Schafer: Memo to Xcel: Try less outrage, more savvy

  • Article by: LEE SCHAFER , Star Tribune
  • Updated: July 31, 2013 - 11:14 PM
Xcel CEO Ben Fowke
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Xcel CEO Ben Fowke

Most CEOs mask their anger in public, a skill that helps them get the top job in the first place.

Not Xcel Energy’s Ben Fowke.

This CEO of a Fortune 500 company arrived mad at a meeting with Star Tribune editors and reporters last week to discuss utility municipalization in Minneapolis, and he left mad.

There were no CEO rants or outbursts, but no one in the room could have missed his anger. It’s apparently quite aggravating to him that Minneapolis city officials could plan a City Council hearing Thursday on the question of municipalization, one step in a process that could lead Minnesota’s largest city to establish its own electric utility and take over the assets of Xcel, and not have ever asked whether Xcel still will be headquartered in Minneapolis the day the switch was thrown.

It won’t be, he said.

Having the city actually step into the shoes of Xcel sure looks like it could be an expensive fiasco for both the people of Minneapolis and Xcel, so some anger seems justified.

But to head this off the company needs to get a whole lot lighter on its feet politically.

It’s far more than this headquarters question that Xcel executives find frustrating, of course. Start with the notion that the city holds a lot of leverage now in talks to renew a utility franchise agreement. It’s a key point for advocates now pitching alternatives to business as usual with Xcel.

It’s also nonsense.

The franchise agreement that Xcel slid across the table to me early this week, the one that rolls off at the end of 2014, is just over four pages. It’s not quite as long as the contract at the kennel where we board our family dog.

It’s so short because it covers so little. It allows Xcel to gain access to public rights of way for transmission lines and to trim trees that affect those lines, in exchange for collecting a “franchise fee” for the city on Minneapolis revenue.

That’s it. Expiration would not mean that Xcel loses its right to run a power line down city streets. It’s the state that granted Minneapolis to Xcel as part of its exclusive service territory. Not the city.

No franchise agreement would likely make things messier, but Xcel would still be the electric company in Minneapolis. What’s certain is that the franchise fee Xcel collects for the city, which is currently 4.5 percent for residential customers, would go away day one.

Some leverage.

Xcel is also clearly bugged that its critics don’t seem to fully appreciate the technical and managerial expertise it takes to run a reliable electric grid across a broad swath of the state. And it’s not so easy to just carve out one city for a different mix of sources of energy, for instance, because as a regional regulated utility, it basically has agreed to treat all of its customers across the region the same.

As Fowke put it the day he came to the newspaper: “What I want on my roof you shouldn’t have to pay for.”

That seems to partly explain why Xcel appears to only want discussions with top officials. Laura McCarten, a regional vice present for Xcel in Minnesota, said in a conversation this week that “we really want to work with the city of Minneapolis” on its energy goals.

Minneapolis has a weak-mayor system with a lame duck now in the job. Whom, exactly, does Xcel expect to “work with”? The City Council?

“That’s been part of our struggle,” McCarten replied.

Maybe a better approach would be to see “the city” much more broadly than just the folks who go to work in City Hall. The people advocating for a different energy approach are operating primarily through a group called the Minneapolis Energy Options coalition (MEO), and there’s a cultural chasm here for Xcel to cross.

When Minneapolis Energy Options campaign coordinator Dylan Kesti stopped by the newspaper last week to discuss regional energy policy, long pants were optional.

CenterPoint Energy has been a target of activists, as well. Unlike Xcel, it saw it could do business with Minneapolis Energy Options, last week signing a three-page memorandum of understanding.

CenterPoint “affirms that it is a willing partner” in advancing the goals of MEO. It has agreed to “collaboratively explore” improvements in energy conservation programs and to “collaboratively explore” other ways to reduce greenhouse gas emissions.

In the realm of business, CenterPoint has agreed to nothing. In the realm of politics, it has made a deal.

As for Xcel, “I have gotten the impression that they expect some deference, for their work as a utility,” said John Farrell, chairman of the steering committee of Minneapolis Energy Options. “They are doing a great job of meeting their requirements [for renewable sources], but that does not mean we should stop asking for things or not aspire to do better.

“And there would be no better partner than Xcel in doing it. They do have all that experience and technical expertise and understanding of the regional grid, and they could bring all of that to the table.”

Some City Council members in Minneapolis must be thinking that booting Xcel and taking over as a power company is a yearslong process with huge financial risks to the city. They would have to be asking themselves when Xcel will come to the table. These council members don’t have a pressing energy policy problem, they have a political problem.

Xcel has met with members of the Minneapolis Energy Options group, and McCarten characterized it as a “good exchange of ideas.” Yet Xcel executives need to do so much more, meeting energy policy advocates maybe at the Hard Times Café on Riverside Avenue rather than at headquarters or the mayor’s office.

Loosen the tie. Listen. Talk about a memorandum that Xcel actually can sign.

And if Fowke won’t calm down, leave him in the car.

lee.schafer@startribune.com • 612-673-4302

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Xcel CEO Ben Fowke