Five years ago, Cleveland's municipal electric company--the symbol of the anti-establishment "boy mayor" Dennis Kucinich--was nearly snuffed out.
With the city perched on the edge of default on its bank notes and desperate for funds, Kucinich refused to raise money by selling the company, Muny Light, to the competing private utility, Cleveland Electric Illuminating Co. (CEI). Kucinich, whose slogan was "Power to the People," was an avid supporter of municipal ownership of the utility and wanted to pursue an antitrust case the city had filed against CEI.
In retaliation for his defiance, the city council refused a Kucinich proposal to bring in new revenue by raising the income tax.
At the time, Muny served a scant 20,000 customers and was a captive to its direct competitor CEI, which supplied 100 percent of the city utility's electricity.
Kucinich and others charged that the private utility, the city's banks and its business community conspired to drive Cleveland toward default as a means of getting rid of Muny. Even the relatively staid Nuclear Regulatory Commission's Atomic Safety and Licensing Board called CEI's activities with respect to Muny "cut-throat competition." Among other things, the board said that CEI had attempted to force Muny Light into price-fixing, had caused blackouts for the city-owned company by avoiding proper power connections and had forced the city to buy power that it did not need at unfairly high rates.
In 1979, Cleveland's voters backed Kucinich's refusal to eliminate the nominal competition provided by Muny Light, overwhelmingly rejecting a ballot proposal to sell the company and accepting a 50 percent increase in the income tax.
Muny Light--often disparaged as Puny Light--survived, but in tatters. And Kucinich lost a re-election bid to George V. Voinivich.
Now both are trying to make a comeback.
Renamed the Cleveland Public Power Co. (part of a continuing attempt to shed its old image), the utility now buys only about a quarter of its power from CEI, serves more than twice as many customers as it did when it was saved, and has won 540 customers from the private utility this year--a larger number than in the three years previous. Cleveland is one of only two dozen cities in the nation where electric companies compete for customers.
Despite a recent increase, CPP's rates are 10 percent below CEI's, according to Joseph Pandy Jr., the city's commissioner of light and power. "We had a survey done by an independent firm that found that 50 percent of the people will switch for a 10 percent savings," said Pandy, who added that the utility is actively recruiting CEI's customers.
Still, a lingering reputation for unreliability--although no longer based on fact, according to city officials--has limited CPP's ability to win large commercial accounts, and its customer total remains well below its 60,000 peak.
"We're paying our own way and offering everybody--including the city, which is a big customer of ours--substantial savings," said Pandy, who was hired by Voinovich in 1980 after a national search for a professional. An engineer with a legal civil service appointment, Pandy followed a succession of commissioners who were temporary political appointees, serving at the pleasure of whoever was mayor.
One of the company's major initiatives has been to diversify its power sources and to increase the number of its power "pipelines," or interconnects, to improve reliability.
In addition to the power the city-owned company buys from CEI (at a kilowatt hour cost in 1982 of 5.0539 cents), it also buys from an Ohio cooperative at 3.4463 cents per kilowatt hour and from the Power Authority of the State of New York at from 1.5543 cents to 2.9840 cents per kwh. CEI, which supplied the municipal power company with more than 75 percent of its electricity as recently as 1980, now supplies less than a third.
On May 16, a contractor began overhauling the city utility's gas turbines, the first step toward eventually resuming some of its own power production--which had ceased in 1977--and CPP expects to sell bonds later this year for more repairs.
"We never want to be in the shape we were in, where our eggs were all in one basket," said Pandy. "We're designing the system to be diversified."
Muny Light also has built a new substation to provide electricity to the city's major airport, allowing it to add new residential customers in an area not previously served, said Pandy. "We're serving about 40 percent of the geography of Cleveland but only about 20 percent of the customers."
Although CEI still portrays the municipal utility as unreliable, Pandy said, CPP "in the last two years has had fewer outages than CEI."
The key to improving reliability was building a second "interconnect," or connection to other systems with surplus power to sell, so that a simple accident couldn't shut down the entire municipal system. The groundwork for the second interconnect was laid before the Voinovich administration by Kucinich and others who fought CEI's objections.
Voinovich contends that he has been a strong supporter of the city-owned utility, and others (but not Kucinich) agree. "People say, why am I so devoted to it?" Voinovich said. "It's because I look at it as an economic development tool. It's something we have that the suburbs don't have. If we can provide electricity at economical rates, we can keep people here."
"We see them as competition," said CEI spokesman J. Lee Bailey. "The present administration has been willing to do some things that the system hasn't done in the past," including raising rates, he said. CEI has 710,000 residential and business customers.
One unfortunate consequence of CPP's role as a competitor is that it prevents the privately owned utility from working as closely as it should with the city's economic development efforts, Bailey said. And the $6 million it cost CPP to extend service to Cleveland's Hopkins Airport could have been better used to improve the city's water system or roads and bridges, he said..
Despite improvements, CPP was hit with a major defeat last December when Standard Oil of Ohio (Sohio), the city's largest corporation, chose CEI over CPP as its source of electricity for a brand-new headquarters building.
The decision was a result of a months-long investigation of the two companies by Sohio, said oil company spokesman Tony Kozlowski. "We picked CEI because, first of all, its past track record compared to Muny. We wanted a power source we could depend on for 50 to 100 years and, based on past performance, we thought that was CEI."
Kucinich, far from feeling vindicated by the power company's better fortunes, charged that the city does as little as it can. "They do just the minimum, so the constituents will not feel betrayed," he said. "I would say from the beginning of the Voinovich administration there hasn't been any attempt to do much for Muny Light."
Pandy and Voinovich disagreed. "The irony is, despite all the public posturing, a lot of the common sense things CPP is doing had not been done (during Kucinich's administration)," the mayor noted.
"If he had not taken the stand he did, there would not be a CPP today," said Pandy. "He was the man who led the battle to hold on to it. That's to his credit," he said. On the other hand, Pandy said, few improvements in the system were made under the Kucinich administration.
Meanwhile, after two trials, the city's antitrust suit against CEI is in the U.S. Court of Appeals. The first trial resulted in a hung jury which voted 5 to 1 in favor of the city. In the fall of 1981 a second trial resulted in a judgment in CEI's favor. The city has appealed, arguing that the judge erred in refusing to allow key evidence about CEI's intent, according to William B. Norris, the attorney who represents the city. (The judge had allowed that evidence in the previous trial over which he had also presided.)