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 goals. It 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
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