Minneapolis mulls hiring nonprofit with utility ties for energy study

Minneapolis officials are considering hiring a nonprofit that has ties to Xcel Energy Inc. and CenterPoint Energy to study its options as its longtime agreements with the utilities come to an end.

The City Council is set to vote Friday on a $250,000 agreement with the Center for Energy and Environment (CEE) to look at ways Minneapolis could achieve its renewable energy goals when the 20-year agreements that give Xcel and CenterPoint exclusive rights of way in exchange for millions in franchise fees expire in 2014.

The city wants the group to research options for when those agreements end, including the possibility of having the city run its own utility system, an effort that Xcel has fought vigorously in Boulder, Colo.

Other possibilities involve keeping the companies, but imposing more requirements on them to help the city meet its goal of reducing green gas emissions by a third in the next dozen years.

The city, Xcel, and CEE describe the organization's connections in the industry as an asset to the study, though an outside observer says the burden is on those involved to prove they're impartial.

"Your challenge is going to be that people may question the credibility — you've got your own model and you're not an outside independent firm … you're going to have to prove to people that whatever you do, you have that kind of fair analysis," Ken Bradley said he recently told a friend at the nonprofit.

Bradley was, until recently, director of Environment Minnesota and is a founder of the Minneapolis Energy Options coalition.

City Coordinator Paul Aasen said it's very common for energy consultants and advocates to have experience working with utilities, and that in this case, the city is simply seeking technical and legal research and analysis. "If you're interacting on energy issues at all, you're going to end up crossing paths … with the utilities that are assigned to the service region," he said.

CEE, one of three companies that submitted a proposal to Minneapolis, traces its roots to the city's energy office in 1979. It spun off as a nonprofit when the city dissolved the office 10 years later, and has served 50,000 residential customers.

President and founder Sheldon Strom said the nonprofit submits proposals to help utilities improve energy conservation to the Minnesota Division of Energy Resources for approval. Utilities contract with CEE to carry out the work once the state OKs those plans.

Strom said that Xcel and CenterPoint jointly manage a contract with CEE for a program in which the nonprofit makes energy efficiency recommendations to homeowners and installs low-cost measures to boost their efficiency. Through Xcel, the nonprofit also does a rebate program for small businesses that gives them a free audit of their lighting and guides them through a lighting retrofit; the utility paid CEE $10.2 million last year for that work.

The center is currently awaiting state approval of a pitch for a new program called Energy Intelligence, which would entail working with smaller industrial companies that are Xcel customers.

He added that the center is hiring the law firm McGrann Shea Carnival Straughn & Lamb as a subcontractor to address the issue of municipalizing utilities. City Council members will vote on waiving a conflict of interest between Minneapolis and the firm, which is representing clients on unrelated negotiations with City Hall.

CEE has the largest program with the company out of any of the nonprofits that participate in its conservation efforts, according to Xcel, and utility regional vice president Laura McCarten described the organization as one of the most influential working on state energy policy.

"In the world of energy efficiency and energy policy issues, everybody knows everybody. … We find them to be a very professional and very competent organization that delivers what they say they will," said McCarten.

CenterPoint directed questions to the city.

The study, due early next year, will outline goals for the city's future energy system and ways to meet it, from taking over the utilities to changing the way the city uses franchise fees, and possibly seeking state regulatory changes.

Cam Winton, an attorney at Duke Energy, disclosed that Xcel is a client of the company's wind turbine maintenance services. Council Member Betsy Hodges said because Xcel wasn't her client, she felt free to use every tool possible to push the company in negotiations. The comment appeared to also be a jab at former Hennepin County Commissioner Mark Andrew, who said after the event that his consulting firm, GreenMark, had Xcel as a client in 2008.

The candidates said they were committed to exploring the city's options as the franchise agreements expired, though many cast doubts on forming a municipal utility. Former council president Jackie Cherryhomes, Council Member Don Samuels and Andrew voiced support for the study, and Winton suggested a five-year agreement with Xcel while the city continued studying whether taking over the utility would work.

Hodges said if Minneapolis signed another franchise agreement with Xcel, the city would advocate for a shorter-term agreement and higher renewable energy standards.