STRATEGIC VICTORIES, MINNEAPOLIS ENERGY OPTIONS WINS MPLS DFL ENDORSEMENT AND A MOU WITH CENTERPOINT

THE CAMPAIGN TO WIN THE MINNEAPOLIS DFL ENDORSEMENT

    There was yet another track for the Minneapolis Energy Options campaign in full swing by late February / early March of 2013. It was for the Minneapolis Energy Options resolution to win the endorsement of the Minneapolis DFL. The campaign had easily won the endorsement of the Minneapolis Green Party in February 2013. While Minneapolis Energy Options itself is not a partisan entity, we encouraged any possible engaged, informed and motivated base to attend all DFL conventions and ward caucuses with the end goal of getting Minneapolis Energy Options endorsed by the city DFL.

The work toward that goal began in late February with calling and recruiting potential delegates to read the resolution at their DFL precinct caucuses. The resolution was to put a ballot question up for voters authorizing Minneapolis to “research, explore and pursue the option of converting our energy utilities to city ownership, if such a transition would create a more reliable affordable and clean local energy system”.  NOTE 1

Our first big accomplishment toward this goal which was to get as many individuals as possible from each of the 117 Minneapolis precincts to commit to reading the resolution at their precinct caucuses on the night of April 16^th, 2013.

 Only after this particular was in full swing did we find out that it was not customary to advance caucus resolutions on odd numbered years and that we might cause some confusion on caucus night.

  On the night of April 16^th, there were indeed mixed results from the precinct caucuses about whether resolutions were allowed to be read or voted upon in odd numbered years, or whether there was even a vehicle to advance a resolution that was read and voted on.

 According to the correct interpretation of the rules that were not universally understood, precinct chairs were supposed to at least allow the attendees to vote on whether to allow votes on resolutions. But amid this somewhat frustrating confusion, there was a remarkable result of momentum-building success. The Minneapolis Energy Options resolution was passed at a rate of 100% at every last precinct where it was allowed to be read and voted upon. There was no precinct where an attendee got a chance to read the resolution and saw it get voted it down.

   Because of these overwhelmingly positive results, the Minneapolis Energy Options resolution was eventually given that much-desired avenue to be introduced at the City DFL convention. We needed petition signatures from at least 10% of the city delegates which call for the Minneapolis Energy Options resolution to be introduced at the convention and voted upon.

 With the help of some last minute organizing on the morning of the city convention, Minneapolis Energy Options ended up receiving far more than the 10% of all delegate signatures required. Close to 4 months of organizing work all came to a head with 2 voice votes among delegates at the City DFL convention on June 15^th, 2013. The convention chairs allowed 3 statements to be made in favor of the resolution and 3 statements to be made in opposition to the resolution. One of the statements made in opposition to the resolution was nothing more than an opinion that we should not be reading resolutions at all in a city convention. When the moment came for the big voice vote, it was not unanimous but the convention chair declared that the ayes for the Minneapolis Energy Options resolution were far enough over the winning threshold of 60% support to where a hand count was not necessary.  A second voice vote was called by one of the co-chairs just to make sure.  

Winning the DFL endorsement on June 15th was seen as a big strategic victory for Minneapolis Energy Options. It was not a ballot initiative yet and the convention chair made that clear. But if it had become a ballot initiative there would have been a “vote yes on Minneapolis Energy Options” printed on the sample ballots that the DFL distributes widely to Minneapolis voters. This would have been a goldmine of free advertising for a campaign that was quite cash-strapped in comparison to Xcel.  A DFL sample ballot that is distributed widely to Minneapolis voters would provide the campaign a key counterweight to the corporate advertising blitz Xcel and/or Centerpoint would be expected to generate in opposition to the initiative.

That is why the day after the DFL convention, Xcel started sending emails to neighborhood organizations saying they will send representatives to neighborhood meetings where Minneapolis Energy Options would be presenting and seeking endorsements from. That was the moment which Xcel made the abrupt change from underestimating the campaign to overestimating the campaign. From mid-June to Mid-August Xcel Energy sent spokespeople to every neighborhood organization meeting they could for the purpose of blocking endorsements. This resulted in joint (back to back) Minneapolis Energy Options and Xcel presentations in some neighborhood meetings.

Xcel could not get any neighborhoods to endorse a no vote for Minneapolis Energy Options but Xcel’s presentation probably did block some pro-Minneapolis Energy Options endorsements in some neighborhoods that would have otherwise done so. The main messaging that Xcel used in their brief counter campaign was to misrepresent the ballot initiative as a vote to jump straight to forming a municipal utility, to say this municipalization would cost the city billions and that it is unnecessary in the first place because Xcel is already a national leader on clean energy.

NOTE 1 Minneapolis Fifth Ward candidates talk municipal energy, environmental concerns BY SHEILA REGAN, TC DAILY PLANET

April 10, 2013

A MEMORANDUM OF UNDERSTANDING WITH CENTERPOINT ENERGY

These strategic victories of multiple candidate endorsements, the Minneapolis DFL endorsement, numerous neighborhood organization endorsements, and hundreds of citizen-signed Minneapolis Energy Options signed petition cards sent to City Council members all helped build momentum in time for the most critical and consequential phase of the Minneapolis Energy Options campaign. It was the city council actually taking a first set of votes to advance the issue.

This momentum culminated in City Council voting 9-4 on June 27^th and 10-3 on June 28^th in favor of setting August 1^st, 2013 as the date for the public hearing (required by state law) on whether to put the Minneapolis Energy Options resolution on the ballot.

When the public hearing was set, the Minneapolis Energy Options resolution went from being perceived of as a marginal, out-of-reach idea to big deal for Minneapolis. Much of the credit for making Minneapolis Energy Options into a big deal actually goes to Centerpoint and Xcel. But those two utilities both took two very different approaches.

 As soon as the Minneapolis City Council voted to hold this public hearing, Centerpoint called up the campaign and asked to make a deal. They offered to come to an agreement to meet Minneapolis Energy Option’s goals if the campaign ceases all efforts to pursue a municipal natural gas utility. That was quite fascinating to see! George Crocker with the North American Water Office in particular had been working for close to 40 years to get the utilities to move on the environmental goals Minneapolis Energy Options would be working for. Just after just this one vote to hold a public hearing, (which was so many multiple steps removed from forming a municipal utility in the first place) a major utility called up a “scrappy” campaign office with an active interest in negotiating.

These calls would eventually result in a historic Memorandum of Understanding (MOU) signed on July 23^rd, 2013 where Minneapolis Energy Options agreed to not pursue a Municipal Gas utility in exchange for Centerpoint agreeing to meet mutual goals with Minneapolis Energy Options. The MOU also effectively took the focus off of Centerpoint for the August 1st public hearing.

Upon the signing of the MOU, division vice president of regional gas operations for CenterPoint Energy, Joe Vortherms announced “We are pleased to have found common ground with MEO,” said “Our shared goal is to advance Minneapolis’ standing as a leading city on sustainability and energy conservation. We believe MEO’s focus on local and sustainable energy practices complements our Conservation Improvement Programs. Together, we can help the city reach its energy goals.” NOTE 1

The MOU laid out ways for Centerpoint to expand its Conservation Improvement Programs (“CIP”) such as offering on-bill loan-repayment option for residential customers who make energy efficiency investments. The MOU also contained Centerpoint making a commitment to equity and diversity in employment.

On some levels, the core negotiating group within Minneapolis Energy Options had hesitations about doing the MOU and was not certain that it would be a benefit. The Centerpoint MOU would not really have teeth since it’s an agreement with the campaign rather than the city. However, reaching the MOU was essential to the campaign at that point to demonstrate we were serious about winning historic deals with moving utilities in our direction and to prevent a second utility launching a counter campaign if the ballot initiative materializes.   

The negotiations started with Centerpoint asking us to identify natural gas as a climate solution, but the MOU ended up with Centerpoint now agreeing to ask their suppliers to report on methane leakage due to its climate threat.

This most groundbreaking condition of the MOU is for Centerpoint to “annually inquire of its Minnesota natural gas suppliers what information they can provide regarding efforts to reduce methane leakage” and to “Report to the City efforts to address methane leakage from its distribution system on an annual basis, along with estimates of leakage and methodologies used to derive those estimates.” NOTE 2 Accessible citation needed

That is unprecedented for a gas utility. If methane leakage is as low as 4% it cancels out the climate benefits of displacing coal with natural gas.

Centerpoint also agreed to engage proactively in other strategies for reducing climate impact, such as Combined Heat and Power, solar thermal and biogas, upon the recognition that methane is a more potent greenhouse gas relative to carbon dioxide. Centerpoint is also doing a pilot project on feeding organic methane into their pipelines.

NOTE 1 Minneapolis Energy Options and CenterPoint Energy announce agreement to reduce carbon emissions in Minneapolis

Posted by Dylan T. Kesti MINNEAPOLIS – July 23, 2013 –

THE MINNEAPOLIS ENERGY OPTIONS CAMPAIGN BEGINS: WINNING ENDORSEMENTS AMONG NEIGHBORHOOD ORGANIZATIONS, CANDIDATES AND SITTING COUNCILMEMBERS

According to the process laid out by Minnesota State law, the resolution that Minneapolis Energy Options campaigned for has to get at least 7 votes on the Minneapolis City Council to make it onto the ballot for an election (a bare majority given that the chamber has 13 voting members). The voters of Minneapolis would have the ultimate say on whether the resolution passes. As described earlier, this crucial city council vote has to take place at least 60 days before Election Day. In addition state law also requires there be 30-day notice of a public hearing about such a resolution. These steps that state law lays out for the process set up the basic time table for the Minneapolis Energy Options campaign of 2013.

In anticipation of this time table, Ward 2 City Council member Cam Gordon drafted the resolution that would allow the city to form a municipal power utility if a required feasibility study can prove that a municipal system can deliver energy as affordably and reliably as the existing utilities.

            After being publicly silent until after the 2012 elections, Minneapolis Energy Options formally launched in January 2013. In late 2012, Minneapolis Energy Options hired Dylan Bradford Kesti as a campaign manager with the mission of getting the ballot initiative passed. 

  One of the first news items to give Minneapolis Energy Options a burst of early momentum was when Xcel initially requested the Public Utilities Commission for a 10.7% rate increase for Minnesota's customers for 2013 in part due to the fact that Minnesotans were using less energy! In a December 13, 2012 Star Tribune Article,

“Xcel says the increase is needed to recoup investments in its two nuclear power plants, counter a drop in electric sales and pay for other power plant and transmission upgrades as well as higher property taxes.”   NOTE 1

Minneapolis Energy Options spoke on WCCO in January of 2013 to make the case that Minneapolis residents shouldn’t have to be paying more in rates to use less energy but instead should get rewarded for using less energy. That is why the trajectory of raising rates in response to energy efficiency can’t be tenable forever as it cancels out our aggregate financial rewards for victories with energy conservation.

NOTE 1 CITATION NEEDED   http://minnesota.cbslocal.com/2013/02/11/interim-xcel-rate-hike-showing-up-in-electricity-bills/

WINNING ENDORSEMENTS AMONG NEIGHBORHOOD ORGANIZATIONS, CANDIDATES AND SITTING COUNCILMEMBERS

In early 2013, Minneapolis Energy Options began the necessary actively building relationships with the City Council Members in office.

By May of 2013, there were three sitting council members who were endorsing supporters for Minneapolis Energy Options: They included mayoral candidates Gary Schiff & Betsy Hodges as well as the resolution’s author Cam Gordon. Much of the remaining council members were classified as on the fence. According to the Minnesota Daily, Gary Schiff as a mayoral candidate endorsed the campaign because “it will educate people about the city’s need to fight for its interests and generate more renewable energy…If we don’t stand up for renewable energy sources, then it’s not going to happen,” he said. NOTE 1

It brings strategic victory for any issue campaign in general for a big name public figure to show their endorsements on their campaign websites and literature. That is why Minneapolis Energy Options ran a parallel campaign to seek endorsements among non-office-holding candidates for city council and mayor.

In addition to the new Mayor Betsy Hodges having endorsed the campaign as a candidate in 2013, a majority of the members who sit on the new city council (Gordon, Frey, Yang, Cano, Bender, Andrew Johnson and Palmisano) had endorsed Minneapolis Energy Options the campaign as candidates.

Minneapolis Energy Options strategically hosted a couple of candidate forums for City Council candidates. One of these included a forum for 5^th Ward candidates on April 9^th, 2013 at the Minneapolis Urban League.

 

Minneapolis Energy Options also sponsored a forum for Ward 9 City Council Candidates on May 1^st, 2013. Minneapolis Energy Options received unanimous endorsements among all candidates at both forums.

Yet another track for the Minneapolis Energy Options campaign was to seek endorsements from neighborhood organizations. The Powerful Conversations Tour did not yet exist in early 2013 but there was a predecessor to Powerful Conversations that was given in front of neighborhood organizations and candidate forums we were trying to secure endorsements from.

At the same time period when Minneapolis Energy Options was elevating the issue of energy among candidates for office, the campaign received gracious help from MPIRG for door-to-door and phone canvassing.

In the first half of 2013, MPIRG devoted a lot of their field canvas to this issue. They knocked on 55,000 doors in Minneapolis requesting residents who answered to sign a green endorsement postcard asking their city council members to vote in favor of advancing the ballot initiative. Minneapolis Energy Options collected and submitted the cards to each respective city council member they were addressed to.

In March through July Minneapolis Energy Options did outreach at multiple community events, the biggest being Pridefest and MayDay. We eventually secured about another 2,000 contacts.

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By April 2013, this outpouring of support encouraged the City Council to start commissioning a $250,000 study to examine the pathways of varying degrees of influence and control Minneapolis can take to reach desirable outcomes that fulfill a vision of clean, affordable, reliable and local energy. The measure to pursue the Energy Pathways study was approved in committee on April 4^th, then the full City Council voted April 12 to spend up to $250,000 for the Energy Pathways Study over the following nine months.

On behalf of the Energy Pathways Study, 8^th ward City Council Member Elizabeth Glidden stated “We want to let our current utility providers know these are our goals and we are serious about trying to find a path to better achieve our goals,”  NOTE 2

The Energy Pathways Study was eventually released in February 2014 and has served as a political roadmap for that years utility franchise negotiations.

However success with getting the Energy Pathways Study was not yet accepted by the campaign as a substitute for mobilizing the sitting City Council Members to support advancing the ballot initiative.

As Stated earlier, the resolution has 3 early endorsers among City Council Members which included Cam Gordon and the mayoral candidates Hodges and Schiff.

Minneapolis Energy Options needed 4 additional yes votes in order to hold the public hearing about whether to put the resolution on the ballot. Many of the council members who were undecided at the time said they would determine their votes on the issue based on their trust in the opinion and knowledge of two particular council members who were also on the fence.

The big turning point (explosion!!) in the campaign was a June 3^rd 2013 social media day of action focusing on getting commitments from council members Elizabeth Glidden and Lisa Goodman. Campaign supporters were also leaving phone messages for both Glidden and Goodman the previous weekend of June 1^st and June 2^nd.

After 7 hours of flooding their social media pages on June 3^rd, both council members communicated to Minneapolis Energy Options they would be advocates for setting up the public hearing in their upcoming council meetings. Because of the trust other council members has in the options of Glidden and Goodman, June 3^rd was considered the tipping points when we finally hit the critical number of city council members tentatively agreeing to vote yes for advancing Minneapolis Energy Options to a public hearing.

During this time period we had a lot of conversations with council members about “the power calculus” on whether we can win. There was a big question on whether putting the initiative on the ballot would enhance Minneapolis’ ability to get its clean energy goals achieved or it the risk of having the ballot measure losing would pose too much of a risk for the city’s leverage in the 2014 franchise negotiations.

NOTE 1 CITATION: The Minneapolis Energy Options campaign explores affordable utilities. The Minnesota Daily By Hailey Colwell March 27, 2013

 

NOTE 2 Minneapolis to study city-run utilities April 16, 2013 BY: DYLAN THOMAS

STATE LEGISLATION AND XCEL’S LOBBYING NARROWS THE SCOPE FOR THE ENERGY OPTIONS MINNEAPOLIS CAN TAKE

THE LOST REVENUE STRIKE AMENDMENT IS THE LINCHPIN FOR EVENTUAL SUCCESS WITH MUNICIPALIZATION

   

The municipal utility route may be the only alternative path to negotiating higher franchise fees and right of way terms that state law clearly lays out for cities. However, state law still imposes a hefty financial obstacle even for this one alternative path it provides.

 If the City of Minneapolis were to acquire electricity distribution infrastructure currently owned by Xcel, state law MN 216 B 45 suggests that the price figure would have to consider the profits the utility would have made if municipalization had not taken place. NOTE 1   To draw a comparison, consumers who switch phone companies face a similar dilemma where they have to pay compensation for the loss of future revenues to a phone company whose service they no longer use.

Many constituents and City Council Members who were supporters of municipal power in principle, felt municipalization would be unaffordable for Minneapolis if the city is required to reimburse Xcel for the lost future revenues that it would have made.

This state legislation passed in the early 1970’s, hugely inflates the cost for cities to form their own municipal utilities.

Having to pay a utility compensation for future lost revenue is the poison pill that dissuades cities like Minneapolis from following through on municipalization even if a PUC-sanctioned feasibility study decides that a City of the Lakes Power and Light can otherwise do a better job than Xcel.

 Not surprisingly, new municipal utilities ceased to be formed in Minnesota after that particular statute took effect.

During the 2013/ 2014 MN State Legislature, there was a proposed strike amendment SF 911 / HF 945 to remove the six words in the statute that requires that the state’s Public Utilities Commission factor in lost revenue to a utility company when determining how much a city should pay a utility for its’ the line, pole and substation infrastructure.

Going forward will take a substantial grassroots coalition to act as a counterweight to the utility lobbyists who are determined to keep the lost revenue provision as their poison pill.

NOTE 1 https://www.revisor.mn.gov/statutes/?id=216B.45

HOW ABOUT FORMING ENERGY COOPERATIVES IN MINNEAPOLIS?

  Formulating an argument on how state law makes municipalization unaffordable for cities begs another question.

    Couldn’t several smaller, multi-neighborhood electric co-ops accomplish the same goals that Minneapolis Energy Options laid out for clean, affordable, reliable, local energy at far less cost than buying up all poles, electric lines and other Minneapolis equipment from Xcel to form a municipal electric utility? Electric co-op utilities are owned by their own customers, elect their own board to run the utility, and return the profits back to the customer base. Wouldn’t creating energy co-ops within Minneapolis be a more practical way for the city to introduce completion into management?

 Forming a new energy cooperative is indeed an exciting idea for those reasons. Unfortunately, Minnesota state law does not give Minneapolis or parts of Minneapolis the option to switch directly to a co-op owned utility. In order for an energy generation co-op to form within the city, one of three things would have to happen. 1: The incumbent utilities would have to agree to buy power from such a cooperative 2: The city would have to form its own municipal utility 3: A major state law change would have to take place to allow a competitive non-monopolistic energy service in Minnesota. Let’s assume that Xcel is not going to support a local clean energy co-op that would eat into their market share. Now if the state legislature doesn’t overthrow the legalized monopoly statutes that protect Xcel from competition by prohibiting cities from accessing alternative suppliers, then what are we left with?

The only legally-provided option is to form a municipal utility and then have that muni contract with such member-owned co-ops to provide power to the city utility.

Once again the only path the city is allowed to take other than continue service with their incumbent utility is to get voter approval to explore a municipal utility and to proceed only if the findings of a feasibility study meet expectations.

XCEL WANTS TO BE HELD IN CHECK BY THE STATE LEVEL NOT THE CITY LEVEL

State law sets up huge political and financial obstacles for cities to form their own municipal utilities. In addition, it would take a major change in state law to form a cooperatively owned utility.   

There is yet another much more feasibly applicable but politically blocked path for cities like Minneapolis that want its energy utility companies to meet a whole range of their adopted climate action plan goals.

It would be to open up utility franchise agreements to be inclusive of a city’s energy efficiency, renewable energy and local jobs goals rather than the scope be restricted to a narrow focus on public right of way.

There was some legislation SF 1450 / HF 1490 introduced in the 2013-2014 session that would allow goals for clean energy, improved air quality, equity and green jobs to be included into utility franchise agreements.

The Minneapolis City Council supported this 2013 legislation which would have allowed cities more flexibility in franchise agreements and picking their own fuels or transmission delivery systems.

 Even though passing the legislation would have taken away much of the drive to consider a municipal utility, Xcel lobbyists still fought Minneapolis legislators’ attempts to ensure these more efficient and renewable energy goals could be included in new municipal franchise agreements. In 2013, the Star Tribune quoted Xcel lobbyist and director of regional government affairs Rick Evans said the company “would fight the proposal if it gained momentum in the Legislature.”   NOTE 1

As a result the Minneapolis-backed bill SF 1450 / HF 1490 languished in the Minnesota Legislature when it had a moment of opportunity in 2013.

Utility lobbyists usually say that giving a legislative pathway for cities to have more control/ influence will lead to “balkanization”. They argue it would be economically inefficient if each city wants something different AND that state government can still overrule what individual cities want anyway when there is a mismatch.

I noticed this pattern for myself during the 2013 Minneapolis Energy Options campaign.

The statements I heard Xcel spokespeople use against Minneapolis Energy Options at neighborhood meetings typically did not argue against the merits of the campaign’s environmental goals and in fact they spent a lot of time touting Xcel’s environmental credentials. Instead, Xcel spokespeople have argued the legalistic technicality that environmental goals are supposed to be done at the level of state legislatures and the PUC rather than by individual cities.

Here is the more general picture as to why Xcel lobbied against pro-local control legislation SF 1450 / HF 1490. The utilities like to steer their public process for decision making into centralized arenas like the PUC and the state legislature where they can most easily manage. This concentrated ability to influence and lobby is something they can’t do with 50 different communities setting their own goals.

NOTE 1 (Citation from http://www.startribune.com/local/minneapolis/217856111.html  Stakeholders mobilize for hearing on Minneapolis municipal utility debate Article by: MAYA RAO , Star Tribune Updated: August 1, 2013 - 5:38 AM )

THE EXTENT OF XCELS LOBBYING PRESENCE

Could Xcel perhaps be setting up a trap for us by making claims that the state and the federal governments are the only ones who have standing to set the environmental friendly standards?

If Xcel were so trusting of the state then why would Xcel so heavily lobby the legislature? Or do they trust the state because they basically run the show at that level? According to the Center for Public Integrity, Xcel Energy Services inc. has spent $2,360,000 in 2011, $2,430,000 in 2010 and $2,627,326 in 2009 on lobbying in the State of Minnesota. That is a larger expenditure than any other association or business group on the list provided by the Minnesota Campaign Finance Board. It is even higher than the MN Chamber of commerce spent on lobbying in those respective years.

On one hand it feels awkward to demonize energy utilities because they are supposed to provide an essential service to us. Yes real people work for the utilities and when we need them we call them. The role of providing a service does include having employees to report to the PUC. But why should this role of providing a service include sending 45 registered lobbyists to the capitol to interfere with the people's public decision making though elected officials? It is questionable whether it should even be legal for regulated monopolies to do lobbying of that extent, but it is too normalized.

When customers pay their utility bills, they are also paying the utilities’ lobbyists to advocate for the companies’ own interests even when they come up against our own potential collective interests. It was utility lobbyists that made it prohibitively expensive to form a municipal utility or too legally complex to do community controlled energy.

In addition, there is no box on your utility bill that reads: “check here if you want your money to go toward lobbyists for community-owned power rather than paying for Xcel’s lobbying presence.”

In this way Xcel has hence engineered a catch-22 where they can’t lose. As the utility gets bigger from more mergers (such as the merger that turned NSP into Xcel), it snowballs more political clout, thus making it harder for state level regulators to exercise any real control over them. Average citizens can’t even come close to competing with Xcel at the state legislature.

Let’s take a look at all parties present at the March 17^th 2014 informational hearing and break them down by the number of registered lobbyists each party had:

Xcel Energy Services Inc has 58 Registered Lobbyists total and 45 without any termination dates
CenterPoint Energy MN Gas  has 33 total registered lobbyists 30 without termination dates 
  MN Power (ALLETE)  has 32 total registered lobbyists 27 without termination dates.
 Otter Tail Power Co has 18 registered lobbyists total 15 without termination dates.   
 Missouri River Energy Services has 11 total registered lobbyists 8 without termination dates.
 The MN Municipal Utilities Assn has 8 total registered lobbyists
 The City of Minneapolis has only 8 registered lobbyists without termination dates.
 Center for Energy & Environment has only 5 lobbyists
 MN Rural Electric Assn  has 4 registered lobbyists without termination dates.
 Southern MN Municipal Power Agency (SMMPA) has only 3 registered lobbyists.
  Minneapolis Energy Options and Community Power collectively have 3 registered lobbyists.

Given these numbers, it is rather duplicitous for Xcel to argue that the state regulators and the PUC are the rightful ones to keep them in check while spending more than any other entity in lobbying the state of Minnesota.

Yes, the Public Utilities Commission is the quasi-judicial body in charge of directly regulating the utilities. But it is basically a five-person court appointed by the governor. Even though the PUC technically takes public commentary, the PUC as a body is a lot further removed from we the people than local city councils or state legislatures who are more face to face with their constituents.
Here is the end sum of all the roadblocks that the interplay between state legislation and Xcel’s lobbying have brought forth: Either Minneapolis takes the path of pursuing Municipal Utility or Xcel and Centerpoint agree to meet Minneapolis’ climate and energy goals. As a campaign, Minneapolis Energy Options decided that we can’t have the advantage of the latter without pursuing the former.

CORRECTING COMMON MISCONCEPTIONS OF MINNEAPOLIS ENERGY OPTIONS

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?

NOTE 1 MUNICIPALITY MODELING RESULTS SHOW PROMISE FOR FUTURE BOULDER ELECTRIC UTILITY http://cleanenergyaction.org/2013/02/28/municipality-modeling-results-show-promise-for-future-boulder-electric-utility/    FEBRUARY 28, 2013 CHARLES CIPRIANI 

NOTE 2  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)

 

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. 

THE PRIMARY MOTIVE FOR MINNEAPOLIS ENERGY OPTIONS WAS BUILDING UP LEVERAGE FOR THE CITY’S UPCOMING UTILITY FRANCHISE NEGOTIATIONS, SO THE MINNEAPOLIS COULD MEET CLIMATE ACTION GOALS

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 1^st 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 5^th 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    

NOTE 2 http://www.minneapolismn.gov/www/groups/public/@citycoordinator/documents/webcontent/wcms1p-109331.pdf