XCEL’S LETTER TO MINNEAPOLIS CUSTOMERS
Meanwhile, this same week of July 22nd Xcel sent mass-mailing of a letter to all 183,000 of its Minneapolis ratepayers. NOTE 1
Xcel’s letter characterized the proposed resolution as an attempt to "take over" the local electric and gas utility systems by using that terminology repeatedly. People who already understood the story behind Minneapolis Energy Options probably found it hysterical to hear Xcel Energy complaining about how horrible it is that the city was even considering doing this and interpreted the letter as a "Please allow our inefficient monopoly continue to fleece you" ordeal.
However the letter accomplished its goal in using a mixture of valid but incomplete information to alarm customers who had either not heard the Minneapolis Energy Options message.
The letter stated, “The Aug. 1 public hearing followed by a vote by city residents are the only steps involving the public necessary for the city to create the municipal utility” without making mention of a feasibility study being done by the PUC that would find out whether the city’s residents and businesses would in fact have to “spend billions of dollars to acquire the property of Xcel Energy within the city” and whether the city can feasibly “set prices and policies and provide all customer service, maintenance, and storm and emergency response activities.” NOTE 1
As a result, constituents who were sensitive to “The city is trying to take over! Taxes will go up!” type messages must have made a number of stern phone calls to their City Council members and swayed the vote of council members had considered voting yes to put the initiative on the ballot.
Even if Xcel’s letter stopped any momentum toward a ballot initiative materializing, it inadvertently helped Minneapolis Energy Options by making the campaign into a big deal. Xcel’s letter helped Minneapolis Energy Options reach people we had not yet reached before which made it easier for us to talk about the issue.
In contrast to Xcel, Minneapolis Energy Options didn’t have that kind of mass-mailing capacity. But some organizers for the campaign went door-knocking the day after most people received the letters. A lot of people we encountered had confusion about what was going on and what the letter meant. There were some people who hadn’t talked with Minneapolis Energy Options before called the campaign up and asked “how can I help?”
A PUSH POLL GIVES CANDIDATES POLITICAL COVER TO COME OUT AGAINST THE RESOLUTION
On July 23rd, the same day people were first reading the letter from Xcel, the Star Tribune published an article on the results of a push poll on the issue. The push poll done by the downtown chamber using Xcel’s message framing. As a result the newspaper ran with the headline that 2/3 of likely voters oppose the “city takeover” of utilities.
This poll number was a far cry from the unanimous support at DFL precinct caucuses and the 60% plus support at the DFL convention, particularly given that Minneapolis voters overall are overwhelmingly DFL to begin with. The Minneapolis Energy Options resolution was quite popular when the campaign was free to promote and frame the issue as we would like. At these times when the campaign had control of the narrative, it was easy to dismiss a no vote as anti-green, anti-energy conservation and anti-local control.
Nevertheless, the result of that push poll created an expectation that the ballot measure could not win and hence provided political ground for some leading mayoral candidates to publicly state opposition to putting the resolution on the ballot.
An example was how Mayoral Candidate Jackie Cherryhomes sent out a mass email on July 31st using that very same reasoning:
“Two-thirds of Minneapolis voters oppose the city's efforts to create city-run utilities, according to a recent poll conducted by the Minneapolis Regional Chamber of Commerce. Yesterday, I issued a press release supporting the majority of Minneapolitans in opposing the city's efforts to take over gas and electric services. Spending our borrowing and tax capacities on buying private infrastructure would cost the city bonding and investment capital we need for our streets, alleys and bridges.”
Exactly like Xcel’s mass mailed letter, Cherryhomes was opposing the idea of municipalization without making any mention of Minneapolis Energy Options. She sidestepped deriding the campaign by charactering municipalization as an effort by the city.
No other candidate statements received as much attention as that of Mark Andrew who came the closest to winning the DFL endorsement. In his speech at the DFL convention speech, Mayoral Candidate Mark Andrew stated, "I strongly support the environmental principals and goals of Minneapolis Energy Options—always have, always will." However the push poll gave Mark Andrew the standing to make this statement at a press conference “It’s reckless and irresponsible to put something on the ballot that win or lose is going to dramatically set back the mayor’s ability to strike a deal on the franchise agreement next year or the year after... You can’t go into a discussion in a toxic atmosphere and having this ballot initiative on the ballot accomplishes that and nothing else." The Star Tribune article noted that Andrew adding “that the city would spend millions on legal studies if the initiative were to pass.”
NOTE 2Perhaps Mark Andrew was correct in both of his assessments, but only because Minneapolis Energy Options lost control of the narrative between the DFL convention and late July. Because Xcel did not want the municipalization path to even be looked into for Minneapolis they could not paint Minneapolis Energy Options as being reasonable. Xcel and the rest (perhaps intentionally) mis-charachterized the proposed ballot initiative as if it would have been a jump straight to municipal utility and shouted that through the media megaphone in hopes that the lesser informed people would not notice the “feasibility study” stages in between. Lesser informed refers to people who have not yet been reached by the campaign or showed interest before that point.
When the weeds and the process of going though municipalization became the issue instead of the fantastic possibilities Minneapolis could do with energy, it gave Xcel an easy path to kick up a cloud of fear by emphasizing the cost of redoing substation arrangements which serve areas that cross city boundaries. In the words of Xcel regional Vice President Laura McCarten: "We don't build our electric grid by city boundaries. If you're going to separate out and build your own utility company, it's difficult because it's an interconnected grid throughout the region. You'd have to break it apart and put it back together in a different way." NOTE 3Perhaps that was an accurate statement, but it was a far cry from the narrative of what initially inspired the Minneapolis Energy Options campaign.
It was more than losing control of the narrative though the media megaphone that signaled Minneapolis Energy Options could probably not win a Boulder-like campaign against Xcel.
This window of time after the DFL Convention and before the public hearing made it clear that Minneapolis Energy Options had an unequal playing field in terms of campaign finance. While the incumbent utilities are free to spend millions our ratepayer dollars campaigning against Minneapolis Energy Options if they choose to do so, there are all sorts of legal restrictions and red tape against local governments spending tax revenues on campaigns. Therefore the funding for the Minneapolis Energy Options campaign was reliant on private sponsors or PACs contributing. In this way the Minneapolis Energy Options campaign got stuck in a catch 22. The potential big funders were waiting until they were certain Minneapolis Energy Options would be on the ballot before they opened up their wallets. But without big donations, we were left without the campaign war chest we needed to convince City Council or candidates for mayor that we were substantial enough of a campaign to win a ballot initiative in just 3 months.
NOTE 1 http://www.startribune.com/local/blogs/216845251.html?uccb=1374715659440&cr=1 Two-thirds of voters oppose utility ballot question, chamber says
Posted by: Maya Rao under Politics and government Updated: July 24, 2013 - 7:09 PM
NOTE 2 Mpls. mayoral candidate Mark Andrew slams vote on city-owned utility
Posted by: Eric Roper Updated: July 29, 2013 - 6:04 PM http://www.startribune.com/local/blogs/217438851.html
NOTE 3 NOTE 2 Minneapolis urged to study city-owned utilities, replacing Xcel and CenterPoint
By David Hanners
email@example.com POSTED: 06/21/2013 12:01:00 AM CDT
firstname.lastname@example.org POSTED: 06/21/2013 12:01:00 AM CDT
XCEL WAS UNCOMFORATBLE WITH OTHER OPTIONS BEING LOOKED INTO
The drama with Xcel peaked the Friday after the mass mailing of the letter when the front page Star Tribune showed an article about Xcel CEO Ben Fowke threatening to move the company headquarters out of Minneapolis if the referendum was successful. Any movement that makes a fortune 500 CEO make statements out of anger in front of newspaper reporters must have really hit a nerve. They chose to make the Minneapolis Energy Options resolution into a politically volatile issue when it did not necessarily have to be.
Here is another perspective of the utility franchise agreement expiration. When a business contract comes close to expiring, a reasonable business person can hardly disagree with looking into some other bids before signing off on multiple more years of the same contract. The same reasoning was carried over to the expiration of Minneapolis’ utility franchise agreements to the extent which state law allowed it to be. Energy is a significant cost of doing business and Xcel's rates had been rising on a continual basis. So therefore the business community in Minneapolis had a stake in at least considering alternative arrangements.
By all means NSP/Xcel was clearly fearful about possibly losing market share to a competing energy management that could more cost-effectively meet local energy goals. In business terms, the incumbent utilities are worried about a competing energy management getting the chance to underbid them in selling energy to communities. They do not want a scenario where local communities can set a precedent of developing much cleaner and more affordable energy system than the incumbent utilities can.
Xcel’s brief but stomping scare campaign against having a ballot initiative was a move to prevent alternative bids from even being looked at. Municipal utility just happened to be the only alternative bid that state law laid out an explicit path for.If the incumbent utility interests were so confident that they had the best possible energy management, then why would they be afraid of having the ballot initiative which would result in the PUC doing a feasibility study?
The manner in which Xcel become so afraid of even having this other option looked into, fueled suspicion among to campaign supporters that they might have had some big weakness or inefficiency to hide. Otherwise, why didn’t Xcel approach the Minneapolis Energy Options resolution with a message of "By all means check it out, feel free to look into municipalization or any other competing bid options because we are confident the numbers will show we will provide the best available offering.”?
But in opposing the opportunity for Minneapolis to even vote on the resolution, they were essentially being unwelcome of a feasibility study being done. Yes most of the ire that Xcel spokespeople expressed was against the municipal utility idea while the feasibility study hardly even got a mention.It would be quite odd for Xcel to bring attention against doing an independent study whose whole purpose is to detect any unintended consequences before actually moving ahead with any policy change on municipalization.
But since the ballot initiative would require a feasibility study long before requiring formation of a municipal utility, Xcel’s opposition to having the ballot initiative at least indicated an ulterior motive of not even wanting this to be looked into. Perhaps they were afraid that the results of a feasibility study would have shown municipal power as the better option for the city (minus having to pay for lost revenue). Xcel must have had a real concern to be rolling out so many stooges for a scare campaign.
The takeaway message of Xcel’s scare campaign was that that buying back the grid would cost 'billions and billions' of dollars for Minneapolis. The only way we could find out if they were telling the truth or exaggerating the cost estimates for self-serving purposes was for independent analysts to do the feasibility study to find out what the real numbers actually are. Opinions vary on the quality of the power grid, because of the imperfect information available. If the electric grid truly has become decrepit and in need of a lot of repair, then it actually isn’t worth near as much as Xcel warned and would not cost Minneapolis very much to buy. It would be like buying and fixing up a damaged house where the main expense comes from spending on the repairs rather than the acquisition of the property itself. Perhaps that is the information Xcel did not want the city to find out about.
Perhaps Xcel was genuine in their convictions that a municipal utility would genuinely be a bad path for the city and wanted to prevent people’s time and energy from being wasted on efforts to get data about it. However, this was not the only way Xcel was trying to block access to data during the heat of the Minneapolis Energy Options campaign. The City of Minneapolis had recently adopted the building energy disclosure ordinance to lay the groundwork for energy efficiency projects. Xcel Energy responded to it by pushing the Public Utilities Commission to adopt such a restrictive set of “data privacy” policies that would undermine the ordinance. NOTE 1
An argument can be made against the feasibility study on the grounds that it would cost between 2 and 3 million dollars. However because Minneapolis’ energy use over the next several years is in the league of billions of dollars, it is justified to spend a few million to find out some very good information that can lead to a way to save, and diversify our energy sources for tomorrow. The process of asking and getting some answers is valuable. In general, the more information, number and figures that will be brought into the light the more bargaining chips the city could have in its franchise negotiations. It was the validity of these principles that encouraged the City of Minneapolis to commission its own Energy Pathways Study that was 1/ 10th as expensive. That provided a fallback option to holding the ballot initiative in anticipation of doing a formal feasibility study.
COMMUNITY VOICES | Minneapolis' energy future: What will our options be?
July 26, 2013 http://www.tcdailyplanet.net/news/2013/07/26/community-voices-minneapolis-energy-future-what-will-our-options-be
NOT ALL WAS WELL ON THE XCEL FRONT
Minneapolis Energy Options ballot initiative campaign was a hot topic of Media coverage June-August, though it was not always right kind of coverage.
Minneapolis Energy Options and the City of Minneapolis received a great deal of ridicule in the online comments sections of relevant Star Tribune articles on steps taken toward a municipal utility. The Star Tribune Editorial board also gave a more respectable thumbs down to the idea of a municipal utility for Minneapolis in the month leading up to the public hearing. However, not all of the news and Star Tribune articles were rosy on the Xcel front either. Xcel was getting some negative press and online comments of their own.
On July 8th, 2013 Xcel Energy filed a study with the Minnesota Public Utilities Commission where they chose not to plan retiring the old and polluting Sherco coal Generating Station Units 1 and 2. Xcel announced their intent to instead invest $50 million to reduce Sherco’s emissions of nitrogen oxides 44 percent and sulfur dioxide by 56 percent. NOTE 1 But that decision to sink more capital into Sherco offered little reprieve from a global climate standpoint because Units 1 and 2 of Xcel’s Sherco power plant are the state’s largest Greenhouse Gas emitters. This helped rally the ire of climate movement to challenge Xcel.
Another somewhat negative though not unexpected press story came out about Xcel that same day on July 8th, 2013. An administrative law judge ruled to limit Xcel Energy's electricity rate hike request to 4.7 percent or $127 million. That amounted to less than half of the original $285 million (or 10.7 percent) Xcel proposed in late 2012. It was not helpful to Xcel’s image to have state officials be so skeptical of the merits of Xcel’s rate hike request.
The state Department of Commerce recommended an even lower $99 million rate increase, saying Xcel should cut millions of dollars in bonuses for executives and flights on corporate jets. Between 2009 and 2013, Xcel Energy had spent over $1.2 million of its ratepayer dollars to fly its executives between Minneapolis and Denver on their private jet. NOTE 2
In addition, the total pay of Xcel CEO Ben Fowke went from 9.7 Million in 2011 to $11 million in 2012 to $15.7 Million in 2013. NOTE 3 It was also leaked to the press that Xcel officials defended the overhead and said the high compensation “helps attract top talent.” NOTE 4
I recall people in the campaign hearing this “helps attract top talent” statement and considering it an expression of entitlement mentality for huge executive compensation.
A week after a judge’s ruling on Xcel’s rate hike request, on 7-15-2013, the Star Tribune reported a much more damaging and unexpected news item about Xcel. The Star Tribune reported Xcel announced their recently completed upgrades to extend the 47 year old Monticello nuclear plant for another 20 years had cost overruns of $320,000,000 over budget; twice as much as originally budgeted. NOTE 5 To put matters in perspective, this is a mistake equivalent to costing $500 for every Minnesota customer.
According to the article, documents showed they knew about the cost overruns as early as December 2010. Xcel used a state law to classify its latest cost-overrun estimate as a “trade secret” despite the previous estimate being submitted to state regulators in January.
Xcel spokeswoman Mary Sandok said in an e-mail that the utility needed to keep secret the amount of the latest overrun estimate because it didn’t want project vendors to “know how much contingency was built into the budget,” thus giving them an edge in negotiations over final bills. NOTE 5
The article left the reader with the conclusion that utility officials declined to answer questions about the cost overruns presumably because they thought it would be inappropriate to comment while state regulators were considering a rate hike request.
NOTE 1 Xcel Energy Inc : Xcel Energy study examines future of Sherco Units 1 and 2
07/08/2013 | 12:47pm
NOTE 3 http://www.bizjournals.com/twincities/news/2014/04/08/xcel-boosts-ceo-ben-fowke-pay-retention-award-2013.html Xcel boosts CEO's pay with retention award Apr 8, 2014, 10:45am CDT Jim Hammerand
NOTE 4 Xcel rate hike rebuffed by judge by Elizabeth Dunbar, Minnesota Public Radio
NOTE 5 http://www.startribune.com/business/215458431.html Monticello nuclear plant repairs surge
· Article by: DAVID SHAFFER , Star Tribune
· Updated: July 15, 2013 - 10:49 AM