MINNEAPOLIS ENERGY OPTIONS PAVED THE WAY FOR THE CITY TO NEGOTIATE A SHORTER FRANCHISE AGREEMENT AND A CITY-UTILITY PARTNERSHIP IN 2014

    Minneapolis Energy Options campaigned for a municipal utility authorization ballot measure so the city would have a “big stick” to wield in case Xcel and Centerpoint showed resistance toward negotiating the renewed franchise agreement to be more compatible with the climate action. Having the option to municipalize was also promoted as an escape hatch the city could use to where we could take our energy future into our own hands in case the incumbent utilities did end up being intransigent.

(Here is a spoiler alert to anyone who does not yet know the ending of the story.)

The Municipal Utility Option did not materialize because City Council did not end up putting the initiative of the ballot (described in detail in a later chapter). However, Minneapolis Energy Options ended up pushing a key strategic lever. Just the mere fact the city and the campaign brought up the possibility of municipalizing proved to be powerful leverage for negotiation regardless of whether there ended up being a ballot initiative. Passing the ballot initiative would have changed Minneapolis’ franchise negotiating position with Xcel by creating the presence of another OPTION. However, just the mere presence of a big city bringing up the prospect of forming their own a municipal utility pushed the envelope for the franchise agreement renegotiation far enough to where the utilities had no room to publicly show an intransigent attitude.

Kudos to city officials who have flexed their muscle in order to open up this level of dialogue with Xcel and Centerpoint. It helped get Minneapolis into a much greater bargaining position for the 2014 franchise negotiations and a position that led to the formation of the Clean Energy Partnership.

As a matter of general principle, it is generally not advantageous to start negotiations on a multi-year contract by folding up and conceding on too many possibilities on the front end or refusing to examine key possibilities. It is common sense negotiating in the business world: Why renew a long-term contract with a service provider without doing some research and study beforehand? What is a negotiating session without the ability to walk away if a satisfactory deal can’t be reached? If you go into negotiations without the ability to walk away then it's not a negotiating session, it's a surrender.

While Minneapolis did not exactly have that municipalization option to walk away during the 2014 utility franchise negotiations, Minneapolis was able to avoid a worst-case scenario of signing another 20-year status quo franchise agreement that 1: does not guarantee helping Minneapolis to meet its greenhouse gas emissions reduction targets 2: is devoid of support for investment into localized renewable energy that would lower greenhouse gas emissions 3: offers no financial respect toward further energy efficiency incentives.

First of all, there was broad consensus on City Council that 20 years was an obscenely long amount of time for a franchise agreement given rapid rate of evolving technology.

Second of all, a middle-ground consensus gradually emerged between both Xcel and Minneapolis. The threat of municipalization gave Xcel had incentive to negotiate and sign the clean energy partnership deal and keep their market share over Minneapolis as a reward for signing onto the partnership.

What the Minneapolis Energy Options campaign accomplished by campaigning for the ballot initiative was laying the groundwork for a city-utility partnership that could very well build an impressive precedent national scene as a pilot project for other cities to follow the same suit.