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Could Minneapolis Get Cleaner Energy With a Utility Takeover?

John Farrell
August 14, 2012  |  6 Comments

As we spoke to legislators and activists roaming the halls of the State Capitol this past legislative session, it became increasingly clear that Xcel Energy and other utilities are calling the shots for our energy future.

They decide which bills will be heard and, ultimately, which will be passed into law. Not coincidentally, a champion of clean, local energy was denied a seat on the Public Utilities Commission by the Legislature.

Republished from an op-ed written by myself and Ken Bradley and printed in the Startribune.com

Minnesota spends more than $20 billion a year on energy -- primarily importing polluting fossil fuels -- and the state's utilities typically lobby against decreasing our dependency. This hampers our economy and harms our environment.

Fortunately, cities don't have to rely on the Legislature to stand up for more-efficient and cleaner energy use.

Consider Minneapolis. The city's residents spend $450 million per year on electricity and gas services. As in most communities, these services are delivered by utility companies that have a "franchise."

This 20-year legal agreement gives each utility a monopoly to deliver electricity or gas to homes and businesses in exchange for an annual fee to the city (about $23 million a year, taken right off the energy bills of Minneapolis customers).

Over the next several years, these franchise agreements will expire. Minneapolis has a choice to make. Its two big utilities -- Xcel Energy and Centerpoint Energy -- will send their fleets of lobbyists across the river from the Capitol to ask the city of lakes to sign away its energy options -- and $9 billion in revenue -- for the next 20 years.

We know that Minneapolis residents and businesses would like to install more local renewable energy and reduce energy use. Utility programs have come up short.

There has been only a tiny amount of local energy development in Minneapolis. Xcel has typically opposed policies like a solar energy standard, among others, that would make it easier and more cost-effective to install solar energy, generate local electricity and create local jobs.

Energy savings also have been hard to come by; Xcel and Centerpoint have little incentive to promote them when their bottom lines grow along with electricity or gas sales.

Meanwhile, states like New Jersey and our provincial neighbors to the north in Ontario have installed more than 500 megawatts of solar power. They have built more solar power in a single month than our utilities have installed in their entire histories.

Every megawatt of solar can power 200 homes with free, clean sunshine, and every megawatt installed in Minneapolis could mean more jobs and dollars in the local economy.

As city residents, we need to make sure our next franchise agreement paves the way to an energy future that includes reliable, efficient and local renewable energy. Our leaders need to understand that 20-year franchises are confining when energy technologies are changing dramatically.

Almost no one had a cellphone 20 years ago, and most of us were excited to tape our favorite television programs on VHS. It made more sense to sign 20-year franchises with big utilities when there were few economical energy alternatives.

This time it's different. The McKinsey research group recently found that the United States could reduce energy consumption by nearly 25 percent and save money.

The cost of renewable energy is falling dramatically (50 percent in five years for solar). Minneapolis doesn't have to settle for 20 more years of rising energy use, rising costs and minimal local clean energy.

At least the city could buy time with a short-term agreement of two to three years while it studied alternatives. It also could negotiate franchises that require the utilities to make big investments in conservation, energy efficiency and local renewable energy.

Even better, Minneapolis could join Los Angeles, San Antonio and other large cities and consider becoming its own utility. A city-owned utility could funnel those energy dollars into big investments in energy savings and capture the economic opportunities as local energy generation becomes remarkably cost-effective.

Already one in seven Americans are served by a municipal electric utility, retaining control over their energy futures.

The City of Lakes could sign franchise agreements with its two big utilities, their polluting power plants and their shareholders for another 20 years. They would be happy to oblige. But we believe that the world is changing and that we should keep our options open.

-------------------------

Ken Bradley is director of Environment Minnesota. John Farrell is senior researcher specializing in energy policy for the Institute for Local Self-Reliance. Both are members of the Minneapolis Energy Option coalition.

Lead image: Plan A or Plan B via Shutterstock.

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

6 Comments

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Douglas Prince
Douglas Prince
August 17, 2012
electric38 -
I hear ya. NV Energy keeps its monopoly and the so-called "education" system basically churns out strippers and busboys.
Ralph Perez
Ralph Perez
August 17, 2012
Good point Doug. Nevada is a sunshine gold mine of free energy for solar PV power. Check the rooftop solar PV consumer owned numbers. Compare that with their unemployment. Thousands of people could be put to work installing consumer owned rooftop solar but the powers that be, have the press and the politicians deep in their pockets. The drink, gamble and party atmosphere has them rendered useless. More foreclosures, more homeless, and more broken families await the future for Nevada's children while the bickering continues.

Remember, once the consumer owned PV rooftop is installed the $400-$600 dollar electric bill disappears for hundreds of thousands of consumers - for 1 complete generation. This money can go elsewhere into the economy to upgrade the quality of life in several areas.

What's done in Vegas with renewable energy, apparently does stay in Vegas. While the rich casinos and NV Energy sit and smile. Rolling the dice and spinning the wheel with the odds firmly stacked against the future of our children's health.
Delroy Leslie
Delroy Leslie
August 16, 2012
Minnesota also has plenty of good solar resources that they should take advantage of. Unfortunately most people are comfortable with the environmentally damaging form of electricity that they do not think of an alternative. Even with the hot summers and warm winters, they still do not see a problem
Ron Peterson
Ron Peterson
August 16, 2012
Western Minnesota has good wind resources, they should take advantage of it, but it's hard to do with the high return required by private firms.
Douglas Prince
Douglas Prince
August 16, 2012
John - I'm assuming Xcel and Centerpoint are investor-owned utilities. At least Minneapolis has a potential choice of providers. Unless they're colluding, of course.
In Nevada, we only have NV Energy for the entire state. It's an investor-owned monopoly which has the PUC wrapped around its finger. It is constantly finding one excuse over another to raise rates quarterly or biannually.
I believe the only true response to such dictatorial entities is to go completely off-grid. Give up some of the excesses of modern life, slap up some panels, put up a VAWT, and cut the cord.
Is there any sort of off-grid movement occurring in Minnesota at this time?
Richard Mignogna
Richard Mignogna
August 16, 2012
John, interesting proposition... however unrealistic. I agree that IOUs exert an unwelcome and disproportionate influence on elected officials. The provision of necessary public services is certainly within the purview of government, the principal concerns being the ability of government bureaucracies to provide such services more efficiently and cost effectively than the private sector. But, my time at the Colorado PUC has convinced me that the regulated monopoly utility model no longer serves its purpose, though perhaps not for the same reasons as you. IOUs seldom operate in the public interest and new technology is making them increasing irrelevant. Xcel, of course, is headquartered in Minneapolis. Losing Boulder would be one thing. Losing its home town? That would certainly be an interesting battle. One could easily envision them threatening to pick up their toys -- and their jobs -- and go elsewhere. That should pretty much stifle any consideration of municipalization.

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John Farrell

John Farrell

John Farrell directs the Energy Self-Reliant States and Communities program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His latest paper,...
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