Municipal utilities - essential in the fight for just energy?

Energy commons - part II.

Dear readers,

welcome back after a longer absence, which were filled on my part by an engaging summer study on energy efficiency, two weeks of southern summer holidays and a catch of the early summer Covid wave 😒. Now I’m back to pick up on this idea of decommodifying energy in the 21st century and taking back control! ✊ First up, as promised: municipalization. Or: making energy common by making it public.

At least, that’s the idea. While in theory - the theory of the state as representative of the people - it’s a good idea even; in practice, really existing states have more and less voluntarily overseen the privatization of infrastructural services and so…. now asking them to reverse course is - maybe - like asking the scorpion to let the frog carry both of them safely over to the other shore. (But don’t take my word for it, ask Forbes about the scorpion and the capitalist state 😁!)

OK, so let’s start from the beginning. I’ll take you back to the example I briefly mentioned in last edition: the campaign to remunicipalize Berlin (and this time I’ll throw in Hamburg for good measure too). What exactly does the dream of making energy public mean to its proponents?

Berlin and Hamburg: dreams in common

Very simply put: the dream is that energy is not a commodity and providing it to residents is therefore not about making money off of people’s basic needs. Instead, a municipal utility should strive first to uphold other values. In their draft law for a “citizens’ utility”, submitted as part of the 2013 referendum, the activists of the Berlin Energy Roundtable stipulate that it “should be democratic, ecologically oriented and socially just”. It should therefore “increase its share of renewable energy used in the city and take measures against energy poverty”. In addition, “the draft foresaw public meetings, an Advisory Board with directly elected citizen representatives and an obligation to make core documents accessible to the public” (quotes from Becker, Naumann and Moss’ 2016 summary.)

By the way, the 2013 referendum failed perhaps in part because the Berlin Senate decided to start its own municipal utility just beforehand. Not the same, but still, good marketing! “We are the volt” is a play on “We are the people (Volk)”.

To these activists it had to be a public municipal body because only it could guarantee service to all and crucially, also, participation for all. (This wouldn’t be possible in a cooperative utility, which would restrict at least some types of participation and benefits to its members and would likely have to rely on commercial investors.) Democratic participation was very important to them, not merely as a value, but also strategically: only democratic control safeguard the public interest in the hands of politicians and managers, they argued (as quoted in Becker, Angel and Nauman, 2020).

Meanwhile, Hamburg had already founded a municipal energy provider in 2009, primarily with the mandate of providing climate friendly electricity to all who would have it. Activists’ strategy to then municipalize the grid as well was slightly different from Berlin, with less deliberation and consultation ahead of the referendum. As a result, the referendum (just barely clinching a victory in 2014) was a declaration of intent, rather than a detailed proposal for the organization of the utility. The intent, however, was the same: to establish a “socially just, climate compatible and democratically controlled energy provision from renewable sources”.

Dreams of commons

The fact that the activists were pursuing these social goals by advocating for public ownership has led some authors to think that these campaigns might be the budding flowers of a new paradigm of the commons. That assumption is not so strange - it does seem like these initiatives are at least in part linked directly to dissatisfaction with the privatization rounds under New Public Management philosophies, and that when more people start opposing those trends, you soon have some bigger political movement for public infrastructures on your hands.

One cluster of scholars in particular has been advocating for this interpretation: Andrew Cumbers, Sören Becker, Ross Beverdige, Matthias Naumann and James Angel. Becker et al (2020) hope that participation of people in essential infrastructures might lead the way to a broader agenda of the right to the city, in which co-ownership and co-production play a critical role. Angel (2016) hopes that the focus on infrastructure could lead to a re-appropriation of the state, so that dissatisfaction with privatization might last longer than a street protest. As a result, he hopes, cities may beat energy poverty yet.

Right to the city demonstration in Hamburg 2016. Photo Rasande Tyskar.

Party 💩

There is however a second cluster of authors ready to crash this progressive liberation fest. This group includes Bart Voorn, Marieke van Genugten, David MacDonald, Judith Clifton and Mildred Warner. In a series of articles they argue that in so far as there is an increase of (re-)municipalizations (and other cases of “reverse privatizations”), it looks like the goal usually isn’t to establish something like a common, certainly not in the sense of the Berlin and Hamburg activists.

What these researchers find instead are practical (cost-benefit) evaluations of the best way to deliver energy services. Sometimes this amounts to a correction, not a reversal, of privatization. In this “pragmatic” — rather than revolutionary — spirit, municipalities tend to choose quite “corporate” structures to manage energy provisioning on behalf of the municipality. By corporate they mean organizations “with independent corporate status, managed by an executive board appointed primarily by local government officials with majority public ownership” (definition by Voorn, Van Genugten, and Van Thiel). The point here is that the municipality abdicates ownership, which is often done in some attempt to find a middle road between public service and full privatization.

There are other indications that municipalities aren’t on the barricades. One study, by Daniel Albalate and colleagues, notices that among the (growing) cases of municipalization of services, energy municipalization in particular often comes at the natural end of an existing contract (instead of through active discontinuation). The authors interpret this to signal that the move to reverse the privatization of energy doesn’t follow from political pressure from civil society. This seems to jibe well with the ‘corporate’ and ‘pragmatic’ nature of the transition to municipal management.

All of this still means that Becker et al’s vision might forever elude us:

(To) break with managerial-style decision-making and purely economic imperatives that dominated past urban governance and energy policy. (Becker et al 2015)

Never stop dreaming

However, there are reasons not so assume the worst for the fate of the municipal common. One key point to keep in mind is that while:

much of the quantitative literature finds re-municipalization is driven by pragmatic reasons, and second, much of the case study literature argues re-municipalization is a political and transformative process. (Clifton et al 2021)

The interpretations of pragmatism rest on relatively ‘thin’ data and there could be more going on behind these trend points than what the respective authors suspect.

For instance, the fact that municipalization of energy in particular takes place at the natural end of a concession need not signal municipalities are stuck in market ways of thinking. After all, activists in Berlin and Hamburg took the upcoming end of the contract as the occasion to start their campaigns. Albalate and his colleagues also point out that energy markets are simply more complex, usually regulated at levels above the municipal level, and there has often been more competition in gas/electricity sectors that in, say, water. Such factors constrain the actions and control of municipal energy utilities. Brinker and Satchwell (2021) similarly show that the power to pursue social goals like small-scale renewable deployment by municipal agencies depends on their relative strength in the market. The will (to build a network for the people) may well be there more often than it seems, but the way may just as often be blocked, given the political economy of most energy systems.

I don’t want to paint too 🌹 a picture either, though.

Very likely, many municipal governments, while — unlike the scorpion — of good hearts, may be a steeped in technocratic and neoliberal public planning practices. The strongest argument (in Voort et al 2021) against a too optimistic reading of some popular municipalization campaigns is ultimately that many governments have not embraced any ideology of demarketized public services. They might cherish the values of sustainability and social justice, but they wouldn’t know how to uphold them any different from how they do so now. Instead, they use corporate bodies to address “overriding rationales” like:

improvements in quality, the need for investments in conserving and maintaining infrastructures and guaranteeing the universal provisions of water services (Voort et al, 2021)

In other words, the struggle for municipal commons may be long. For:

• while municipalities may not be anti-democratic per se, they are not yet inclined to experiment with more radically democratic systems of provisioning.

• and even if they are open to it, it’s complicated. Its not easy to figure out new property regimes, rules for universal access, effective governance and financial solvency all at the same time.

In a later wrap-up letter, I’ll come back to these three challenges in creating and maintaining commons: property and access, finances and governance. First up though: people’s resistance to take what is common away from them.

Take care,

Marten