The system of democratic regulation of privately-owned utilities that has evolved in the United States over the past century includes five main elements: participation; transparency; a standard of justice and reasonableness; protection against confiscation of utility assets; and prices that are related to costs. After setting these elements forth and explaining how they are balanced, we describe how the system failed in a series of relatively small but highly visible experiments with deregulation in California and elsewhere in the US. Finally, we outline the history of how democratic regulation evolved in the US and how democracy is reversing the failed experiment with deregulation in California.

Energy touches many facets of life – politics, economics, health, perhaps our very survival. It is therefore vital in a democratic society that energy be governed in a democratic way. Democratic governance is possible whether energy utilities are investor-owned, municipally-owned, or state-owned. Democratic governance is possible whether the market structure is monopoly or liberalized. The key is democratic regulation. The authors will spell out the five elements required. Democratic regulation can resolve such difficult conflicts as those between short-term and long-term concerns, and between economic and non-economic interests. Environmental sustainability is possible as long as there are democratic governance structures to reconcile the apparent conflict between price and sustainability and to develop long-term mandates for renewables and energy efficiency. There are many structures that can accomplish democratic regulation. One is Citizens Utility Boards, groups of citizens with a mandated "seat at the table" from which they advocate for citizen interests before an independent democratic regulator.

Gasoline is way too expensive. We have enough natural gas for 100 years. Regulation just makes energy more expensive. Renewables can save us from dependence on foreign oil. Jerrold Oppenheim and Theo MacGregor debunk these and other myths and show the complications of energy policymaking.

Consumers are already burdened with utility bills that have as much as doubled at a time when most incomes have barely risen. Utility proposals to as much as double infrastructure investment must be reconciled with the need for affordable utility service. Key strategies include efficiency and reduction of risk. Special consideration is needed for low-income consumers.

Public-private partnerships require strong regulation, transparency, and tenacious NGOs with resources. A successful example is the Low-income Energy Affordability Network (LEAN) in Massachusetts, but what the World Bank calls "state capture" is much more common.

Word document is presentation to Tripartite Meeting. Acrobat document is later, expanded ILO Working Paper.

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Click on document to read Introduction. Based on work for the United Nations by Greg Palast, Jerrold Oppenheim, and Theo MacGregor -- the first step-by-step guide to the way that public services are regulated in the US. The book examines what's right with the traditional American regulatory system, why regulation elsewhere has failed, and what can be done to fix it. It explains how decisions are made by public debate in a public forum. Profits and investments of private companies are capped, and companies are forced to reduce prices for the poor, fund environmental investments, and open themselves to financial inspection. Open this page to read the book's Introduction. E-mail us to order your copy.


TABLE OF CONTENTS
FOREWORD, BY HON. CARL WOOD
DEMOCRACY AND REGULATION: AN INTRODUCTION
CHAPTER I. SECRECY, DEMOCRACY AND REGULATION
CHAPTER II. REGULATING IN PUBLIC
CHAPTER III. COMPETITION AS SUBSTITUTE FOR REGULATION? BRITAIN TO CALIFORNIA
CHAPTER IV. RE-REGULATION IS NOT DEREGULATION
CHAPTER V. THE OPEN REGULATORY PROCESS: STEP-BY-STEP
CHAPTER VI. SOCIAL PRICING
CHAPTER VII. ISSUES THAT ARE PUBLICLY DECIDED
CHAPTER VIII. AN ALTERNATIVE: DEMOCRATIC NEGOTIATIONS
CHAPTER IX. BE THERE: A GUIDE TO PUBLIC PARTICIPATION
CHAPTER X. A HISTORY OF DEMOCRATIC UTILITY REGULATION IN THE US
CHAPTER XI. REGULATING THE MULTINATIONAL UTILITY
CHAPTER XII. FAILED EXPERIMENTS IN THE UK AND THE US
CHAPTER XIII. THE BIGGEST FAILURES: CALIFORNIA AND ENRON
CHAPTER XIV. INTERNATIONAL DEMOCRACY – DEVELOPING AND DEVELOPED COUNTRIES
CHAPTER XV. CONCLUSION


CALIFORNIA PUBLIC UTILITIES COMMISSIONER CARL WOOD, in the Foreword: "Palast, Oppenheim and MacGregor have drawn on a vast pool of practical experience, wide international contacts and profoundly democratic motivation to examine and explain the U.S. utility regulatory system as a model for an epoch which is characterized worldwide by the sudden and often unconsidered privatisation of essential utility services previously owned and operated (however well or poorly) for the public good."

R. A. MILLER, WESLEYAN UNIVERSITY in CHOICE: This volume discusses governmental regulation of public utilities--firms supplying electricity, gas, telephones, and water. Regulation works best, the authors argue, when regulators adhere to the democratic process: public access to information, public participation in setting prices. The US democratic process is generally superior to that elsewhere, e.g., in South Africa, India, Peru, the UK, Mexico, Bolivia, Brazil, and other countries. The authors (an economist-reporter, a lawyer, and a regulator) have a wealth of experience in utility regulation, and it is evident on every page. The recent electricity crisis in California (and Enron's participation) receives considerable attention. Throughout the book the democratic process receives most of the credit or blame. Unfortunately, the economic analysis is either weak or incomplete (e.g., no mention of the contribution to the California electricity crisis of either the drought in the Pacific Northwest or the prohibition of forward contracts). The authors' detailed description of the US utility regulatory system will be especially useful to those new to the topic. A companion source of information to this book is a Web site containing updates and additional documentation. Summing Up: Recommended. Public and undergraduate library collections."

MEG POWER, NATIONAL COMMUNITY ACTION FOUNDATION: "This masterpiece suggests the way the whole world should see the amazing system of utility governance we Americans take for granted. This book is required reading for anyone committed to maximum feasible participation of those directly affected by public policy."

ENTERGY CORP. STRATEGIC PLANNING MANAGER BENGT JARLSJO: “Very informative, unique, and uplifting. I believe that every person, including regulators, environmentalists, consultants, and employees, working to implement new projects, rates, and programs for regulated companies should consider DEMOCRACY AND REGULATION required reading.”

ICELAND CONFEDERATION OF STATE AND MUNICIPAL EMPLOYEES (BSRB) OFFICIAL ANNA ATLADOTTIR: "Your book is a tremendous help in my work as the Icelandic member Of The Standing Committee on Public Utilities of the European Federation of Public Services Unions (EPSU). Thank you for setting forth complicated issues in such a way that ordinary people are able to understand them."

NATIONAL CONSUMER LAW CENTER: "DEMOCRACY AND REGULATION is a valuable book for those who believe in regulating utilities in the public interest, filled with useful data, tables and ample footnotes."

EUROPEAN FEDERATION OF PUBLIC SERVICE UNIONS (EPSU) “recommends the book as a valuable contribution to what will inevitably become the new battleground in Europe’s liberalised energy markets: how to control powerful profit maximising, often transnational, energy companies, ensuring they deliver a reliable and affordable public service. Competition is not the answer but democratic regulation is.”

NEW HAMPSHIRE PUBLIC UTILITIES COMMISSIONER NANCY BROCKWAY: "If you have no other books on public utilities, you should have this one. Palast, Oppenheim and MacGregor provide a timely and thoroughly documented analysis of the necessary role of the public in overseeing provision of electricity, gas and other utility services in a free market society. DEMOCRACY AND REGULATION is a timely reminder that these essential services cannot simply be left to the invisible hand of the market, or worse to the inscrutable hand of the back-room deal."

English transcript of talk presented in Reykjavic, Iceland, in March 2001 detailing the failures of deregulation in the US, a brief history of US regulation, consumer protections in the US, and the importance of transparency and participation in regulating monopoly services.

To date, there have been almost no benefits to consumers from retail electricity competition in the US; rather, serious detriments to consumers include high and volatile prices, decreased reliability and increasing blackouts, lost jobs, and new consumer problems, such as slamming, invasions of privacy, and lack of information.