City-owned utilities issue distracts from achieving energy goals.
Many public-policy choices involve the clash of opposing groups with incompatible goals. There seems to more consensus regarding energy, however. Nearly every stakeholder desires reliable service, reasonable prices and as little environmental impact as possible.
Those are certainly the goals of residents, businesses and environmental organizations in Minneapolis. And they are shared by the two utilities, CenterPoint Energy and Xcel Energy, that have long provided service to the city.
For the most part, the utilities have delivered. Through innovation, conservation and cooperation with ratepayers and government officials, Xcel and CenterPoint have maintained reliable service in a challenging climate, priced reasonably, and have made progress toward relying on cleaner energy sources. While earning profits for shareholders, both have been good corporate citizens.
CenterPoint, with headquarters in Houston, employs about 900 workers in Minneapolis. It announced on Thursday that it would purchase and remodel the former Neiman Marcus store on Nicollet Mall. Xcel, with headquarters in Minneapolis, employs about 2,000 people downtown and is also expanding its Nicollet Mall headquarters by taking space in a new nine-story building.
All of this could change, however — with unpredictable results. The exclusive franchise rights for Xcel and CenterPoint expire at the end of 2014. Rather than renew those agreements, the city may consider running the utilities itself. It is time for residents to pay attention to this debate, and time for the community’s leaders to soberly reflect on its implications.
Earlier this summer, the City Council ordered a study on the feasibility of municipal utilities. That report is due in February. This Thursday, the council will hold a public hearing on the issue. Soon after that, it will vote on whether to place the question of authorizing municipalization before voters on the November ballot.
It seems likely that the focus of the hearing will be on Xcel. Last Tuesday, an agreement was reached between CenterPoint and Minneapolis Energy Options (MEO), a coalition pushing for the city to keep the municipalization option open. The pact signaled agreement between the utility and the environmental group on enhancing conservation and other measures. And MEO agreed to urge the City Council to exclude CenterPoint’s natural gas franchise from any referendum on exploring municipalization.
Xcel has reached no such understanding, and to date has not been in as deep a dialogue with MEO as CenterPoint has been.
Both Xcel and City Council members should think long and hard about their next steps. If a confrontational battle over a polarizing referendum can be avoided, it should be.
Some advocates suggest that going forward with the referendum would increase the city’s leverage in negotiations with Xcel. Perhaps. But the city already has leverage, particularly in its ability to negotiate the length of any renewal franchise agreement.
Xcel, meanwhile, has leverage, too. Xcel CEO Ben Fowke told the Star Tribune Editorial Board last week that “there is not a utility in the nation that has their headquarters in a city that has municipalized.”
Actually taking over electric service in the city would present daunting challenges for Minneapolis. The transition costs could be staggering — billions of dollars, according to a letter Xcel sent to city residents. There is no evidence that the city has the expertise to run an enterprise involving so many specialized technical and financial complexities.
Many Minneapolitans think City Hall has its hands full fixing potholes and plowing snow. And despite laudable intentions, there is nothing to immediately suggest that MEO or other advocates have a better plan than Xcel does for balancing environmental and economic objectives.
Amid so much uncertainty, starting a high-stakes political fight could have unintended consequences. Instead of encouraging the needed dialogue about the city’s energy goals, it could fuel an overheated climate of distrust. If the referendum failed, the city’s leverage would disappear. If it passed, city leaders might feel political pressure to go through with municipalization even if the feasibility study and further exploration advised against it.
Already the political jousting has drained away energies that would be better focused elsewhere. Minneapolis should strive to be America’s greenest city — a laudable ambition in its own right, as well as one that would be highly marketable to potential residents and businesses. This achievable vision — not a bruising battle over the unlikely notion of a municipal electric utility — should be the focus of elected officials, residents, businesses, environmental groups and utilities.
It would serve Minneapolis best if all involved talked more directly and deeply — and soon — about the real goal: How to make Minneapolis a world-class example of cooperation and conservation.
The Opinion section is produced by the Editorial Department to foster discussion about key issues. The Editorial Board represents the institutional voice of the Star Tribune and operates independently of the newsroom.