Submitted by Roldo on Wed, 02/04/2009 - 13:50.

This area’s private electric company had a stranglehold on the city’s public electric system. Muny Light, as the city’s system was known, in the 1970s was an island serving some Cleveland neighborhoods, surrounded by CEI, which served in Cleveland and its suburbs.

CEI refused to allow electric power to cross its lines – a common practice called wheeling - to serve the city’s much smaller system. It was tightening its grip. It was hoping its hold would become a death grip.

Without access to cheaper power sources the city was forced to buy from CEI. The company charged higher rates and limited its access. This led to brownouts and shutdowns of service by the city system. The result was damaging to Muny Light, now called Cleveland Public Power.

These issues didn’t get the news attention they deserved. Thus, public opinion was on the side of CEI. Meanwhile news articles about service problems that plagued the city’s system were well-displayed.

In the 1970s, the Cleveland Electric Illuminating Co. (CEI) was the friend of the news media. The company would host 100 reporters and editors with brunch, drinks and scarce tickets to the Cleveland Browns football games.

I called CEI before one of these parties and suggested that I come as a member of the press. “It’s a private party,” said CEI’s public information boss. I was told the event wouldn’t attract much attention. That’s what they thought.

Well, I said, you shouldn’t mind if I show up with a photographer to take photos of the press attendees. Obviously, the reporters and editors didn’t want to be seen enjoying themselves nor did CEI want the publicity.

Wasn’t CEI buying influence by fêting the press? I asked. After a laugh, he said, “You can answer whatever you want.”

I did show up with photographer Steve Cagan. We were met at the door by an off-duty Cleveland cop. I guess they really didn’t want me there.

CEI at the time spent $1.15 million in advertising in a year; gave $600,000 in charity; and donated more than $500,000 in political contributions. It was buying favors. The company had always been civic-minded that way. CEI gave Cleveland the motto, “Best Location in the Nation,” in 1944.

These acts afforded CEI the ability to gain favorable news and avoid negative news. It enabled CEI to frame issues most favorably to itself in the newspapers and on television.

Reporters who tried to do an unbiased job in covering CEI found themselves reassigned. They didn’t meet with the kind of coverage CEI boss Ralph Besse thought appropriate for his company. After all, Besse could argue, we send you many advertising dollars.

CEI pleasured those who weren’t critical. During the 1974 newspaper strike, CEI provided funding through a public relations firm (Bill Silverman) to hire a Plain Dealer assistant city editor to do a survey. The survey asked how the news media felt about CEI. When I later checked, the survey wasn’t even delivered to CEI. The company also sponsored a WCLV-Radio entertainment commentary series employing a number of other out-of-work PD and Press editorial people. Favors deserve favors returned.

The point is that, as usual, the private sector was hailed as much as the public sector was vilified in the news media. Bias ruled.

With the stranglehold tightening the city sued CEI for its anti-competitive actions.

It took some time but CEI was judged guilty of violating the Sherman Anti-Trust Act by a federal authority. The staff economist testified:
“… CEI appears to be behaving like a spoiled child caught cheating and declaring it will use any trick it can get away with in order to get even.” A harsh slap at CEI's behavior.

The report also proclaimed: “When a utility has monopoly power in transmission, its transmission customers are extremely vulnerable to financially devastating impacts from changes in availability, price, terms or conditions of that service. If the only transmission supplier in the area hinders and frustrates the orderly planning of its transmission to customers with whom it competes for retail sales, then these competitors of the supplier are competitively disadvantaged.”

This, of course, was exactly what CEI was doing to the city.
This followed a ruling by the U. S. Nuclear Regulatory Commission that CEI was obliged to transmit (wheel) electricity from other sources over its lines to Muny Light. It labeled CEI’s failure to do so, “Cutthroat competition.”

CEI’s refusal to wheel electricity from other cheaper sources not only disadvantaged the city financially but led to the frequent outages that damaged its reliability.

As part of the proceedings, Lee Howley, legal counsel for CEI and former city law director, was asked about a CEI memo. In the memo, Howley and CEI were warned against a “synchronous tie” with Muny that would allow the transfer of power to Muny. The memo said “It should be avoided like the plague.”

Howley said he couldn’t remember reading a CEI memo that provided methods to frustrate Muny’s desire for interconnection.
Howley was asked about CEI’s desire to have the city construct certain facilities three different ways before CEI would perform an interconnection. The request was obviously to deter interconnection.

Howley’s response was, “Well, I suppose if you did something three ways it will cost more than one way, if that’s your question.”

“It seems apparent that the CEI witnesses can’t recall anything that seems to be beneficial to the city, except that which is refreshed to them by documents. It seems to me to reflect something about the character of these witnesses,” said the questioner.

Among the charges upheld by the board:

- That CEI tried to force Muny into price fixing.

- That CEI acted to forestall expansion of Muny Light.

- That CEI offered power only in amounts it knew would be inadequate.

- That CEI caused Muny blackouts by avoiding proper connections.

- That CEI’s transfer procedures were “arbitrary, cumbersome and not in keeping with modern, prudent engineering.”

- That CEI avoided meetings with the city to plan interconnections.

- That CEI would dispatch inadequate crews when power transfers were made.

- That CEI forced the city to purchase power at more expensive than traditional charges.

- That CEI forced the city to buy power it didn’t actually need.

In other words, CEI did everything it could to sabotage the city’s municipal light system. (For a full history of this “case against CEI” see a 12-page issue of my newsletter Point of View, Vol. 11, #14, Feb. 3 1979.)

Indeed, part of the problem was Muny couldn’t generate its own power because a boiler explosion had destroyed its capacity to generate electricity. I got a memo recently from a former reporter who remembered that a prominent city councilman at that time told him that the explosion was considered an act of sabotage. No action was pursued, however.

All these decision by U. S. regulatory bodies led the city to sue CEI for anti-competitive acts against the city.

Next we’ll see how the city’s $325-million anti-trust lawsuit - the result of these findings against CEI - was sandbagged by a U. S. federal judge.

It’s hard for the common citizen even in as democratic a system as we have to triumph with all the roadblocks the Establishment can place to deter justice. And a news media that slants to the wishes of private power.

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