Tuesday, January 17, 2017




The way in which Minneapolis Energy Options used municipalization as a strategy to campaign for clean energy could not have had the power it did if there had not grains of truth we could present on the multitude of benefits municipal utilities bring in general.  The very positive aspects of municipal utilities helped add an essential element of inspiration among supporters of the campaign. The municipally-owned energy utilities in major cities like Los Angeles, Sacramento, San Antonio, Austin were pointed to as role models for what Minneapolis could achieve. For example, people served by municipal utilities such as Los Angeles and Sacramento were the only ones in California that were protected from the outrageous Enron-staged rolling brown-outs and rate spike extortion.
In other words, a municipally-owned energy utility is not an exotic concept. 25 percent of US electricity is supplied by locally owned municipal utilities and co-ops.  NOTE 1  There are already 125 municipal electric utilities in Minnesota and 31 municipal gas utilities including Rochester, Moorhead and Wilmar. In fact 50 out of 87 county seats are served by a municipal electric or gas system NOTE 2

There are in fact close to 2,000 municipal utilities that are in operation across the United States. However only perhaps half a dozen of them were formed in recent years while the vast majority have been municipally owned for decades or right from the start.

NOTE 1    Everyday Socialism, American-Style, Is Happening Now Tuesday, 14 May 2013 10:44 Gar Alperovitz Chelsea Green Publishing book excerpt http://truth-out.org/news/item/16353-everyday-socialism-american-style-is-happening-now



Residential customers served by municipal-owned electric utilities pay a national average of 14 percent less in rates than their counterpart customers of corporate power companies. NOTE 1 Municipal utilities pay back roughly 25% more to their communities than investor owned utilities that have signed franchise contracts. NOTE 2  

There are structural ownership-related reasons why municipal utilities are generally more financially efficient in getting the same amount of work done at a lower cost.
Municipal utilities can obtain tax-exempt financing for capital projects. This allows municipal utilities to invest more money into grid maintenance and outage prevention which makes their service more reliable.
Knowing this, which system of utility ownership is more likely to have lower rates?
1: A municipal utility that reinvests its surplus back into the system and directs revenue to the city general fund
2: A for-profit corporate-owned utility that pays dividends to stockholders and gives only a small fraction of its revenue back to the city in franchise fees.
Because cities have no stockholders demanding returns on investment, they are in a position to pass the savings directly onto their citizens.
Under municipal power there are no right of way fees added to utility bills, no shareholders to pay dividends to, minimal overhead, no excessive lobbying presence at the state capital, and no lavish multimillion dollar per year executive bonuses to pay. In the case of Boulder, Colorado corporate-owned utilities have chosen to spend their customer payments to fighting municipal governments in courts and interfering in people’s ballot initiative campaigns.
Profits under municipal utilities go back to local or county government rather than to distant out-of-town or out-of-state investors and thus help the city or county supplement their budgets and ease pressure on property taxes.
Ashland, Oregon, has a successful example where municipal utility profits provide 30 percent of the general fund that pays for such services their basic services. NOTE 3  http://www.ashland.or.us/Page.asp?NavID=37

Here is one argument that detractors against Minneapolis Energy Options have made in light of these benefits of municipal ownership. It was to point out how these undeniably well-performing and efficient municipal utilities had been under municipal ownership for decades or since the very beginning of electrification. Then they’d say it is the process of making the switch from an investor owned to a municipal utility that would be financially detrimental. 
 However Winter Park, Florida is an example of a city which successfully converted to a municipal energy utility on June 1st 2005 after 69% of its voters voted to exercise the buy-out option against their incumbent utility on September 9th 2003. Winter Park customers have noticed that their service has more reliable and with more competitive rates to boot. Their municipal utility did take some short term losses because it had to make capital improvements that their previous investor-owned utility deferred. But it is now it is making millions of dollars in annual profit and is investing that profit into the undergrounding of power cables.
NOTE 4 (multiple sources included)


NOTE 1 Everyday Socialism, American-Style, Is Happening Now Tuesday, 14 May 2013 10:44 Gar Alperovitz

   As far as technical efficiency, municipal utilities are in fact more reliable, as measured by the average number of minutes a customer spends without power each year. NOTE 1 On average, municipal utilities have significantly fewer power outages and are quicker to get the power back on after severe weather events than Corporate-owned privatized utilities.

For instance, municipal utilities in some of the hardest-hit areas of Massachusetts after Hurricane Irene in 2011 were able to restore power in one or two days, while corporate-owned utilities like NStar and National Grid took roughly a week for some customers. NOTE 2

 One can easily say that this is because municipal utilities often maintain their grid better so there are less damages in the first place.
Why is it that city-owned energy utilities on a nationwide average basis have better-maintained infrastructure, fewer hours of outages and faster response times to disasters, and than corporate power utilities? It is because city-owned utilities naturally pay more attention to local repair concerns and have proportionally more employees on hand in the local community ready to fix outages and do basic maintenance.   NOTE 3

When ownership is close to service, then rates and service can be influenced by members of the community. This provides a muni the built-in incentive to operate in the public interest and long-term community benefit.
When a utility’s workers, policymakers and managers are part of the community they distribute power to, they have a social capital incentive to provide great service. They can’t hide behind a 1-800 number from a place far away.
A utility owned and operated under local control is more likely to offer more reliable service and resonate with local needs than a utility whose personnel and ownership is spread across a wide multi-state distance.
But in addition, no muni is an island. They have very big networks of mutual aid agreements with other municipal utilities around the region (and nationwide) that help out in the case of outages.

Knowing this, which system resonates better with the spirit of democracy, accountability and local control?
1: A state-regulated monopoly with a self-selected board of directors who are accountable primarily to stockholders and govern the utility and/or the holding company by meeting secretly behind closed doors in a distant corporate headquarters despite being overseen by a state PUC…
2: A utility commission appointed by the City Council or a board of director’s elected by the customers they serve and meets in public while inviting input?

NOTE 2 (CITATION NEEDED) http://www.nytimes.com/2013/03/14/business/energy-environment/cities-weigh-taking-electricity-business-from-private-utilities.html?pagewanted=all&_r=0 Cities Weigh Taking Over From Private Utilities

Published: March 13, 2013


    A municipal utility would employ more people than a privatized investor owned utility with good working conditions to boot.

According to an advocacy group called Massachusetts Alliance for Municipal Electric Choice, government-owned utilities on average employ more linemen per utility customers than the corporate utilities. NOTE 1

 The City of Minneapolis has a strong history of paying its employees well, and a commitment to living wages and collective bargaining.

Eliminating market barriers to municipalization placed by legalized monopolies will allow more space for localized renewable energy incentives to be realized, which will in turn stimulate the creation of additional new green jobs in installation, manufacturing, and maintenance.

As far as credentials on environmental sustainability, many larger municipal utilities are much further along on fighting climate change with local renewable energy generation than Minneapolis has been. Municipal utilities have demonstrated a superior ability to cut greenhouse gasses and be catalyst for moving their cities in a clean, renewable energy direction. For example, the Sacramento Municipal Utility District has a goal of reducing emissions by ninety percent by 2050, and has installed one hundred times more solar capacity than Minneapolis had (at the time of the Minneapolis Energy Options campaign). NOTE 1

The Municipal Utility of Austin, Texas has committed to reaching 35% renewable energy by 2020. Gainesville, Florida with a population of just 130,000 has more megawatts of solar energy installed than the entire state of Minnesota had at one point.

 Perhaps the biggest success story is with the San Antonio municipal utility. It recently completed a new 20 MW solar project (more that twice the amount of the installed solar capacity of the entire state of Minnesota in 2012) plus having the most wind capacity of any municipal utility, while maintaining the lowest electricity rates of any of the 10 largest cities in the United States.  NOTE 2


The city of Lancaster, California created a municipal utility after its school board rejected an offer from SolarCity on the claim that it was unaffordable. Since municipalization the city bought 32,094 panels, had them installed on 25 schools, generated 7.5 megawatts of power and sold the enterprise to the school district for 35 percent less than it was paying for electricity at the time. NOTE 3

Another example of a sensible investment is a wastewater-to-energy facility in California's Point Loma Treatment Plant. It serves a 450-square-mile area near San Diego. The methane produced through the treatment of wastewater process generates electricity.
On the other hand, a community’s long-term goals such as investment in energy conservation, pollution prevention, localized renewable energy deployment and local infrastructure building all have a difficult time translating into the reductionist quantitative language of corporate owned utility profit. 

NOTE 1 COMMUNITY VOICES | Minneapolis' energy future: What will our options be?

NOTE 3 (With Help From Nature, a Town Aims to Be a Solar Capital By FELICITY BARRINGER http://www.nytimes.com/2013/04/09/us/lancaster-calif-focuses-on-becoming-solar-capital-of-universe.html?pagewanted=all&_r=0  Published: April 8, 2013


The large, centralized, corporate owned utilities have resisted publicly-owned power utilities for over a century. Public power advocates were victims to the Cold war era McCarthyism. Private utilities accused them of being “socialists and communists out to destroy the American System of government”.  NOTE 1

2004/ 2008 Presidential candidate and Congressman Dennis Kucinich was one politician who has embodied populist resistance to privatization of public utilities.

When he was mayor of Cleveland, the banks who were holding city loans demanded Kucinich to sell Muny Light which would have been a contradiction to his campaign platform. Cleveland Electric Illuminating also tried to strongarm Kucinich. By all means, Cleveland managed their own utilities successfully.
Kucinich was even faced with a recall election in 1978 because he would not sell Cleveland’s municipal utility to a private company.
When Kucinich held firm and refused to sell out Muny light, the Cleveland banks that held the city loans blackmailed the city in their outrage by taking Cleveland into default and blamed it on Kucinich. This cost him his job and he lost the November 1979 mayoral election. 
The next mayor of Cleveland sold the public utilities and the rates doubled.
In 1993, a reporter for The Cleveland Plain Dealer had been investigating Mr. Kucinich's decision not to sell Muny Light, and concluded that the move in fact would have highly benefited consumers. Cleveland Electric Illuminating’s nuclear-laden energy rates were far higher than those of Muni light  NOTE 2
   This marked the revival of his political career, giving him a powerful resurrecting campaign message. With a light bulb as his logo and the slogan "Because he was right," Mr. Kucinich won election to the Ohio state Senate in 1994 and the United States House of Representatives in 1996 serving for 16 years.

NOTE 1 The Last Energy War: The Battle Over Utility Deregulation

 By Harvey Wasserman (p31)
NOTE 2 http://work.colum.edu/~amiller/nyt-kucinich.htm January 2, 2004

Past Defeat and Personal Quest Shape Long-Shot Kucinich Bid