The most common misconception about
Minneapolis Energy Options was that voter approval of such a ballot initiative
would be an automatic jump straight to the city
acquiring the power grid to form a municipal utility as if there were no steps
in between with the PUC or a feasibility study.
Even if Minneapolis’ voting
electorate had approved the ballot initiative to authorize formation of a
municipal utility, it would not have required Minneapolis to go forward with
the actual acquisition immediately or even at all.
If
Minneapolis voters had been offered the referendum and passed it then it would
have required that the City be able
to document it can pay back the municipalization bonds in a timely and cost-effective
manner without increasing long-term rates before the city could can go ahead
with acquisition. City Council Member Cam Gordon, who proposed the referendum,
made it clear he only intended for the City to be able to create a city-owned
utility if it can meet several criteria, including meeting climate change and
energy efficiency goals and increasing locally generated renewable energy. The questions in the feasibility study
includes whether this municipal utility will have the capital needed to hire
crews when needed, to manage its workers, to purchase the needed equipment, to
provide a call center for ratepayers or to offer targeted help with billing services.
From
this perspective, there was no risk in voting yes for the ballot initiative. Even
if the ballot initiative had materialized and had been successful, there was
still a chance we could have ended back up with Xcel anyway if that is what the
feasibility study were to recommend.
There is a
positive precedent for the feasibility study process that Cam Gordon was
suggesting. The City of Boulder invested $3.3 million into a feasibility study
that found that the city could get 40 percent of its electricity from wind and
solar, effective immediately, and without raising rates, if it took the
municipal utility path. Boulder’s feasibility study suggested that the city can
reduce greenhouse gas emissions by 50% through increasing renewable energy
production by more than 54%, which is far above Xcel’s targets, while reaching lower utility rates than Xcel (for residential,
commercial, and industrial sectors) with as good or better levels of system
reliability projected over an estimated 20-year span. NOTE 1
A
big debate during the heat of the Minneapolis Energy Options campaign in
mid-2013 was a question on how many bonding dollars municipalizing would cost
Minneapolis and the extent to which Minneapolis could be compared with Boulder
in that regard.
A formal feasibility
study (not to be confused with the City Council-approved Energy Pathways Study)
is the detailed
analysis that would determine the cost of buying back all the power lines,
poles and other equipment from Xcel. But as described earlier we were in a
catch 22 in getting the actual numbers people on both sides of the debate
wanted.
Only with the municipalization option approved by a vote of the
people, could Minneapolis then have standing in front of the PUC to do a formal
feasibility study and determine whether, how and under what circumstances to
pursue the option to municipalize.
The differing claims
as to the overall price tag of starting a municipal utility vary widely
depending upon whose interest is at stake. For example, the city of Boulder
estimated municipalization will cost the city about $290 million, while Xcel
came up with figures that put the payment due at about $1.2 billion; a dramatic
difference of about 4 fold. NOTE
2
Boulder’s
feasibility study found that even if Xcel’s wildly-exaggerated cost estimates
were applied, the city they could repay the bonds needed to finance a city
utility using only the revenue from electric sales – no taxpayer money – keep
rates the same or lower and reduce
power outages.
Doing
such a feasibility study for Minneapolis would be so informative for inquisitive
or skeptical voters who understandably want to replace the cloud of uncertainty
with actual numbers and figures on municipalization.
However,
doing a $2.5 million formal feasibility study would
be a waste of time and money if the city doesn't even have the legal OPTION
(from its voters) to municipalize. Why invest $2.5 million into doing a
formal feasibility study unless voters show that are at least confident of a
good outcome?
No comments:
Post a Comment