THE OPTION TO AUTHORIZE FORMATION OF A MUNICIPAL UTILITY- A NEW STRATEGY TO ACHIEVE CLEAN ENERGY WINS, INSPIRED BY BOULDER COLORADO

THE OPTION TO AUTHORIZE FORMATION OF A MUNICIPAL UTILITY

So given the above situation, what sort of negotiating strategy would the utilities take seriously? The early steering committee decided the only viable option for using Minneapolis’ upcoming franchise renegotiations as leverage was to put the option to form a municipal utility on the table. The early thought leaders behind Minneapolis Energy Options found out that municipal utility was the only path Minnesota State law clearly laid for a city to take besides signing whatever franchise agreement that the incumbent utilities will agree to.

John Farrell, who eventually became the chair of the Minneapolis Energy Options steering committee, had been researching the topic for years and is frequently asked to speak on behalf of many of the cities about energy municipalization.  

In addition, City Council Member Cam Gordon had been interested in municipal power since he first ran for City Council in 2001. He gave Timothy DHT a very detailed guidebook he had on strategies to pursue municipalization and the typical counter offensive tactics the incumbent utilities use to try to stop it. Leslie Glustrom, who was very involved with the Clean Energy Now campaign in Colorado, told the early steering committee the story about Boulder’s activity pursuing muncipalization.

The rest of the early steering committee found out there are municipal utilities around the nation who have been doing a lot of cool stuff. In general their rates are 14% cheaper and have less power outage time than corporate owned utilities and are more sustainable, clean/efficient and /”smart” at least in big cities. For example the Municipal Utility of Austin, Texas has committed to reaching 35% renewable energy by 2020.

In addition there are close to 2,000 municipal utilities that are in operation across the United States with 125 Municipal electric utilities in Minnesota and 31 municipal gas utilities including Rochester, Moorhead and Wilmar. NOTE 1 (See addendum on why Muni is better in theory for more)

   

They determined Municipalization as an investment for Minneapolis would at minimum cost not very much short of billion dollars in bonding.

Yes it is a substantial investment, but we figured the investment would be spread out over the course 20 years and could pay off since city residents and businesses were already paying $450 billion and rising annually to Xcel and Centerpoint.

 Nevertheless, municipalization was still really exciting and worth researching and exploring because it presents a threat to Xcel and Centerpoint and a point of leverage to have them take negotiating clean energy goals seriously. If we put the option on the table then Xcel and Centerpoint would have an incentive to take us seriously.

NOTE 1 (http://mmua.org/about/why.htm )

THE PUBLIC PROCESS FOR FORMING A MUNICIPAL UTILITY SETS UP A CATCH 22

About June of 2012, the early steering committee was looking into the public process that has to happen under Minnesota state law MN to form a municipal-owned utility.

Minnesota state law says a city or town has to stay with their incumbent energy utility unless its residents vote yes on a council-approved ballot initiative to authorize formation of their own municipal utility. Even if Minneapolis refused to sign a contract with Xcel to operate in the city, Xcel could easily argue in court how state law requires them to serve their current customer base so therefore Minneapolis has to allow them to operate. On the other hand Minneapolis (among other Minnesota cites) has full legal authority under State Statute 216 B to offer their voters a municipal ballot initiative to authorize formation of a municipal utility and to pursue forming a municipal utility if the voters approve.

It is quite a lengthy process. First, the City Council has to give a notice to hold a public hearing on the issue at least 30 days in advance of the hearing. At this public hearing anyone can give comment to say if city residents should be given the option to vote on a ballot initiative to authorize formation of a municipal utility. Following the public hearing, city council has to vote in favor of putting such an initiative on the ballot and even offering their constituents the choice in the first place. This vote has to happen at least 60 days in advance of Election Day. Then on Election Day, voters could say yes or no to a ballot initiative that gives the city the authority to form a municipal utility but DOES NOT require it. Only after this ballot initiative passes could a city have standing to do a feasibility study in front of the PUC to find out the numbers of how much it would cost the city to purchase the electrical infrastructure currently owned by Xcel.

A key strategy which incumbent investor-owned utilities typically use to beat such ballot initiatives is to make claims as if the municipalization ballot initiative REQUIRES the city to form a municipal utility. There is in fact a whole handbook utilities use on how to prevent cities from forming municipal utilities which Minneapolis Energy Options and other communities had access to.

Here is why this process for forming a municipal utility is laid in in a way that gives the incumbent utilities free range to employ their usual tactics and strategies for getting people to vote no on such a ballot initiative.

A city be only allowed to attend PUC meetings and figure out the actual numbers how much forming a municipal utility would cost only after its public votes yes on the ballot initiative. Passing the ballot initiative would give the City standing in Until that point then the incumbent utility has room to misleadingly claim “not only does a YES vote mean you are required to municipalize but it will be billions and billions of dollars based on our numbers.”

Jumping ahead a bit in the story, one of the main critiques of the Minneapolis Energy Options resolution was that it was backwards to vote to authorize municipalization before the numbers were crunched and before voters could have some numerical figures from which to make an educated vote. Although it does sound instinctually backwards to vote on authorization of municipal utility before a formal feasibility study is done, that is the process we have to follow according to Minnesota state statutes in 216 B. Overall, it was not an idea from Minneapolis Energy Options or the City of Minneapolis to put the proverbial cart before the horse.

Whether or not it was intentional, state law is set up to make the process of municipalization and similar big changes VERY complex and difficult to accomplish. It sets up a catch 22 where a city has to pass the ballot initiative in order to have standing at the PUC to get the numbers. Opponents of the would-be ballot initiative among the public could claim that the city is uninformed because it hasn’t done the research yet, however the city couldn’t do the needed research until the ballot initiative gets a city-wide yes vote! Doing such a campaign is like threading a needle: you have to get it perfect or it won’t work.

In addition, a city that wants to municipalize would then have to go through a long and complex legal process with the PUC just to get the numbers on what it would cost.

Otherwise the only information you can get about the cost of municipalization is from the utilities who wildly inflate the costs out for their self-interest over market share. As for Xcel’s operation in Minneapolis, there is nothing to compare it to so it is hard to come up with data. This whole set up gives the incumbent utilities the opening they need in order to do a scaremongering hit job as to how much going muni will cost.

A NEW STRATEGY TO ACHIEVE CLEAN ENERGY WINS

The early steering committee came to terms with the daunting nature of this process for putting the municipal utility option on the table. But decided we needed to do it and take the opportunity.

Upon the knowledge of the process, Minneapolis Energy Options started laying the groundwork for a campaign for such a ballot measure that would simply authorize the city to begin exploring a municipal utility as an option. Simply stated, it would have given the City the option but not requirement of forming a Municipal utility.

There was a brief moment where Minneapolis Energy Options considered putting the initiative on the ballot in 2012 but quickly determined that was a very bad idea because: 1) The issue was too unfamiliar with City Council. 2) We had no coalition among the public who had heard of the issue. 3) There were already two very big VOTE NO campaigns against Constitutional Amendments and they would have had a hard time undoing confusion among voters if we injected a “Vote Yes” ballot initiative 4) All of the support networks of organizers we needed like MPIRG were busy with the 2012 election and could not have given a lot of muscle to this campaign 5) 2013 was a City Council election year and it was strategic to could couple the municipal energy issue with the municipal elections… 6) Waiting until late 2012 to announce the campaign would give the utilities minimum time to prepare a backlash campaign 7) Waiting until after the 2012 election gave us more time to build $70,000 in financial resources for 2013. The funders behind the campaign were not interested in Minneapolis forming its own municipal utility but funded the upcoming campaign to use the threat of municipalization as leverage.   

As a result, we used 2012 to quietly build up a network of coalition partners sharing about our new strategy (as described in a previous chapter).

Minneapolis Energy Options brought about a strategy that was quite new to organizers and funders: to use threat of municipalization and franchise agreements negotiations to achieve clean energy wins.

The dominant strategy for creating change in our energy system has been “get legislation at the state level that tells the utilities they have to do it”. But we know from experience there are limits on how much the familiar strategy can accomplish because of likely gridlock and the requirements upon utilities not being specific enough.

Almost all the way across the board the result of this typical strategy is that the clean energy requirements are achieved but incumbent utility management is left with a great deal of control to determine the specifics about how to accomplish them. This usually results in giant wind farms whose cost the utilities they get to build into their rate base. Giant wind farms are part of the solution. The main issue of contention is that incumbent utility management has been oppositional to provisions on decentralization, and locally-based, small-scale generation that are also part of the solution and have inspired Minneapolis Energy Options thought leaders like John Farrell.

Some energy policy organizations have spent the last 2-4 decades of using state regulations to push energy utilities were less than thrilled about this new strategy of considering municipalization. A City of Minneapolis Municipal utility would be out of the control of state regulation and hence throw a wrench into the familiar strategy. This is why many funders were skeptical and why Minneapolis Energy Options could not secure some environmental/ energy groups as coalition partners. It was a disruptive strategy indeed. But the point of Minneapolis Energy Options was disruption because the current system was not working. We needed to change the power dynamic to achieve the long-held goals.

BOULDER COLORADO SETS AN INSPIRING PRECEDENT FOR THE CAMPAIGN

In 2013, Minneapolis Energy Options campaigned for getting this ballot initiative in order to provide a signal that a significant constituency within the city was not content with a status quo that combined yearly utility rate hikes with continued dependence upon dirty energy.

The spirit of Minneapolis Energy Options was not about exploring a municipal utility just for the sake of municipal ownership. It was about to be pursuing the option to municipalize for purposes of CLEAR, the acronym Minneapolis Energy Options invented for how we want our energy to be “Clean, Localized, Equitable Affordable, and Reliable.”

For that reason, the 2011 success of two similar pro-municipal utility ballot measures in Boulder Colorado has provided a main source of inspiration and precedent to Minneapolis Energy Options.

Boulder, Colorado is the first city to authorize a municipal utility for the specific purpose of increasing clean energy to meet climate emissions reduction goals. Boulder is home to the National Renewable Energy Laboratory. It is also a city with an abundance of climate and environmental scientists and energy experts who were practically volunteering to carry out feasibility studies and to educate the community about Boulder’s energy pathways.

Like Minneapolis, Boulder Colorado also had a franchise agreement with Xcel: one which expired in 2010. According to the Colorado Constitution, the renewal of the franchise agreement had to go to the voters.

Xcel first offered a win-win deal of selling Boulder a wind farm in the years up to 2010. But then Xcel reneged on that offer and instead insisted on a status quo franchise agreement ballot initiative.

In protest, the City of Boulder put two initiatives on the ballot.

The first ballot initiative gave the city the authorization to pursue municipalization, so long as the city could prove they have the capability of providing electricity with the same reliability and at a cost not higher than Xcel. The second ballot initiative was intended to raise the consultant and legal fees anticipated for the municipalization process. NOTE 1

On Election Day 2011, the voters of Boulder narrowly passed both ballot initiatives despite the campaign being outspent 10 to 1 by the Xcel-led opposition.

It provided inspiration and confidence to the Minneapolis Energy Options campaign to see how those campaigning for the ballot measures could spend only about $107,000 to win a campaign against Xcel spending nearly $961,000 to defeat the measures.  NOTE 1

However that story provided confidence with a caution. The poll numbers in support of the ballot initiatives were at a lofty 70% before the Xcel-led opposition succeeded in narrowing down the voter support to just barely above 50%.

NOTE 1 Boulder Likely to Adopt Its Own Green Utility—and Risks of Going Solo  http://insideclimatenews.org/news/20130120/clean-energy-renewable-energy-climate-change-global-warming-boulder-municipalization-xcel-energy-coal-germany  By Maria Gallucci, InsideClimate News  Jan 23, 2013)

THE EXPIRATION OF MINNEAPOLIS UTILITY FRANCHISE AGREEMENTS IS THE REASON WHY THE MINNEAPOLIS ENERGY OPTIONS CAMPAIGN LAUNCHED WHEN IT DID

   Minneapolis Energy Options was formed when it’s early thought leaders first learned that the City of Minneapolis’ had 20 year-long franchise agreements with Xcel and Centerpoint that were set to expire at the end of 2014. The franchise agreements give Xcel and Centerpoint the public right of way to construct and maintain electricity/ gas distribution facilities throughout the city. Utility franchise contracts govern the use of city property in delivering electricity and gas to the city homes and businesses. Usually for most cities, these contacts are negotiated in obscurity with little fanfare, were largely administrative rather than visionary in focus and resulted in little more than reaffirming the status quo for another round. But because of Minneapolis Energy Options, the City of Minneapolis was destined to approach their upcoming utility franchise agreement renewal a bit differently.

     Ross Abbey (who was a Policy Associate with Fresh Energy and is now staff with SunShare) had access to the franchise agreement expiration information as chair of Minneapolis’ Community Environmental Advisory Committee. In the autumn of 2011, Ross Abbey notified Timothy DenHerder Thomas that the city’s utility franchise agreements with both Xcel and Centerpoint were expiring at the end of 2014. Ross Abbey recognized Timothy as someone who was doing a lot of community organizing around energy and so he asked Timothy if there was anything we should do in regard to the franchise agreement expiring.

            Timothy DHT then passed the question about if this is worth organizing around onto Louis Alemaheyu (at the time with Environmental Justice Advocates of MN) and George Crocker (Director of the North American Water Office). George Crocker has been thought leader on innovating energy utilities for quite some time having done work on the issue dating back to the power line fight in late 70s early 80s in Western MN. (This story is detailed in the book Powerlines the first battle in energy history). Louis Alemaheyu was deeply involved in the environmental justice component of Minneapolis Climate Action Plan so he knew the city process well enough to determine if the franchise agreement issue was worth organizing around. This led to the November 2011 meeting in Louis’ living room where Minneapolis Energy Options was born.

            The meeting concluded that even though there was a lot of great planning for climate policy action happening around Minneapolis, the city can’t accomplish substantial goals if the management of Xcel and Centerpoint stand in the way. In addition, the utility franchise agreements helped cement the status of Xcel Energy and Centerpoint Energy as regulated monopolies within the city. Therefore the expiration of the franchise agreements thereby also presented itself as a brief once in 20-year window of opportunity for expiring the form of monopoly control over energy that had long frustrated the early thought leaders of Minneapolis Energy Options. The expiration of the franchise agreement presented itself as a powerful opportunity for some leverage to move Xcel and Centerpoint in the direction of meeting the city’s climate goals. The original plan of Minneapolis Energy Options all along has been to turn a usually mundane administrative and obscure franchise contract renewal into a leverage point for an overall agenda of clean, affordable, reliable energy with more local control over our energy future. The Minneapolis Energy Options campaign was formed to take advantage of that opportunity. The objective was to get the City Council to carefully consider, research, explore and negotiate alternatives to passively letting the city renew the same contracts with the same companies.

            In December of 2011, Timothy, George, and Louis set up a meeting with City Council member Cam Gordon and his policy staff Robin Garwood to have a discussion about how we can use this franchise agreement expiration to make Minneapolis a leader on meeting climate action goals.

Both Cam Gordon and Robin Garwood had independently heard from John Farrell with Institute for Local Self-Reliance and Ken Bradley (with Environment Minnesota at the time) about the franchise agreement expiring and what should be done about it. John Farrell and Ken Bradley quickly joined in with Timothy, Louis, George and Robin to form the early core of what would become the Minneapolis Energy Options steering committee. In January 2012, this early steering committee met with Cam Gordon and some staff from the political advocacy organization MPIRG and held a series of meetings initially about how to negotiate a new and broader franchise agreement with both Xcel and Centerpoint.

STATE LAW SETS ONLY A NARROW SCOPE FOR WHAT CITIES CAN NEGOTIATE IN UTILITY FRANCHISE AGREEMENTS

After just 3 months, this early steering committee found out the extent the deck was stacked against cities taking advantage of the negotiating opportunity Minneapolis Energy Options had envisioned. MN State law doesn’t say anything about a city’s clean energy goals, or local job creation being items for negotiation in utility franchise agreement. Items identified for negotiation in utility franchise agreements are in the more mundane and administrative realm of management, notices, rates, and liabilities.

Individual cities have limited legal power to do much else because a utility franchise agreement is more of a construct of state law rather than a pure contract between a city and a utility company.

It is also a construct of state law rather than city ordinance that gives Xcel Energy has the exclusive right to sell electricity in Minneapolis. It was the Minnesota Public Utilities Act of 1974 that allowed utilities to have exclusive control over designated service territories as regulated monopolies. This situation where for-profit electric companies had exclusive monopoly rights was considered to be in the public interest because of their subservience to the state body known as the Minnesota Public Utilities Commission (PUC). The PUC is given the final say on setting the rates utilities charge their customers, approving infrastructure utilities want to build as in the public interests, and guiding how the utility is going to meet energy demand. In return, the PUC approves rates in a way that guarantees Xcel a 10%- 12% rate of return give or take. Because Xcel Energy has exclusive rights to provide all the electricity used in Minneapolis it is the only entity that can legally sell electricity to Minneapolis residents and businesses.

Given that we have to work in the range of regulated monopoly, how does state law identify what considerations can be negotiated in utility franchise agreements? As things stand, cities have less power than the Public Utilities Commission to negotiate with utilities for the proportion of renewable energy added to their mix. MN statute 216 B.36 states that no city can pick their fuels or transmission delivery system. Without changes in state legislation, a city council can’t for example go straight to Xcel and require with accountability that they provide 10 % of our energy from anaerobic digesters and solar arrangements next to substations. The window that current state law does allow for is a city to negotiate how much Xcel pays them for right of way use.

According to Ward 8 City Council Member Elizabeth Glidden, who chaired the Council’s Regulatory, Energy and Environment Committee in 2013 “State law tells us you can talk to Xcel about how much they pay [Minneapolis] for right-of-way use, but we can’t under state law have a discussion with Xcel [asking], ‘Well, we want you to provide 10 percent of our energy with clean, renewable sources,’” explained.  NOTE 1

Via the city’s two franchise agreements, Xcel and Centerpoint pay the City of Minneapolis between $26,000,000- $29,000,000 (and rising) annually in exchange for that right of way. The City of Minneapolis indeed receives this rising $26-29 million dollars EVERY YEAR from Minneapolis utility customers paying a 5% franchise fee on each of our utility bills.

 The amount of franchise fees is the only leverage a city council has have under state law to negotiate in their utility franchise agreements. What advances toward larger goals could using this sort of leverage actually accomplish?

 This franchise fee money doesn't come at the expense of Xcel or CenterPoint's shareholders. It’s all just a pass-through. So if the city negotiates a higher franchise fee, then Xcel will just pass these higher franchise fee costs onto the electric bills or city ratepayers. Under these most restrictive of circumstances, the lofty principle of a city having more leverage in franchise negotiations would be equated with charging ratepayers with higher electric and/or gas bills. Then the whole concept could be dismissed by critics as just a way for the revenue hungry city to skim more than $24 million dollars from its citizens each year.

Under that set up, there is no clear reason why Xcel or Centerpoint would take seriously the negotiations Minnepolis Energy Options had in mind. There would be no real threat for the utilities to just say no to such friendly negotiations. The utility spokespeople are very skilled at saying no in a polite way. An example would be, “We would love to do this for you but the PUC won’t let us”.

NOTE 1

Minneapolis to study city-run utilities

April 16, 2013 BY: DYLAN THOMAS

THE MINNEAPOLIS ENERGY OPTIONS COALITION BEGAN WITH A VISION OF USING OUR DOLLARS WE PAY ON UTILITY BILLS TO BUILD A LOCAL RENEWABLE ENERGY FUTURE

In 2012 the early thought leaders behind Minneapolis Energy Options were busy building a loose coalition with pre-existing grassroots organizations who shared a vision of more localized renewable energy and democratic control over our energy system. These coalition partners include Environment Minnesota, Environmental Justice Advocates of Minnesota, the Sierra Club North Star Chapter, the Institute for Local Self Reliance, Grand Aspirations, Minnesota Public Interest Research Group, Neighborhoods Organizing for Change, Minnesota Youth Environmental Network, Mn350, ICP Green, Minnesota Renewable Energy Society, the North American Water Office and the Will Steger Foundation.

These are mainly environmental sustainability organizations that also incorporate aspects of labor, economic justice and neighborhood community building. Active participants and workers for these organizations looked toward Minneapolis Energy Options with excitement because the emerging group laid out a strategic opportunity to spark a long-overdue public conversations about energy among both Minneapolis residents and city officials. 

A primary motivation for the active campaigners in Minneapolis Energy Options was a desire to see a conversation about a clean, affordable, reliable and localized energy future to go on loud and clear with the City officials. On the strength of this appeal and with the help of MPIRG, Minneapolis Energy Options was able to send thousands of Minneapolis Energy Options postcards signed by Minneapolis residents and sent to their respective City Council members.

A VISION OF USING OUR ENERGY DOLLARS TO BUILD LOCAL RENEWABLE CAPACITY LAID THE GROUNDWORK FOR MINNEAPOLIS ENERGY OPTIONS TO FORM

Both Our Power and the Minneapolis Energy Options began with a $450,000,000 dollar question about the economic justice impacts of energy consumption and the great economic opportunities in addressing the issue.

   The $450 million per year (and rising) we as the residents and businesses of Minneapolis spend to pay for energy are precious. It is only fair that we as the city have the option to invest our energy dollars into cleaner, renewable and locally-controlled options rather than send such a large proportion of our hard-earned dollars toward the coffers of distant out-of-state shareholders.

However almost none of these $450 million in annual energy dollars are spent on locally generated renewable energy despite the potential for doing so.

As it turns out, Minneapolis residents and businesses have not had consumer choice over where our electricity and gas is sourced from. Everyone has to buy from electricity from Xcel Energy and natural gas from Centerpoint Energy. Utilities are typically monopolies within their service territories.

Our energy dollars with Xcel were going toward an energy system that was 35% coal, 29% nuclear, and 14% natural gas. These three industries create far fewer jobs per dollar invested than energy efficiency and clean energy, which has turned job creation into a rallying point.

Finding a systemic way to expedite more economic development for local renewable energy was one of the prime issues that motivated the organizers who started Minneapolis Energy Options.

Because of the monopoly ownership structure of Xcel and Centerpoint, Minneapolis residents and businesses are not given much room to initiate localized renewable energy generation. Yes at the time, there were a handful of often well-to-do individuals who owned their own individual solar arrays. But the utility powers that be were not trying to make the go solar option easier or more cost- effective for a greater number of people to take.

In one instance, Xcel revolted when the City of Minneapolis got Federal Stimulus funds for energy and chose to invest the money into putting 40 kilowatts of solar panels on the Haaf Parking Ramp in downtown Minneapolis.

According to city Council Member Cam Gordon, “Xcel required the City to spend thousands of additional dollars to prevent these solar panels from putting renewable electricity onto the downtown grid. Xcel argued that allowing this clean, renewable power to get onto the grid would put the grid at risk, which indicates that the grid is too fragile to accommodate local renewable energy generation.”

NOTE 1

For another example, Xcel proposed eliminating the popular Solar Rewards Program- a rebate program for rooftop solar arrays that is credited with helping 560 Minnesota homes and businesses install solar arrays between 2010 and mid-2012. NOTE 2

In June of 2012, Xcel proposed scaling back their Solar Rewards program for 2013 and eliminating it altogether after the end of 2013. They were opting to spend the $5 million in annual subsidies they received for it on energy conservation efforts instead.

The PUC eventually ruled in favor of maintaining the Solar Rewards Program upon the public commentary being overwhelmingly in favor of keeping it.

On July 20th 2012, Lee Gabler, Xcel's director of demand side management and renewable operations, wrote an email response to widespread criticism of Xcel’s anti-Solar Rewards decision "In an economy where our customers' demand for energy is not growing, we feel it is not appropriate to add more of this expensive energy resource. Increased costs, including new infrastructure, are placing upward pressure on our customers' bills, so it's appropriate to control customer costs by ending a program that doesn't provide sufficient value."   NOTE 3

Many of the statements and perspectives of the individuals with Xcel have changed since the time Minneapolis Energy Options began. But the above statement from 2012 provides a key example of what disturbed and irritated the early thought leaders behind Minneapolis Energy Options.

It is not only built upon the assumption that solar power will be a more expensive resource despite the cost of it dropping significantly. It revealed a refusal to recognize the benefits that distributed solar generation brings to the grid and how it can help Xcel customers avoid the costs of paying for expensive new transmission lines.

New strategies to make energy efficiency upgrades more cost effective and accessible for a greater number of people presents another way how we will lessen dependency on companies who are importing polluting energy from outside of the state.

Overall, it is only fair that we as communities have accessible opportunities to enhance local economic development while reducing overall energy use at the same time.

Our energy money is being funneled to shareholders of corporate monopoly utilities that have a government guaranteed profit margin above 10%. Think of electrical power as the metaphorical water that flows into the bucket of the local economy. But the system of distant ownership/ control also pokes holes in the bucket which steadily drains dollars out of our local economy bucket at the same time it is being continually refilled.

What would plugging the holes in this metaphorical steady leak look like? It means we will keep our energy dollars home to revitalize the local economy and create local jobs which will strengthen our grid to prevent power outages, and lead the region in a transition to a clean and efficient energy future.

This was the early vision and social idealism that inspired the organizers behind Minneapolis Energy Options even before the campaign was formed. However what was the moment that actually lit the spark for Minneapolis Energy Options?

NOTE 1 COMMUNITY VOICES | Minneapolis' energy future: What will our options be? By Cam Gordon, Community Voices July 26, 2013 http://www.tcdailyplanet.net/news/2013/07/26/community-voices-minneapolis-energy-future-what-will-our-options-be

NOTE 2 http://www.twincities.com/news/ci_20761224/xcel-energy-phase-out-solar-rewards-program-minnesota Xcel Energy plans to phase out solar rebate in Minnesota

By Leslie Brooks Suzukamo
lsuzukamo@pioneerpress.com

POSTED:   06/01/2012

NOTE 3 Xcel's plan to drop Solar Rewards draws heat

·        Article by: DAVID SHAFFER , Star Tribune 

·        Updated: July 20, 2012 - 9:05 PM

THE CASE FOR WHY MUNICIPAL POWER IS SUPERIOR AT LEAST IN THEORY

THE CASE FOR WHY MUNICIPAL POWER IS SUPERIOR AT LEAST IN THEORY

 

The way in which Minneapolis Energy Options used municipalization as a strategy to campaign for clean energy could not have had the power it did if there had not grains of truth we could present on the multitude of benefits municipal utilities bring in general.  The very positive aspects of municipal utilities helped add an essential element of inspiration among supporters of the campaign. The municipally-owned energy utilities in major cities like Los Angeles, Sacramento, San Antonio, Austin were pointed to as role models for what Minneapolis could achieve. For example, people served by municipal utilities such as Los Angeles and Sacramento were the only ones in California that were protected from the outrageous Enron-staged rolling brown-outs and rate spike extortion.

In other words, a municipally-owned energy utility is not an exotic concept. 25 percent of US electricity is supplied by locally owned municipal utilities and co-ops.  NOTE 1  There are already 125 municipal electric utilities in Minnesota and 31 municipal gas utilities including Rochester, Moorhead and Wilmar. In fact 50 out of 87 county seats are served by a municipal electric or gas system NOTE 2

There are in fact close to 2,000 municipal utilities that are in operation across the United States. However only perhaps half a dozen of them were formed in recent years while the vast majority have been municipally owned for decades or right from the start.

NOTE 1    Everyday Socialism, American-Style, Is Happening Now Tuesday, 14 May 2013 10:44 Gar Alperovitz Chelsea Green Publishing book excerpt http://truth-out.org/news/item/16353-everyday-socialism-american-style-is-happening-now

NOTE 2 (http://mmua.org/about/why.htm )

MUNICIPAL POWER HAS GREATER FINANCIAL EFFICIENCY

 

Residential customers served by municipal-owned electric utilities pay a national average of 14 percent less in rates than their counterpart customers of corporate power companies. NOTE 1 Municipal utilities pay back roughly 25% more to their communities than investor owned utilities that have signed franchise contracts. NOTE 2  

There are structural ownership-related reasons why municipal utilities are generally more financially efficient in getting the same amount of work done at a lower cost.

Municipal utilities can obtain tax-exempt financing for capital projects. This allows municipal utilities to invest more money into grid maintenance and outage prevention which makes their service more reliable.

Knowing this, which system of utility ownership is more likely to have lower rates?

1: A municipal utility that reinvests its surplus back into the system and directs revenue to the city general fund

2: A for-profit corporate-owned utility that pays dividends to stockholders and gives only a small fraction of its revenue back to the city in franchise fees.

Because cities have no stockholders demanding returns on investment, they are in a position to pass the savings directly onto their citizens.

Under municipal power there are no right of way fees added to utility bills, no shareholders to pay dividends to, minimal overhead, no excessive lobbying presence at the state capital, and no lavish multimillion dollar per year executive bonuses to pay. In the case of Boulder, Colorado corporate-owned utilities have chosen to spend their customer payments to fighting municipal governments in courts and interfering in people’s ballot initiative campaigns.

Profits under municipal utilities go back to local or county government rather than to distant out-of-town or out-of-state investors and thus help the city or county supplement their budgets and ease pressure on property taxes.

Ashland, Oregon, has a successful example where municipal utility profits provide 30 percent of the general fund that pays for such services their basic services. NOTE 3  http://www.ashland.or.us/Page.asp?NavID=37

Here is one argument that detractors against Minneapolis Energy Options have made in light of these benefits of municipal ownership. It was to point out how these undeniably well-performing and efficient municipal utilities had been under municipal ownership for decades or since the very beginning of electrification. Then they’d say it is the process of making the switch from an investor owned to a municipal utility that would be financially detrimental. 

 However Winter Park, Florida is an example of a city which successfully converted to a municipal energy utility on June 1^st 2005 after 69% of its voters voted to exercise the buy-out option against their incumbent utility on September 9^th 2003. Winter Park customers have noticed that their service has more reliable and with more competitive rates to boot. Their municipal utility did take some short term losses because it had to make capital improvements that their previous investor-owned utility deferred. But it is now it is making millions of dollars in annual profit and is investing that profit into the undergrounding of power cables.

NOTE 4 (multiple sources included)

NOTE 1 Everyday Socialism, American-Style, Is Happening Now Tuesday, 14 May 2013 10:44 Gar Alperovitz

NOTE 2 Ken Bradley Taking control of our energy future published October 9, 2012 http://www.journalmpls.com/news-feed/voices/taking-control-of-our-energy-future

NOTE 3  http://www.ashland.or.us/Page.asp?NavID=37

NOTE 4 http://cleanenergyaction.org/2011/07/25/randy-knight/      http://cityofwinterpark.org/departments/electric-utility/  

http://www.nytimes.com/2013/03/14/business/energy-environment/cities-weigh-taking-electricity-business-from-private-utilities.html

MUNICIPAL UTILITIES HAVE HIGHER RELIABILITY

   As far as technical efficiency, municipal utilities are in fact more reliable, as measured by the average number of minutes a customer spends without power each year. NOTE 1 On average, municipal utilities have significantly fewer power outages and are quicker to get the power back on after severe weather events than Corporate-owned privatized utilities.

,

For instance, municipal utilities in some of the hardest-hit areas of Massachusetts after Hurricane Irene in 2011 were able to restore power in one or two days, while corporate-owned utilities like NStar and National Grid took roughly a week for some customers. NOTE 2

 One can easily say that this is because municipal utilities often maintain their grid better so there are less damages in the first place.

Why is it that city-owned energy utilities on a nationwide average basis have better-maintained infrastructure, fewer hours of outages and faster response times to disasters, and than corporate power utilities? It is because city-owned utilities naturally pay more attention to local repair concerns and have proportionally more employees on hand in the local community ready to fix outages and do basic maintenance.   NOTE 3

When ownership is close to service, then rates and service can be influenced by members of the community. This provides a muni the built-in incentive to operate in the public interest and long-term community benefit.

When a utility’s workers, policymakers and managers are part of the community they distribute power to, they have a social capital incentive to provide great service. They can’t hide behind a 1-800 number from a place far away.

A utility owned and operated under local control is more likely to offer more reliable service and resonate with local needs than a utility whose personnel and ownership is spread across a wide multi-state distance.

But in addition, no muni is an island. They have very big networks of mutual aid agreements with other municipal utilities around the region (and nationwide) that help out in the case of outages.

Knowing this, which system resonates better with the spirit of democracy, accountability and local control?

1: A state-regulated monopoly with a self-selected board of directors who are accountable primarily to stockholders and govern the utility and/or the holding company by meeting secretly behind closed doors in a distant corporate headquarters despite being overseen by a state PUC…

or

2: A utility commission appointed by the City Council or a board of director’s elected by the customers they serve and meets in public while inviting input?

NOTE 1 Ken Bradley Taking control of our energy future published October 9, 2012 http://www.journalmpls.com/news-feed/voices/taking-control-of-our-energy-future

NOTE 2 (CITATION NEEDED) http://www.nytimes.com/2013/03/14/business/energy-environment/cities-weigh-taking-electricity-business-from-private-utilities.html?pagewanted=all&_r=0 Cities Weigh Taking Over From Private Utilities

 By DIANE CARDWELL

Published: March 13, 2013

NOTE 3 (CITATION NEEDED) http://www.communitypowermn.org/will_this_impact_jobs_and_people_employed_by_the_utilities

A QUALITY EMPLOYMENT OPPORTUNITY FOR UTLITY WORKERS

    A municipal utility would employ more people than a privatized investor owned utility with good working conditions to boot.

According to an advocacy group called Massachusetts Alliance for Municipal Electric Choice, government-owned utilities on average employ more linemen per utility customers than the corporate utilities. NOTE 1

 The City of Minneapolis has a strong history of paying its employees well, and a commitment to living wages and collective bargaining.

Eliminating market barriers to municipalization placed by legalized monopolies will allow more space for localized renewable energy incentives to be realized, which will in turn stimulate the creation of additional new green jobs in installation, manufacturing, and maintenance.

NOTE 1 http://www.nytimes.com/2013/03/14/business/energy-environment/cities-weigh-taking-electricity-business-from-private-utilities.html

MUNICIPAL UTILITIES HAVE SHOWN THE MOST GROUNDBREAKING ENVRIONMENTAL BREAKTHROUGHS

As far as credentials on environmental sustainability, many larger municipal utilities are much further along on fighting climate change with local renewable energy generation than Minneapolis has been. Municipal utilities have demonstrated a superior ability to cut greenhouse gasses and be catalyst for moving their cities in a clean, renewable energy direction. For example, the Sacramento Municipal Utility District has a goal of reducing emissions by ninety percent by 2050, and has installed one hundred times more solar capacity than Minneapolis had (at the time of the Minneapolis Energy Options campaign). NOTE 1

The Municipal Utility of Austin, Texas has committed to reaching 35% renewable energy by 2020. Gainesville, Florida with a population of just 130,000 has more megawatts of solar energy installed than the entire state of Minnesota had at one point.

 Perhaps the biggest success story is with the San Antonio municipal utility. It recently completed a new 20 MW solar project (more that twice the amount of the installed solar capacity of the entire state of Minnesota in 2012) plus having the most wind capacity of any municipal utility, while maintaining the lowest electricity rates of any of the 10 largest cities in the United States.  NOTE 2

 

The city of Lancaster, California created a municipal utility after its school board rejected an offer from SolarCity on the claim that it was unaffordable. Since municipalization the city bought 32,094 panels, had them installed on 25 schools, generated 7.5 megawatts of power and sold the enterprise to the school district for 35 percent less than it was paying for electricity at the time. NOTE 3

Another example of a sensible investment is a wastewater-to-energy facility in California's Point Loma Treatment Plant. It serves a 450-square-mile area near San Diego. The methane produced through the treatment of wastewater process generates electricity.

On the other hand, a community’s long-term goals such as investment in energy conservation, pollution prevention, localized renewable energy deployment and local infrastructure building all have a difficult time translating into the reductionist quantitative language of corporate owned utility profit. 

NOTE 1 COMMUNITY VOICES | Minneapolis' energy future: What will our options be?

By Cam Gordon, Community Voices

July 26, 2013 http://www.tcdailyplanet.net/news/2013/07/26/community-voices-minneapolis-energy-future-what-will-our-options-be

NOTE 2 Ken Bradley Taking control of our energy future published October 9, 2012 http://www.journalmpls.com/news-feed/voices/taking-control-of-our-energy-future

NOTE 3 (With Help From Nature, a Town Aims to Be a Solar Capital By FELICITY BARRINGER http://www.nytimes.com/2013/04/09/us/lancaster-calif-focuses-on-becoming-solar-capital-of-universe.html?pagewanted=all&_r=0  Published: April 8, 2013

DENNIS KUCINICH PROVIDES A STORY FOR MUNICIPAL POWER

The large, centralized, corporate owned utilities have resisted publicly-owned power utilities for over a century. Public power advocates were victims to the Cold war era McCarthyism. Private utilities accused them of being “socialists and communists out to destroy the American System of government”.  NOTE 1

2004/ 2008 Presidential candidate and Congressman Dennis Kucinich was one politician who has embodied populist resistance to privatization of public utilities.

When he was mayor of Cleveland, the banks who were holding city loans demanded Kucinich to sell Muny Light which would have been a contradiction to his campaign platform. Cleveland Electric Illuminating also tried to strongarm Kucinich. By all means, Cleveland managed their own utilities successfully.

Kucinich was even faced with a recall election in 1978 because he would not sell Cleveland’s municipal utility to a private company.

When Kucinich held firm and refused to sell out Muny light, the Cleveland banks that held the city loans blackmailed the city in their outrage by taking Cleveland into default and blamed it on Kucinich. This cost him his job and he lost the November 1979 mayoral election. 

The next mayor of Cleveland sold the public utilities and the rates doubled.

In 1993, a reporter for The Cleveland Plain Dealer had been investigating Mr. Kucinich's decision not to sell Muny Light, and concluded that the move in fact would have highly benefited consumers. Cleveland Electric Illuminating’s nuclear-laden energy rates were far higher than those of Muni light  NOTE 2

   This marked the revival of his political career, giving him a powerful resurrecting campaign message. With a light bulb as his logo and the slogan "Because he was right," Mr. Kucinich won election to the Ohio state Senate in 1994 and the United States House of Representatives in 1996 serving for 16 years.

NOTE 1 The Last Energy War: The Battle Over Utility Deregulation

 By Harvey Wasserman (p31)

NOTE 2 http://work.colum.edu/~amiller/nyt-kucinich.htm January 2, 2004

CHALLENGING BUSH

Past Defeat and Personal Quest Shape Long-Shot Kucinich Bid

By SHERYL GAY STOLBERG