THE PRIMARY MOTIVE FOR MINNEAPOLIS ENERGY OPTIONS WAS BUILDING UP LEVERAGE FOR THE CITY’S UTILITY FRANCHISE NEGOTIATIONS
Contrary to a common misconception, Minneapolis Energy Options was not intended to be a Municipalization-only campaign. Passing the Minneapolis Energy Options ballot measure in 2013 was not the end game for the overall campaign but was a powerful means to an end of achieving CLEAR (clean, local, equitable, affordable and reliable energy).
The initial messaging of Minneapolis Energy Options was that the expiration of the utility franchise agreements at the end of 2014 provided a deadline for a once in a 20-year window of opportunity to strategically apply political and public pressure on Xcel and Centerpoint.
The ballot initiative was the vehicle from which to apply the amount of political and public pressure that Xcel and Centerpoint will respond to in the negotiations for the next franchise agreement. Everyone at the time accepted the inevitability of Minneapolis negotiating a new set of utility franchise agreements because Jan 1st 2015 would not have provided enough time for any municipalization process to be complete even if there were to be a positive vote by the people on Nov 5th 2013. The best case realistic scenario was for the city to start a much shorter term 2 or 5 year franchise agreement in early 2015 that included emissions reduction, renewable energy and efficiency improvements incentives.
Here was the basic strategy in a nutshell. In order to have some leverage to negotiate more local clean energy goals into the next franchise agreement, we had to put the “do it ourselves” municipal utility option on the table in order for the utilities to take negotiating for clean energy goals seriously. The strategic goal was to get as many concessions from Xcel as possible before signing any inevitable renewed franchise agreement.
The early thought leaders of the Minneapolis Energy Options campaign came to a conclusion that only the prospect of the City forming its own municipal utility could provide the public and political leverage that will pressure Xcel and Centerpoint into offering an agreement where the utilities would ease up on their usual restrictive approach to localized clean-energy generation and lower the policy barriers to helping the city on every reasonable path to meet its greenhouse gas reduction goals.
The campaign accurately predicted than the incumbent utilities would not take very kindly or welcoming to this ballot initiative. Unlike state legislation that simply requires more renewable energy or more conservation, forming a municipal utility would be a direct hit to Xcel and Centerpoint’s market share and hence ability to earn a profit in the first place. Minneapolis is a big enough market to call both company’s ability to earn a profit in Minnesota into question. Overall the Minneapolis market alone creates 13% of the profit Xcel gets from Minnesota. Xcel’s profit rates are close to 13%, meaning that if Xcel lost its Minneapolis service territory, they would lose basically their entire profit base for the state. Therefore Minneapolis is a big enough to have leverage to shift Xcel Energy statewide. Amazingly so, it took only about 35 or so active campaigners with Minneapolis Energy Options to hold a utility company’s feet to the fire.
Of course the 35 active campaigners in Minneapolis Energy Options could not have been so effective without some inside help from the City of Minneapolis.
MINNEAPOLIS HAS GREENHOUSE GAS REDUCTION GOALS AND ITS UTILITY RELATIONS DETERMINE WHETHER THEY CAN BE FULFILLED
In mid-2013, Minneapolis provided some leverage of its own during the heat of the Minneapolis Energy Options ballot initiative campaign.
The Minneapolis City Council passed and approved the Minneapolis Climate Action Plan on June 28, 2013, the same day the public hearing for Minneapolis Energy Options was set. The climate goals Minneapolis adopted include reaching these goals by 2025, all from a 2006 baseline.
· reducing carbon emissions by 30%,
· increasing energy efficiency in commercial and industrial buildings by 20%,
· generating 10% of our electricity from renewable sources
Localized renewable energy programs are what will make up the difference between the trend of a slow decline in energy demand and actually meeting the much sharper drop in emissions the Climate Action Plan requires.
In April of 2014, Minneapolis had increased the goal to an 80% reduction by 2050 in order to match the IPCC standard. Like Minneapolis, Boulder also set a greenhouse gas emissions reduction goal in 2006. NOTE 1
The Minneapolis Climate Action plan gave leverage to Minneapolis Energy Options because it provided goals for the utilities would have to meet in order to remain in good standing with the city.
According to the Minneapolis Climate Action Plan, two-thirds of the city’s greenhouse gas emissions come from our electricity and natural gas use in buildings. NOTE 2
This fact makes utility cooperation central to whether Minneapolis can achieving its 2013 Climate Action Plan’s goalsIt is no surprise that Page 3 of The Minneapolis Climate Action Plan document identifies renegotiating of the municipal franchise agreement as a leverage point for opening more opportunity for localized renewable energy development. Likewise, the Climate Action Plan contained numerous renewable energy programs and energy efficiency strategies that Xcel Energy was not making available at the time.
NOTE 1 http://www.slideshare.net/JuliaEagles/setting-a-long-term-carbon-reduction-goal-for-minneapolis