Ever wonder what happened to the notion last August that the city of Minneapolis would take over its energy utilities? While it may seem like the issue vanished, next Monday the Minneapolis City Council makes a monumental decision on another way forward to a better energy future. On the table is a novel partnership between the city and Xcel Energy and CenterPoint Energy to meet the city’s ambitious equity, energy and environmental goals.
Why should the city opt for an untested utility partnership?
Over the past several years, Minneapolis has developed a comprehensive sustainability plan, including these ambitious targets: generating 10 percent of energy from local renewable energy sources, cutting energy use by 17 percent and reducing greenhouse gas emissions 30 percent by 2025. But there’s a big fly in the sustainability ointment. Two-thirds of the emissions from city residents and businesses come from energy sold by Xcel and CenterPoint.
In other words, the city’s sustainability success hinges on its ability to influence the use of its two largest energy sources: electricity and gas.
From a legal standpoint, the city doesn’t have much influence over the energy use of its residents and businesses. State law grants Xcel and CenterPoint monopolies over their respective energy sources within the city. The state Public Utilities Commission has authority to regulate these utilities in the public interest, insofar as the public is represented by its five commissioners. All Minnesota cities retain the right to take over their energy services from private corporations, but the 1970s-era state law contains a poison pill requiring the city to pay the utility’s profits long after assuming local control of the grid.
Barring a takeover, the city’s influence seems to be limited to its particular property: the use by the two utilities of city right of way (under streets and overhead wires) to deliver energy to homes and businesses. This power is enshrined in so-called “franchise” contracts between many Minnesota cities and their utilities.
But a funny thing happened last year, on the eve of the franchise expiration in Minneapolis. A grass-roots movement took form, insisting that the city — in order to meet its own energy goals — should leverage this once-in-a-generation expiration. This campaign, called Minneapolis Energy Options, suggested that the city should exercise its maximum local authority and at least consider — despite the drawbacks — a takeover of the electric and gas utilities, potentially joining 2,000 other U.S. cities in municipal ownership. The cry was taken up by City Council candidates and was even featured in the mayoral race, with Mayor Betsy Hodges among those advocating that the city explore the full extent of its options for a better energy future.
The city tabled putting municipal utilities on the ballot, but it didn’t give up the opportunity for a clean, local, equitable, affordable and reliable energy future. Driven by the grass-roots energy in 2013, the city completed a comprehensive Energy Pathways Study earlier this year exploring four strategies to reaching its energy goals, among them a novel city-utility partnership.
If executed according to the city’s vision, the partnership promises to bear several fruits. It would have a much shorter contract than previous franchises to allow the city and utilities to be held accountable to their mutual promises. It would include robust community participation, allowing key city stakeholders from unions to low-income residents to small businesses to shape the city’s energy future. And most prominently, it would give the city an equal decisionmaking role with the utilities in a partnership designed to meet the city’s energy goals.
The utilities should jump at the chance to sign on with the city and to treat the city’s energy users as collaborators, not just captive consumers. The city should jump at the chance to share authority over its energy future. The city’s residents should support them because of a real opportunity for community engagement in building a local focus on a cleaner, equitable, affordable and reliable energy system.
We won’t know the details until Monday, but if the partnership looks anything like the promise, then it’s a win-win for the city, its residents and businesses, and its utilities.
John Farrell is director of democratic energy at the Institute for Local Self-Reliance in Minneapolis and writes at the Energy Self-Reliant States blog (energyselfreliantstates.org).