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PRI's Environmental News Magazine

The Man from SMUD

Air Date: Week of August 27, 1993

John Reiger profiles David Freeman, head of the Sacramento Municipal Utility District and longtime champion of energy conservation. Back in the Carter Administration, Freeman argued against the conventional wisdom that energy efficiency and economic growth were at odds with one another. Now, he heads a small utility that he has turned into both a profitable institution and a vanguard of alternative energy.

Transcript

NUNLEY: This is Living on Earth. I'm Jan Nunley, in this week for Steve Curwood.

Imagine that you're a fan of a long-suffering baseball team . . . say, Boston, or Chicago, or Cleveland. For years, you've cursed the team's managers and owners for their bone-headed decisions, and mouthed-off to the talk shows about what you would do if you were in charge. Then you wake up one morning - and you are in charge. Your dream is today's gameplan.

Now, let's say you're an environmentalist. Your schtick is conservation and renewable energy. For years you've berated industry and electric utilities for wasteful, polluting and expensive energy policies. Then one morning you wake up - and you're the C-E-O of a big-city electric company. Again, your dream is the company's gameplan.

This, in a nutshell, is the story of David Freeman. Twenty years ago, Freeman wrote a ground-breaking critique of U-S energy policy, challenging the link between economic growth and the need to consume more and more energy. Today, Freeman is the head of the local utility in Sacramento. The company has some of the most aggressive efficiency and renewable energy programs in the country. . . and Freeman is bringing the company back from the brink of bankruptcy in the process. Producer John Rieger recently paid David Freeman a visit, and filed this report.

(Sound of passing automobiles)

RIEGER: On a crisp Sacramento morning that's sure to be another scorcher, the head of the local electric company, wearing blond boots and a Texas cowboy hat, strolls across the driveway and unplugs his truck.

(Sound of truck being unplugged; Freeman: "We symbolically built this thing right where the gas tank would ordinarily be so people would feel comfortable about it, y'know . . ." fade under)

REIGER: David Freeman, the 67-year-old director of the Sacramento Municipal Utilities District, may be the California capital's most paradoxical public figure - a flamboyant utilities manager, an environmentalist that business loves, and a political heavy hitter that doesn't mind driving a reporter to work to personally show off one of SMUD's electric trucks.

FREEMAN: The first one that we tried to convert was a piece of you-know-what. I mean, I had some exper - You know there's an old expression that good judgment comes from experience, and experience comes from bad judgment? Well . . . (fade under)

RIEGER: Freeman wants that experience, because he wants to lure an electric vehicle manufacturer to Sacramento; so SMUD has converted a small fleet of cars and trucks to electricity, and they take them to parades and lend them to area businesses, trying to drum up that all-important initial market. Electric vehicles are good for electric companies, because they recharge at night, using generating capacity that would otherwise be wasted. But Freeman, characteristically, has a larger vision.

FREEMAN: We're at a point in our history where the electric utility industry can start wearing a white hat. We can be the organization that brings cleaner air to our cities, and also eliminates this horrible concern about having to go back over in the Middle East to fight a war every few years in order to keep the oil flowing.

(Sound of people arriving at SMUD; Freeman: "Good morning . . ." fade under)

REIGER: Arriving at SMUD's modest four-story headquarters, Freeman, in his boots and his hat - doctor's orders explain the hat, he says - mingles democratically with the suits, the secretaries, and the guys he calls "the guys." Freeman rode into town three years ago packing a resume that included service to four Presidents and a stint as the head of the giant Tennessee Valley Authority. That's some pretty heavy artillery for little SMUD, which provides electricity to just over half a million accounts. But little SMUD was in a big crisis in 1990. Angry voters had shut down the Rancho Seco Nuclear Plant, a costly lemon that had driven up rates and driven out a series of failed general managers. Now SMUD was 900 megawatts short of power, its future uncertain.

FREEMAN: It was the greatest opportunity in the country at the time. SMUD was in a kind of a free-fall. It had been raising the rates, the customers were real angry, the Pacific Gas and Electric Company was about to take them over. You were here, weren't you, about three years ago?
CO-WORKER: Yeah, I've been here for 16 years. I've lasted through about 15 general managers.
FREEMAN: What was the challenge when I got here?
CO-WORKER: To get us out of the crapper. We were totally in the toilet when you got here. I used to tell people I was a garbage collector . . . (fade under)

REIGER: Freeman promptly announced budget cuts and a rate freeze. Then he held an "Under New Management" sale, where he auctioned off to the public such choice symbols of the old regime as the company's bulging stock of spiffy blue blazers for the nuclear staff. That helped a bit with the public relations problem. But SMUD needed a new source of power to replace Rancho Seco. And it had to be clean, because Sacramento has some of the nation's dirtiest air. Freeman's plan was to use the power his customers were wasting.

FREEMAN: Our main power plant is our efficiency program. We're gonna do 800 megawatts of efficiency in this decade, and that's cheaper and cleaner than anything that anyone else is doing.

REIGER: SMUD now has the most intensive energy efficiency program in the nation. They've given away 65,000 shade trees to help cut down on air-conditioning demand during the hot Sacramento summer. They've used hefty consumer rebates to replace 42,000 energy-guzzling refrigerators with high-efficiency models. In effect, SMUD is buying electricity from its customers at a bargain price. SMUD is also building new generating capacity, but that too is from unconventional sources - 600 megawatts of clean-burning gas-fired co-generation plants, for instance, and the largest wind farm ever built by a single utility. And in an experiment in "green pricing," they've invited customers willing to pay slightly higher rates to have their own photovoltaic panels installed on their roofs. Some of these technologies are still a bit pricey, but Freeman argues that SMUD's long-term purchases will help bring the price down, and he says local residents understand that cleaner air is worth the cost.

FREEMAN: We have learned to think in terms of externalities, in other words, that there is a cost to generating and using energy that is greater than the price. Remember that our stockholders are the people that breathe the air, and want to see economic progress here.

(Sound of telephone ringing, Freeman on phone: "Well, aw, I'm not going to Washington with this crowd, they're not interested in my kind of diversity, I'm over 40 and got experience . . . " (fade laugh under)

REIGER: Freeman is on the phone before lunch, joking with a county supervisor who once opposed his hiring. These days, on-the-record criticism of SMUD's general manager is hard to come by in Sacramento - not from environmentalists, who like his emphasis on efficiency and renewables; not from the business community - they want solutions to Sacramento's frustrating air-pollution problems, and they like the fact that SMUD's bond rating has gone up. Freeman shows no surprise that environmentalism can be good for business. He's been arguing for programs like these since the early 70's, when he directed a pioneering study of US energy policy for the Ford Foundation. The final report, A Time to Choose, warned that the prevailing rate of energy growth would have serious environmental and economic costs, and recommended major efficiency programs instead of new power plants. At the time, Freeman recalls, the energy establishment reacted with anger and disbelief.

FREEMAN: We were called socialists in the early 70's. The Mobil Oil Company took out ads all over the country and made our report famous. Back in the early 70's, the idea that use of energy and economic progress were anything less than Siamese twins was anathema. It was considered anti-growth, which is kind of a dumb connection if you think about it for more than thirty seconds, because efficiency has been the hallmark of growth.

REIGER: Jimmy Carter embraced the report, and made Freeman director of the nation's premier public power agency, the Tennessee Valley Authority, with a mandate to put his ideas into practice. He did, closing eight budget-busting nuclear power plants, spending a billion dollars to reduce coal emissions, and instituting an efficiency program that reached a million homes, for which the National Wildlife Federation named him Conservationist of the Year.

(Sound of Freeman in phone conversation: "I don't know if you've been through any of those buildings, there's some marvelous buildings there . . ." fade under)

REIGER: It's early afternoon, and Freeman is back on the phone, trying to woo an electric-car manufacturer with images of terrazo-floored headquarters buildings and Sacramento's highly-trained workforce. This deal-making illustrates Freeman's expansive idea of a public agency's bottom line. SMUD would help the new manufacturer by promising to buy the first several dozen vehicles. The payoff would come in the form of cleaner air, new jobs, and customers who would fuel their vehicles with SMUD electricity rather than gasoline. Ultimately, Freeman believes that this is the next great task beckoning to companies like SMUD - to convert the nation's entire transportation system to cleanly-generated electricity.

FREEMAN: This is the contribution that the electric power industry can make that will be second only to bringing electricity to rural America - a solution to the very most vexing problem that this high-energy civilization of ours faces, namely, the fact that we are bringing $50 billion dollars' worth of oil in from overseas every year and burning it in cars in the city streets and contaminating our lungs and contaminating the air to the point where economic growth in Sacramento County cannot take place unless we can find some space in the sky to fit it in.

REIGER: If this vision seems at all quixotic, think back twenty years to an earlier vision. A Time to Choose had an appendix, filled with angry comments from the energy industry, predicting that reduced energy growth would plunge American into a new Dark Age. And yet, energy growth has declined, farther than even the most extreme recommendations in the 1974 report. There has been no Dark Age. Efficiency is being recognized as a major, untapped energy resource. And in California, it's the single largest source of new electricity among utilities.

FREEMAN: I feel a great sense of satisfaction. When I think back 20 years ago, there were maybe 30 or 40 of us in the whole world that were pursuing this, and now there's 30 or 40 in every utility. If you think of the fact that all through the 80's the American government was opposed to efficiency - the Reagan-Bush policy was nuclear power - the efficiency option has survived because it saves money.

REIGER: In 35 years, David Freeman's career has spanned the gulf between two eras of US energy policy - one, just ending, an age of heedless growth; the other, just beginning, an age of growing efficiency and environmental cost-accounting. He's recognized as one of that small handful of energy professionals who first described the new era 20 years ago. Now, at a small municipal utility, he's proving that energy efficiency, environmental sensitivity, and community prosperity are one and the same. For Living on Earth, I'm John Reiger in Sacramento.

 

 

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