tion would issue the notes only in amounts equal to [its] projected output of electricity, thus avoiding inflation of the currency. The organization [or] corporation would then invest the dollars received in exchange for the energy notes for equipment to produce energy locally. This equipment could be pyrolytic converters for wood waste, wind generators or a “wind park," or generators for hydroelectric, depending upon the most abundant source of renewable energy available in any particular location. Up-to-date cost analysis demonstrates that such intermediate technology can compete favorably with oil, coal, and nuclear technology in today's markets— assuming proper conditions (such as tested wind sites) exist. .. . The electricity generated would be fed directly onto the existing grids of utility companies under laws enacted under the PURPA legislation. The utility company would either pay cash for the electricity so generated or, ideally, would agree to accept the energy notes issued by the company, in payment for bills of its customers—kilowatt-hour for kilowatt-hour. Such a system would constitute the best way of redeeming the energy notes. For instance, assume Mary Smith has bought 5,000 kilowatt-hours for $500; that would mean that at any time in the future, Mary could pay an electric bill of 500 kilowatt-hours with five of her fifty 100-kilowatt- hour notes. The utility company would have to agree to accept such payments in advance of selling energy notes. Some utilities may be willing to do so and others not. However, if there were a broad base of public support for the concept, including environmental groups and anti-nuclear groups, it would be difficult for utilities, many of whom are in financial trouble today, to refuse a reasonable proposal. PURPA legislation requires utilities to accept or buy such energy, but does not specify the terms of the sale.. . . The validity of the energy notes does not, however, rest on the agreement of the utility companies to redeem the notes. The community corporation that originally issued the notes might ultimately be the redeemer based on its cash income, which would increase as electric rates increase. The investor in energy notes could still receive 10 kilowatt-hours of value in the future for a 10- kilowatt-hour note purchase today. Redemption is one concern for the creation of an appropriate currency, liquidity is another. Assume that Stanley Graves purchased energy notes equal to 10,000 kilowatt-hours of electricity. Knowing that as a single man he only consumes about 3,000 kilowatt-hours of electricity per year, he has made an investment in his future as well as an investment in his community's self- reliance. But unexpectedly, Stanley finds he needs cash today. He might sell the energy notes to a friend, or barter them for services he needs. However, if a bank would accept the notes, it would provide Stanley with a broader base for the sale of his energy futures. It is the appropriate function of banks to be the managers of money—to deal with the question of liquidity. A local bank has an important function in the creation of a community-based currency. A local bank could buy and trade in energy notes [as] it might foreign currency or securities. The dollar value of the energy notes would fluctuate as the price of electricity increased. Another institution might be set up to provide the same function, but a bank already has the staff and processing equipment to handle the management of money. Such equipment and staff would be costly to duplicate. In order for a local bank to agree to accept energy notes, it would have to have confidence in the capability of the community corporation initiating the project. But again, broad-based public support would make it hard for the bank to resist handling the new currency. Soon other companies besides the utility might accept energy notes in payment for bills. Mary Smith might open a savings account with her extra energy notes. Before long there could be a broad local market and trade in energy notes. All [would be] traded with the confidence that ultimately this currency, at least, is redeemable for something of real value—energy that can heat the home or warm the meal or produce the light to read by. And, with the satisfaction that this energy was produced locally from renewable resources.... Still the question remains of how to capture the value gained in this trade of energy notes back within the community. It is a question of community reinvestment. Although banks are the proper managers of money— essentially dealing with accounting questions—they are not necessarily the most competent to make decisions about the lending of money. In the question of lending community capital, an ethical dimension should be at work. Social and ecological considerations should come into play as well as purely short-term financial considerations. But how is this not-for-profit dimension brought into banking? . .. Working with a local bank,... a community group could open a separate account, designating that deposits would be loaned only for specific purposes—such as providing increased community self- reliance in the areas of food, energy, housing, and essential services. [See "Investing in the Community," RAIN IX:3.] The depositors would assume all the risk. However, with demonstrated community support for the businesses receiving the loans, the chances for the success of those businesses would be very good. Although the interest rate to the depositor might initially be lower than available from money markets, in the long run the return would be higher in terms of local availability of basic items. Such a fund could begin with U.S. dollars, then gradually accept deposits of energy notes. A percentage of each loan could be made in the new currency—facilitating and expanding its circulation. .. . Of related character are plans in the Mid-Hudson Valley in New York State for a wind park [that] would sell energy notes as a means of self-financing. Sites for such a wind park have been tested over a two-year period and can be demonstrated to compare favorably with other sources of energy production available to utility companies. (This initiative, involving Mountain Power, is also further described in Section II of the Handbook.) □ □ For another example of a community currency, see "Restaurant Pioneers Means to Dreams," RAIN 1X:4, page33. March/April 1984 RAIN Page 11
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