- Who is Community Power?
- What is the current situation of the franchise agreements with Xcel & Centerpoint?
- Would municipal utility formation be in the interest of Minneapolis?
- Was Minneapolis Energy Options merely a campaign to form a municipal power utility?
- How does the process of a municipal utility ballot initiative work?
- Would a yes on the ballot initiative have raised energy rates?
- What would a yes vote on the referendum have meant for reliability?
- Are there other municipal utilities in Minnesota?
- Are there municipal utilities in other large cities around the country?
- How do municipal utilities perform?
- How would Minneapolis pay for the energy infrastructure?
- What are the jobs and employment conditions under municipal utility?
- Does the city have experience providing utility service?
On Jan 1st 2015, thanks to pressure built by residents during the Minneapolis Energy Options & the subsequent Energy Pathways study, Minneapolis began a new shortened "franchise agreements" with both Xcel Energy (for electricity) and Centerpoint (for gas). Franchise agreements have traditionally spanned 20-year periods, and exist to formally allow utility companies to construct and maintain energy distribution infrastructure like wires, poles, and gas pipelines along public roads, highways, and other publicly-owned land.
Our new, shorter, franchise agreement is set for half the usual length - a period of 10 years. A key feature of the new agreement, is the option for City to opt out of the franchise agreement as soon as 5 years if 9 City Council Members vote to opt out. Because the new franchise agreements were negotiated concurrently with the terms of the Minneapolis Clean Energy Partnership (a city-utility partnership), evaluation of the new franchise agreements will be closely tied to the success of the city utility partnership. If the partnership with both utilities goes well, then the new franchise agreements would also be extended for 2 additional 5 year terms after the initial 10 years.
At the time of the 2013 Minneapolis Energy Options campaign, Minneapolis was nearing the end 20-year franchise agreements with Xcel and Centerpoint that were set to expire on December 31, 2014 and January 1st 2015 respectively.
Overall, municipal-owned utilities have half as many outage minutes and 14% cheaper power on a national average than corporate-owned power utilities. On average, municipal utilities are quicker to get the power back on after severe weather events than corporate-owned utilities. Municipal utilities are often more efficient in getting the same amount of work done for less cost because there is less overheard, no right of way fees, no shareholders to pay dividends to (the returns go back into the city), minimal lobbying, and no lavish executive bonuses.
However, we were never quite certain whether municipalization is the right choice for Minneapolis specifically. Nevertheless in 2013 we enabled and pushed the city to evaluate and pursue Municipal Utility as an option that includes a requirement to ensuring that a municipal utility would:
- Keep rates at or below their current levels
- Maintain or improving energy reliability
- Create a clear pathway to dramatic city-wide energy savings to reduce both costs and dependency on dirty energy,
- Create a structure and system for greater community ownership, control, and economic benefit in our energy system
Pursuit of a Municipal Utility is not an option however, for the duration of the City-Utility Partnership.
No. The Minneapolis Energy Options campaign seeks multiple options to make the energy we use cleaner, more affordable, and more reliable. The City has chosen to achieve that goal through improved franchise agreements and partnership agreements with Xcel Energy and Centerpoint Energy, rather than by pursuing a municipal utility. In 2013 the campaign believed it was important for the people of Minneapolis to be given a chance to vote yes on authorize but not require the City to create a municipal power utility, in hopes that a yes vote by the people will make it more likely that we will achieve these goals through either the franchise agreements or a new municipal utility.
Municipalization is a process laid out by Minnesota State law. First, the City Council must vote on a resolution to put a ballot initiative in front of voters to authorize formation of a municipal power utility to the Public Utilities Commission. This has to be done no less than 60 days before election day. If such a referendum passes then the city will be authorized but not required to purchase the electric and/or gas utility infrastructure. The city will also gain standing in front of the State Public Utilities Commission to conduct a feasibility study on whether a city can purchase and operate the utility infrastructure as cheaply, reliably and more cleanly than the current utilities. Acquisition would go forward if the City can prove that it can deliver energy as cheaply and reliably as the existing utilities while achieving its renewable energy and efficiency goals.
No. The referendum to authorize formation of a Municipal Utility which Minneapolis Energy Options was campaigning for last year would have required the City to prove that it will not raise rates. If the City can’t prove that, the authorization will not have taken effect. And remember, rates have been going up under the current utilities. Xcel has raised rates at least four times since 2006.
The 2013 referendum to authorize formation of a municipal utility would have required the City to prove that it can keep reliability as good or better than the incumbent utilities. The City provides highly reliable utility services today: drinking water, sanitary sewer, storm sewer, garbage and recycling. In the most recent customer satisfaction survey, no Minneapolis utility service received less than 80% favorable ratings from residents.
Yes. Many Minnesota communities, including Austin, Blooming Prairie, Fairmont, Grand Marais, Lake City, Litchfield, Moorhead, Mora, New Prague, North Branch, Owatonna, Preston, Princeton, Redwood Falls, Rochester, St. Peter, Spring Valley, Waseca, and Wells.
Yes. Los Angeles, Sacramento, San Antonio, Austin and many other large cities have municipal power utilities. Boulder, Colorado has recently voted to form a municipal utility.
On average, customers of municipal utilities have fewer minutes of power outages per year and often municipal utilities get the power back on more quickly after severe weather events. And municipal utilities around the country are leading the way in energy efficiency and clean energy: the Sacramento municipal utility has installed more than 100 megawatts of solar (compare to only 1 MW in Minneapolis) and 230 megawatts of wind and is making steady progress towards a goal of reducing emissions by 90% by 2050.
If formation of Municipal Utility was being pursued, Minneapolis would bond to pay for the electric grid and/or natural gas infrastructure. The City has a AAA bond rating, (compare this to Xcel’s BBB+ bond rating) and rates for municipal bonds are at historic lows. Financially speaking this would have been an ideal time to do this sort of bonding. Yes, it is likely to be very expensive to buy the energy infrastructure. We would not even know the true numbers on how expensive it would be until after negotiations with the incumbent utilities would be completed. Under an ideal scenario, the fees paid by Minneapolis energy utility customers should be sufficient to pay off the bonds, if the City can purchase the infrastructure for a reasonable cost. And remember, the authorizing referendum campaigned for in 2013 would have required that the City not raise rates more than the historical average.
On average, municipal utilities employ more local people per customers than investor-‐owned utilities. It is because city-owned utilities naturally pay more attention to local repair concerns and have proportionally more employees on hand in the local community ready to fix outages and do basic maintenance. The City of Minneapolis has a strong history of paying its employees well, and a commitment to living wages and collective bargaining.
Yes. As noted above, the City is already a major utility provider. The City’s drinking water utility is so successful that neighboring communities purchase their water from Minneapolis.