities also illuminates the regional-national dynamics of power and capital. The expansion of southern utilities closely follows the model of a “favored colony” as outlined by Persky. For example, the early history of the Georgia Power Company shows that whenever the company attempted to finance its expansion, it was forced to turn to northern capital. During the 1887-1925 period, most of the capital was generated from the Old Colony Trust Company of Boston, the Mercantile Trust & Deposit Company of Baltimore, the Thompson-Houston Company, a predecessor of General Electric, and the United Gas Improvement Company of Philadelphia, controlled by Morgan interests. In 1926, the Georgia Power Company was bought out by the Southeastern Power & Light Company, a holding company set up by J. P. Morgan around the turn of the century and a predecessor of The Southern Co. From then on, all financing was handled directly with northern capitalists, usually through Morgan brokerage houses and banks. Consequently, profits generated through electric power production flowed directly from southerners’ pockets to the northern investors. In attempting to start a movement for regaining control over the region’s resources and over the wealth generated in the region, the link of northern capitalists to southern utility monopolies represents a crucial colonial relationship which must be broken up and restructured.

The Georgia Power Project, an Atlanta based group, is a prime example of an organization which has attempted to challenge and organize against the monopoly grip of northern capital on the southern utility industry. Since its beginnings during June, 1972, the group has attempted to fight from the bottom up to expose the corrupt practices of the Georgia Power Company and to present a more workable socialist alternative for distributing electrical power. After researching various aspects of the company’s operations, the Project intervened in the State Public Service Commission (PSC) to oppose a proposed $48 million rate increase requested by the Georgia Power Company. With the rate increase, as a central issue, the Georgia Power Project undertook a campaign to generate opposition to the rate increase and to raise the broader issues of private, monopoly ownership by Northern capitalists versus public ownership and regional democratic control.

Through its intervention with the state Public Service Commn., the Georgia Power Project gained a tremendous opportunity to present to the public the broader implications of the rate increase, to openly criticize many aspects of the present corporate structure (environmental destruction, racial and sexual discrimination, outside monopoly control, etc.) and to publicize the possibilities for setting up alternative systems for electricity distribution. The Public Service Commission, a regulatory agency set up during an earlier period of public outcry against utility monopolies, provides a mechanism for attacking the corrupt practices of investor-owned utilities and for bringing the issues and alternatives before the public.

Organizing around pocketbook issues, such as a rate increase, also presents the possibility of uniting diverse groups (labor, community, radical, ecology, consumer, poor, etc.) against a common corporate enemy. The Georgia Power Project, for example, worked closely with the Atlanta Labor Council (AFL-CIO) during the PSC hearings, exchanging information and resources. The Project also filed a complaint with the Federal Communications Commission in conjunction with the Welfare Rights Organization and the Tenants Council in an attempt to gain media access to reply to the power company’s massive advertising campaign. The development of more broad-based coalitions is also an important step towards educating about the broader implications of reformism and for a more popular acceptance of anti-capitalist demands and programs. The basis for such cooperation was a tacit understanding that each group had something to offer the other. The Georgia Power Project had mastered the research, legal, and publicity skills on an issue on which other groups wished to score political points for themselves and their constituencies. They, in turn, had established a record of political clout and had the troops which proved indispensible in a rate hike hearing before elected commissioners and judges.


Alternative Utility Systems

As we enter another period of economic and political upheaval, the time is especially ripe for building mass-based organizations to challenge the far-reaching grip of capitalist institutions. The Georgia Power Project is one example of such a radical group, starting around opposition to a rate increase, and gradually moving towards envisioning and developing alternative programs for setting up electricity distribution. In light of the characteristic weakness of the Left to establish a “track record” of success and competence in the eyes of working people, this accomplishment by the Project was highly significant and gave it confidence in dealing with the press and other groups.

The Georgia Power Project is a primary example of a group which has tried to engage itself in the realpolitik of a region in an aggressive and positive manner. It has made use of the traditional regulatory agencies (the Public Service Commission, the courts, and the Federal Communications Commission), as well as the media, through press conferences, taped interviews and talk shows. The Project did not feel this was a compromise of its radical principles – but rather a way of proving itself to the people of the region, showing the intransigence of the institutions-that-be, and articulating the potential of people gaining control over their lives and over capitalist institutions. As the system further deteriorates, time is ripe for developing more bold and imaginative strategies and tactics for attacking the concentrations of monopoly power. For the first time in forty years, there is an opportunity for the Left in the United States to operate, not as a small isolated, sectarian group, but as a diverse and widespread political force. But in order to gain support and acceptance with people, the Left must show that it can win and that it will, in Gorz’s words, “restrict or dislocate the power of capital” over the lives of people.

In the process of working in a group such as the Georgia Power Project, it is not too “visionary” to begin to map out a program for producing and distributing electrical power in a publicly-owned, democratically controlled system as an alternative to replace our current methods. During a transitional period of anti-capitalist reformism, the focus of the struggle will be on the continued impingement of the public sector by the private sector. The strengthening of the public sector may come from the top-down or from the bottom-up, in the form of municipal and rural cooperative movements for ownership of electric systems. In the transitional period these could serve as a means of breaking up the monopoly concentrations, presently embodied in trusts and holding companies, such as the Southern Company or Middle South Utilities. Much is still to be learned from a model such as TVA, which was more of a government-conceived and administered, top-down experiment, than a mass-based, bottom-up program.

The municipalities and the rural electric cooperatives would form the backbone of the transitional, anti-capitalist system. Decision making and control would be carried out at these primary levels by councils of consumers & electrical workers in each municipality or rural coop. Models for setting up such local electric distributing systems are numerous in our own American history, as spoken of earlier. It is possible that the production and distribution of other services could then be developed with electrical service as a first step.

In order to coordinate these smaller backbone units, a larger regional authority would be developed. The regional authority would assure the re-investment of profits inside of the region and also the re-distribution of the decision making powers over those funds back to the backbone of the system—the municipalities and rural coops. With control over the regional electric system, planning could be begun for developing a more well-rounded economic base and product mix to replace the current dependence of many parts of the South on one commodity or service, be it tourism, coal mining, timber, textiles, or agriculture. A program for “decongesting” the urban areas and breaking down the rural/urban contradictions could be started with the funds generated through electricity production.

As the municipalities gained in strength and financial staying power, they could start to levy increasingly progressive taxes on the private corporations which were operating in their area, and thus keep some of the wealth generated in the area within the region.

Times are tough, but there is certainly the need and the opportunity for thinking boldly and imaginatively, and for acting the same way. Things can only get better if we take the responsibility to build new institutions in the ashes of the old.