Z Magazine , September 2004.
Sharon Beder’s Power Play: The Fight to Control the World’s Electricity tells of three separate campaigns to privatize and deregulate electricity in the UK, Australia, and the U.S. (California, in particular), as well as of a relentless worldwide effort to turn natural resources to private profit.
Privatization advocates can wax almost utopian these days with visions of a world capitalism unfettered by governments, unions, or consumer organizations, but Beder sees the roots of the current corporate-electric wave clearly in Aug- usto Pinochet’s 1980s Chile, “the first government to mandate a change from government to private ownership,” following the General’s overthrow of Salvador Allende’s democratically elected socialist government in 1973. The United Kingdom’s Conservative Party made it the first industrialized country to privatize in 1990, although Margaret Thatcher still considered the program too controversial to campaign on when first elected prime minister in 1979. Today, on the other hand, Beder writes, the selling off of government enterprises forms part of the so-called “Washington Consensus” of free market policies under which “more than one hundred countries (have) privatised various govern- ment enterprises.”
This consensus is not only for export. U.S. power companies have practiced at home what they preach abroad well enough that the 1996 law making California the first U.S. state to deregulate its largely privately owned electricity industry passed both branches of the state’s legislature, unanimously, and well enough that, even after deregulation produced the state’s first major blackouts since World War II, sticking taxpayers with huge bills when the state was forced to step in and purchase electricity in the 2000-01 fiasco, broad bipartisan California legislative support remains for passing another deregulation law.
Beder tells the story of Enron, the “most innovative company in America” in 2001, according to Fortune magazine, which did more than any other to bring the California system crashing down with its business plan based on the premise that it could make more money trading electricity than producing it. Enron remains in the news via indictments and tapes of its traders reveling in how they “fucked California” as their “Death Star” program manipulated the “free market” for electricity, but Power Play also describes another now largely forgotten earlier U.S. private utility crusade of which the Federal Trade Commission said in 1934, “No campaign approaching it in magnitude has ever been conducted except possibly by governments in time of war.”
The stakes behind the privatization rhetoric were high then, as now. As electrification spread in the late 19th century, several ideas about it became widely accepted. Most considered electricity generation a “natural monopoly”—an industry requiring “such high capital investment in infrastructure that monopolies are more efficient because they avoid duplication of expensive infrastructure and can take advantage of necessary economies of scale.” At the least, a natural monopoly required public regulation, and many also thought that government was the logical provider of electricity. “By 1912, a third of the power companies in the U.S. were publicly owned, and most generated their own elec- tricity,” Beder notes.
As far back as 1893, the General Electric Company recognized that if public agencies could produce power more cheaply than private corporations, it would set a “bad precedent.” A bad precedent is just what the public power industry has set, generally providing residential consumers with cheaper power throughout its history.
The two-thirds of the U.S. power that was in private hands was still a big industry and it responded to the U.S. “excursion into the dark socialistic jungle” that Boston Gas Company’s lawyer called public power in a big way, with a long campaign in Congress, state legislatures, the media, and schools that President Franklin Roosevelt characterized as one “of propaganda, and, if I may use the words, of lies and falsehoods.”
Enron, then, stood on the shoulders of propaganda giants, yet the company was no mean innovator itself, introducing a level of political/financial sophistication not seen before with its “matrix” program that analyzed expenditures on political campaigns and candidates in relation to the likely increase to Enron’s profit expected to result from the regulatory changes the political spending was designed to produce. The operation worked so well that Clinton-era ambassadors to Argentina, Mozambique, India, and the Philippines lobbied on behalf of the company’s project bids and once George W. Bush was elected, Enron president Kenneth Lay was planning energy policy with Vice President Dick Cheney and the president was calling him “Kenny Boy.” Meanwhile, Beder, a professor at the University of Wollongong, Australia reports the global privatization and deregulation campaign continuing unabated, with the CEO of Edison International predicting, “by 2011 there will be only ten energy conglomerates worldwide.” The United Nations Development Program, for its part, considers the privatization process in many countries “more of a ‘garage sale’ to favored individuals and groups than a part of a coherent strategy to encourage private investment.” One South African protest banner summed up a growing opinion: “We did not fight for liberation so that we could sell everything to the highest bidder.”
Power Play is not what you call beach reading, but anyone with a serious interest in the privatization issue might consider cutting back a beach day or two to take it in—Californians especially. Who knows? With a little work, California’s electricity users might even be able to muster a vote in the legislature against the next deregulation plan, maybe even two.
Tom Gallagher is a freelance writer, activist , and frequent contributor to Z
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