Building the Electrostate

In the United States today, officials at all levels of government generally act as if private enterprise is the only way to provide goods and services. Yet a bastion of public ownership survives: more than a quarter of electricity customers—including the residents of Los Angeles, Omaha, San Antonio, Seattle, Jacksonville, and Tupelo, along with tens of millions of other people—get their power from one of the country’s more than 2,500 publicly owned utilities and rural electric cooperatives. Mostly established in the first half of the twentieth century, these institutions have a long record of offering reliable service at affordable rates; even today, publicly owned utilities charge less and resolve outages faster on average than their investor-owned counterparts.

Creating more like them, however, has been extraordinarily difficult. Since the 1940s, few communities have successfully taken control of their private utilities; one such example is the city of Massena, New York, which waged a seven-year political and legal fight before taking over its power grid from Niagara Mohawk in 1981. Residents immediately saw their bills go down substantially. Today, according to New York Focus, they enjoy “some of the cheapest, cleanest electricity in the state.”

The obstacles to expanding public power are not hard to divine. It is opposed by some of the most influential forces in the US—not just the utilities but allied corporate and financial interests, much of the political establishment, and often even unions of power sector workers. In Boulder, Colorado, a long and costly battle to take over the city’s private utility that began in 2010 was abandoned in 2020. (The effort did help the city secure an agreement that, among other things, requires the utility to make its services more reliable and to reduce greenhouse gas emissions more quickly.) In Maine, the state’s two private utilities together poured more than $40 million into fighting a November 2023 referendum that asked voters to authorize a consumer takeover, outspending supporters more than thirty to one. Though polls showed that voters, unhappy with the status quo, were open to the idea of public ownership, the utilities used anxiety about the cost of a debt-financed buyout and the specter of irresponsible “political” control to convince Mainers to stick with the devils they knew. The referendum lost by a margin of over 30 percent.

And yet even as communities have struggled to create new public utilities and electric cooperatives, those that exist have largely proven too popular for their ideological opponents to dislodge. When the Obama administration proposed privatizing the nation’s largest publicly owned utility, the Tennessee Valley Authority, in 2013, Republicans from areas served by the TVA immediately objected: Senator Lamar Alexander, a longtime enemy of tax credits for wind power, fulminated that privatization might increase electric costs for his constituents. In Jacksonville, allies of the Republican mayor attempted to sell the city’s utility, JEA, through a secretive process in 2018–2019; when the plan became public it triggered such a strong backlash from both the city council and the city’s residents—including the billionaire owner of the Jacksonville Jaguars—that it was quickly abandoned. Institutions like the TVA and the JEA have cultivated broad support by offering low rates and reliable service to everyone in their territories, and have protected themselves from privatization by broadcasting their status as public institutions. They embody what the economist J.W. Mason calls the “underrated virtues” of “legibility, simplicity, and universality.”

In this sense, such institutions represent one of the enduring legacies of the moment that produced them: the New Deal era, the country’s high-water mark for development led by the federal government. Their history shows that it was only this federal intervention—in the form of financial support and preferential access to low-cost federal hydroelectricity—that enabled cooperative and public ownership to expand on a large scale. This would in turn have been unimaginable without the advocacy and organizing of the 1920s, a period when the political climate favored the very wealthy, but which nevertheless saw persistent campaigns to democratize economic life.

As we confront another such era, it’s worth asking what the New Deal might have to teach us about the prospects of today’s fights for public power, and public provision of essential services more broadly. The federal electrification program was hardly an unambiguous good: it had particularly dire effects on indigenous communities, whose land the government inundated and whose life-sustaining fish stocks it devastated through dam construction between the 1930s and the 1950s. Any attempt to draw lessons from this history must contend with the damage that technocratic federal decision-making can inflict on marginalized groups. And yet the long story of public power also suggests that state ownership can appeal to the broad American public if it generates substantial and direct material benefits. Today’s campaigns to take over private utilities are not just about finding a better way to keep the lights on but about making a case for the very idea of public and cooperative ownership.

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A century ago, nearly 50 percent of the US went dark after sundown. Private utilities generally wrote off the rural market as unprofitable: the countryside was thinly populated, meaning that a mile of power line served far fewer people there than in a city or suburb; what’s more, utility managers tended to subscribe to the idea that people in rural areas were irredeemably backward and assume that they would use little electricity even if hooked up to the grid. Middle West Utilities, which supplied thousands of communities across thirty-six states, asserted in a company publication in 1930 that even if all rural activities, domestic and commercial, were to be electrified, it still wouldn’t make economic sense to build power systems for most of the countryside.

The lack of electricity shaped virtually every aspect of rural life. People in the country ate nutritionally deficient foods with long shelf lives and relied on unsanitary privies, resulting in ailments such as pellagra (a deficiency of vitamin B3) and hookworm. They structured their days around the sun and did their chores by hand—including backbreaking tasks like laundry, which was left almost exclusively to women.¹

In the cities most households had electricity by 1930, but not in the way we take for granted today. Working- and middle-class homes typically contained a few lights and a radio, but appliances like refrigerators, washing machines, and vacuum cleaners were mainly for the wealthy. Private utilities, however, argued that there was little untapped demand, and that the housing stock was not wired to carry heavier loads.²

Running for president in 1932, Franklin Delano Roosevelt contended that America’s incomplete electrification was unacceptable. At a campaign stop in Portland, Oregon, he lambasted the private utilities, explaining that electricity was no longer a luxury but a necessity: “Many selfish interests in control of light and power industries have not been sufficiently far-sighted to establish rates low enough to encourage widespread public use.”

To achieve universal electrification, he called for both stronger public control of private utilities and the construction of federal hydroelectric dams in all four corners of the US. Instead of supporting full public ownership in the power sector, he envisioned that the growth of the public sector would pressure the private one to lower its rates and make its service more reliable—a philosophy he dubbed “yardstick” competition—while federal dams would expand the supply of electricity overall. At the distribution level, he reasoned that the credible threat of public takeovers could prod private utilities to do better. “I might call the right of the people to own and operate their own utility something like this: a ‘birch rod’ in the cupboard to be taken out and used only when the ‘child’ gets beyond the point where a mere scolding does no good,” he said in Portland.

FDR’s plan was neither novel nor radical but representative of an important current in American politics. The 1920s was a time of growing interest in public ownership in the power sector, and of populist opposition to private utilities, often referred to as the “power trust.” The economic and political clout of utility executives—like Samuel Insull of the eponymous holding company group, Sidney Mitchell of the Electric Bond & Share Co., and Howard Hopson of the Associated Gas & Electric Co.—stood in contrast to the poverty experienced by millions of Americans. Dozens of communities debated whether to municipalize their private power companies in this era; cities like Los Angeles and Seattle substantially expanded their publicly owned utilities. Much as FDR later would, local campaigners criticized private utilities for prioritizing short-term financial returns over affordable, reliable service for the public. Many cited the success of the publicly owned Ontario Hydro in Canada, which served rural areas in the province and charged lower rates than private utilities across the border in New York.  

The growing demand for reform helped drive federal investment in hydroelectricity even before the New Deal. (The government also constructed dams to control flooding and, in the arid West, to store water for domestic and agrarian uses.) In 1928 Congress authorized the construction of the Boulder Dam (today’s Hoover Dam) on the Colorado River. But the project reflected its times: the government allowed private and other non-federal entities to install and operate generators in the dam, and it lacked the authority to build transmission lines to carry power from the Colorado, including to rapidly growing Southern California.

Meanwhile, in a political saga that spanned the decade, national lawmakers declined to sell off the federally owned Wilson Dam on the Tennessee River in Northern Alabama despite strong pressure from Henry Ford, Alabama Power, and other private interests. Senator George Norris, a progressive Republican from Nebraska, helped defend public ownership of the dam and called on the federal government to do still more to develop the river’s hydroelectric potential. Norris proposed the development of “one giant power scheme” that would eventually “hook one system into another, so that we can turn the power of the Tennessee River into the State of California some day by the pushing of a button.” The unified national grid he imagined has yet to be built.³

When the Great Depression brought about the collapse of several leading utility holding companies, FDR and allied majorities in Congress were presented with an opportunity to remake the industry. (I tell the story of how the New Deal transformed the power sector in greater depth in my book, Democracy in Power: A History of Electrification in the United States.) In FDR’s first one hundred days, they created the TVA to acquire the Wilson Dam and build other dams throughout the Tennessee River Basin, realizing Norris’s vision of regional power development. The administration also began constructing the Bonneville and Grand Coulee Dams on the Columbia River as part of its effort to address mass unemployment through the Public Works Administration. Soon the federal government was building dams on rivers across the nation, including the Missouri, the Sacramento, and the Savannah. Congress made the resulting low-cost electricity available to nonprofit and publicly owned utilities on a preferential basis to ensure it would be resold to Americans without a substantial markup.

These dams generated huge quantities of electricity—federal hydroelectric capacity increased nearly twentyfold between 1933 and 1945. But they inflicted enormous social and environmental damage. They displaced tenant farmers and decimated the salmon stocks of the Columbia, which had supported indigenous communities for millennia. The government’s postwar dam construction on the Missouri, known as the Pick-Sloan Plan, had particularly catastrophic effects on the Sioux in the Dakotas, displacing tens of thousands of people from reservations to which the federal government had moved them in the nineteenth century.

The project “took 550 square miles of Indigenous lands, an area half the size of Rhode Island,” the historian Nick Estes has written, and thus “destroyed more Indigenous lands than any other public works project in US history, affecting twenty-three different reservation communities.” The land submerged “was the best land on the reservation: riverfront bottomlands that were heavily wooded on otherwise treeless plains, and full of wildlife and plants, including animals on which many Indigenous peoples still depended for sustenance.”⁴ The devastation was compounded by the government’s refusal to compensate the displaced in full. The historian Vine Deloria, Jr. has called Pick-Sloan “without doubt, the single most destructive act ever perpetrated on any tribe by the United States.”

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This influx of inexpensive hydropower spurred many cities to take over their private utilities. Then as now, public power campaigns faced significant hurdles: private utilities had deep pockets and the support of many elected officials and regulators. But the New Deal made the difference. Not only did the government give publicly owned utilities and cooperatives right of first refusal; many private utilities declined to purchase electricity from the government at all, viewing federal involvement in their sector as a threat—and thus depriving their customers of the abundant, inexpensive power that had suddenly become available. The Public Works Administration also offered grants and low-cost credit to cities that wanted to build municipal systems, since the projects served the dual purposes of expanding infrastructure and putting people to work.

With the threat of federally funded competition looming, hundreds of towns and cities were able to pressure their private utilities to the bargaining table to negotiate buyouts. The push was particularly successful in Tennessee and Texas, which had access to low-cost electricity from the TVA and the state-owned Lower Colorado River Authority (dubbed the “little TVA”). Dozens of communities took over their private utilities in these two states alone.

One such effort involved the Memphis Power & Light Co., part of the enormous Electric Bond & Share holding company, which owned utility systems all over the country. For years, locals had criticized the utility for charging unjustly high rates to enrich shareholders, who made a handsome annual return of 13 percent between 1923 and 1938. Given the prospect of obtaining low-cost federal power, people in the city began advocating for a municipal takeover. Even with federal support for public buyouts, hundreds of referenda for municipalization went down in defeat across the nation between 1934 and 1939. But Memphis authorized the necessary bond issuance in a landslide in November 1934. After years of wrangling, the city acquired the private utility’s properties in 1939.

The New Deal paired public investment with much stronger regulation of private utilities. In the Public Utility Act of 1935, Congress cracked down on the sprawling holding companies that then dominated the industry, simplifying their corporate structures and regulating mergers and acquisitions and financial practices. The law broke up the far-flung and haphazardly organized empires that financiers and promoters had built in the 1920s, making many local power systems available for purchase. While most remained in private hands, some were transferred to public control: the cities of Omaha and San Antonio were among those that acquired their utility systems this way. The statute also required that private utilities charge “just and reasonable” rates for interstate transmission and wholesaling of electricity, bringing about significant reductions. Leonard Hyman, a longtime analyst of the energy sector, described the law’s sweeping effects: “The electric utility industry’s emphasis shifted from razzle-dazzle finance and enrichment by questionable means, to providing service to the customer at a reasonable profit.”

As rates fell, urban standards of living quickly rose. FDR had been correct: contrary to the insistence of the private utilities, residential demand was not fixed. In Tupelo, Mississippi, for example, where the publicly owned utility was one of the TVA’s first customers, rate reductions increased residential power consumption by 140 percent between February 1934 and April 1935. Visiting the city in November 1934, FDR hailed the transformation of residents’ domestic lives that had come with the “introduction of electric cookstoves and all the other dozens of things.” He cited “the number of new refrigerators that have been put in,” which, he declared, “means something besides just plain dollars and cents. It means a greater human happiness.”

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Despite demands from farm groups and Southern states, Roosevelt did not turn to electrifying the countryside until 1935, when he created the Rural Electrification Administration (REA) to extend low-cost credit for building power lines. Congress made the agency permanent in 1936. The need for federal involvement was evident: in 1936 Morris Cooke, the first head of the REA, estimated that at the current pace of construction it would take private utilities another fifty years to electrify just half the farms in the US.

The REA did not throw money at rural electrification indiscriminately or even liberally. Under its enabling statute, it could only finance projects that were expected to generate enough revenue to repay their loans. As it did with federal hydropower, Congress directed the agency to give preference to state, local, and nonprofit entities. And as a condition of making loans, the REA required borrowers to serve all customers in their territory: they could not choose only the most lucrative households or sections of a community and leave the rest in the dark.

At first, the agency had looked to private power companies and municipal utilities to build rural power lines using low-cost federal financing. But when such institutions responded coolly—explaining that they were unwilling or unable to serve the bulk of the rural market—it turned instead to a largely untested option: encouraging residents, often with the leadership of local notables, to form consumer-owned rural electric cooperatives. The government helped create more than eight hundred such cooperatives across the country, supporting them with funding as well as legal and technical assistance. It worked with electric equipment manufacturers, for example, to simplify and standardize designs for distribution lines; while private utilities had estimated the cost of constructing lines in the countryside at between $1,500 and $2,000 per mile, these innovations brought it down to as little as $430.

Power consumption needed to increase for cooperatives to sell enough electricity to repay their federal loans, and the REA set about boosting it. The agency financed the wiring of private homes and publicized new household and agricultural uses of electricity with a traveling show, hauling a thousand-seat tent from state to state along with demo appliances ranging “from chick brooders to radios and food mixers,” according to an annual report from the REA.

The rate of rural electrification rose dramatically. Only one in ten farms had power in 1935; by 1940 more than three in ten did, prompting the agency to declare in an annual report to Congress that it had brought electricity to “nearly twice as many farms” in five years as had been hooked up to the grid “in all the years between the birth of the electric power industry in 1882 and the dawn of 1935.” By the mid-1950s more than nine in ten farms had electricity. Electric lighting, running water, refrigerators, and vacuum cleaners became the norm. Although these changes did not revolutionize gender relations as some had predicted they would, the benefits at home were very real: the availability of washing machines, for example, freed women from the drudgery of doing laundry by hand. The arrival of electricity—which one Tennessee farmer, testifying in church on a Sunday morning in the early 1940s, called “the next greatest thing” after the love of God—inspired some communities to perform a ritual burial of a kerosene lamp to mark the end of one technological era and the start of another.

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Today electricity is once again the stuff of popular politics due to its central place in the cost-of-living crisis. Last year a public power organizer in Tucson, Arizona, described it as a “second rent” for many Americans. Power bills have put millions in debt to their utilities and forced them to choose between keeping the lights on and, for instance, avoiding repossession of their vehicle.

As millions of households struggle to pay their bills, utility shareholders enjoy outsized returns. In a recent piece for Harper’s, the journalist Nick Bowlin reported that though the sector is renowned for being a safe place to park your savings, the state regulators who approve utility rates tend to reward investors as if they were taking on significant risk, allowing the power companies to charge enough to generate a high “return on equity.” “While the average equity-return forecast for Wall Street’s biggest money managers is approximately 6.7 percent, the average ROE for U.S. electric utilities is about 9.6 percent,” he notes. These windfalls to shareholders come straight from the public’s pockets; they reflect what Bowlin calls the “line­-blurring relationships among utilities, their investors, and regulators,” whose personnel “routinely pass through the revolving door” between public and private posts.

President Joe Biden’s signature achievement, the Inflation Reduction Act (IRA), seemed poised to start remaking the power sector when Congress passed it in 2022. As part of a suite of fiscal spending measures such as tax credits to encourage investment in clean energy, the IRA allowed publicly owned utilities and electric cooperatives—which are generally exempt from federal income taxation and thus not eligible for such credits—to obtain federal grants of equivalent value. This meant that a publicly owned utility or electric cooperative that built a solar field, for example, could collect a federal payment upon its completion equal to 30 percent of the cost of construction.

This system of “elective pay” made public investment in clean energy far more attractive. In 2023 the New York State Legislature gave the state-owned New York Power Authority the ability to build large-scale renewable energy projects; previous attempts to expand NYPA’s authority had failed, but the infusion of federal dollars changed the calculus for state legislators and Governor Kathy Hochul. The IRA further encouraged the development of clean energy by giving the US Department of Agriculture nearly $10 billion to award to rural electric cooperatives in the form of low-cost loans and grants. The USDA was quickly flooded with applications.

The IRA is the most significant piece of national climate legislation ever passed in United States. It prompted some commentators to declare an end of history for climate activism, advising organizers to abandon popular politics of the sort that defined the New Deal era and instead embrace technocracy. But in signing the One Big Beautiful Bill Act (OBBBA) into law on July 4, President Donald Trump effectively gutted the IRA before it reached its third birthday. The OBBBA preserves and extends tax credits for nuclear, hydroelectric, and geothermal projects, and for battery storage, as well as the $10 billion grant and loan program for rural electric cooperatives, while rapidly phasing out these public supports for solar and wind. Since solar and wind have accounted for the bulk of investment in new power generation in recent years, the law amounts to a body blow to the effort to decarbonize the power sector.

Why did Republicans come to the TVA’s defense in 2013 but not to the IRA’s last year? As I have noted elsewhere, Biden’s signature policy achievement is the latest iteration of what the political scientist Suzanne Mettler calls the “submerged state,” meaning that it relies on indirect means such as tax credits and public-private partnerships. Due to its technocratic and often invisible character, Mettler argues, the submerged state struggles to gain popular support; people often don’t even know that they are benefiting from public spending. This appears to be what has happened with the IRA: an April 2024 poll found that most voters, including most Democrats, either were unaware of the law or believed it had not touched them personally.⁵

The fact that the IRA has disproportionately disbursed money to red states does not seem to have secured it much support within them. In one Georgia town that received significant IRA money for a facility that recycles solar panels, The New York Times reported in June, “many people interviewed said they’d never heard of the Inflation Reduction Act and did not connect it to the Solarcycle factory. Some of those who had heard about the law described it as wasteful spending.” Such attitudes made it easy for Republicans to eviscerate the law, even if it had benefited their constituents. Meanwhile the green capitalists who stood to profit from the IRA proved unwilling or unable to defend it against reactionary fossil fuel interests—whether due to their lack of numbers and political organization or to their own investments in oil and gas.

The policies contained in the IRA may have been salutary, in other words, but the political theory underpinning it was flawed. The current cost-of-living crisis presents an opportunity to make the case for a much more direct intervention: an enormous expansion of public power. An “electrostate,” as a number of commentators have recently put it, could supply low-cost, clean electricity and drive the shift away from fossil fuels. Success in this area might, in turn, bolster fights for the public provision of other essential goods and services, such as housing.

Much as in the 1920s, when the movements for public ownership propelled by gaping inequality came up against a conservative political climate, the project of building an electrostate will meet with formidable obstacles. The Trump administration aims to put democratic control of economic life ever further out of reach. Its assault on the federal capacity to deliver public goods, meanwhile, includes mass layoffs at the Bonneville Power Administration, the agency that manages the power produced by federal dams in the Pacific Northwest, which threatens the region’s supply of electricity. At the TVA, Trump dismissed multiple board members, leaving its top decision-making body without a quorum for much of 2025 and thus unable to perform basic governance. Under these conditions, the agencies may struggle to maintain regional grids they had hoped to expand, or to continue efforts to decarbonize.

Yet even during this time of reaction in national politics, public and cooperative power are attracting renewed interest. In addition to the public power victory in New York in 2023 and the fights in Boulder and Maine, other communities are seriously contemplating public ownership. While some of these efforts are motivated in part by concerns about climate change, the main incentive appears to be affordability. In Tucson the city council commissioned a study on the feasibility of converting the local private utility into a public agency; the analysis, published last April, found that public ownership would likely lower rates and curb greenhouse gas emissions. In California the cities of San Diego, San Francisco, and San Jose have evaluated community takeovers of their private power companies. The state senate passed a bill in June that would authorize a study on how to convert the Golden State’s big three private utilities—Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison—into publicly owned or nonprofit entities. Though the effort ultimately died in the assembly, the senate vote was a sign of deep discontent with the status quo.

As the struggle in Maine suggests, these attitudes are not confined to cities or solidly Democratic communities. In May 2024, residents of the tiny town of Slayton, Minnesota, voted to municipalize its private power company, Xcel, due to its poor record on safety and reliability. In Ulster County, New York, and surrounding areas in the mid-Hudson Valley, elected officials and local organizers are fighting to convert Central Hudson Gas & Electric, a utility owned by the Canadian private equity firm Fortis, into the public, community-governed Hudson Valley Power Authority. A study published in December estimated that doing so would save customers $15 million in the first year and, cumulatively, billions over the next thirty. The city of Clearwater, Florida, is likewise evaluating a takeover of its system from Duke Energy Florida. As in the mid-Hudson Valley, a feasibility study published in October found that the move would likely save the city’s residents $25 million in year one and nearly $90 million annually in year twenty.

To see what municipalization might bring, residents of Clearwater can look one hundred miles to the northeast, to Winter Park, Florida. After a decisive referendum vote in 2003, the city took over its utility in 2005. The municipal utility charges approximately 25 percent less than does the power company serving much of the central part of the state, Duke Energy Florida. What’s more, it invested in burying most distribution lines, ensuring that very few homes in Winter Park lost power when Hurricane Milton devastated Florida in 2024 and disrupted electricity for hundreds of thousands. It’s hard to imagine a better proof of concept for public power than an island of illumination in a sea of darkness.