A renewed interest in the municipalization of utilities has created new battlegrounds across the U.S.
A renewed interest in the municipalization of utilities has created new battlegrounds across the U.S., where thousands of voters could soon decide to cut ties with private companies and manage their energy futures collectively. Although there are already thousands of public utilities across the country, there have been just 17 new municipal utilities formed over the past decade, according to a recent report by the Minneapolis Star Tribune.
With the chance to lower electricity rates, increase reliability and curb carbon emissions, voters in Minneapolis, Minn. and Boulder, Colo. could soon join the roughly 45 million Americans who already receive at least part of their energy needs from municipal utilities.
In both of these cities, Xcel Energy Inc. continues to fight for hundreds of thousands of customers, making the case to voters and city councils that it continues to meet customer needs at a competitive rate.
Minneapolis energy future
So what are the benefits of the shift? Well for one, advocates in Minneapolis, a city of about 382,000 residents, claim it will expand democracy and lower bills for ratepayers.
“The goals of the campaign was to look at the franchise agreements with Center Point and Xcel, which expire at the end of 2014. All groups sat down with the understanding that these are 20 year agreements and we want to push for municipal utilities as a cleaner, more affordable option,” said Dylan Kesti, campaign coordinator for Minneapolis Energy Options to Mint Press News.
The grassroots coalition now boasts endorsements from 30 organizations including the Sierra Club and 350.org as well as 19 neighborhood organizations that hope the city council will agree to put the matter to a vote this fall.
“Our campaign is about options. It is about Minneapolis residents having the option to choose. It doesn’t mandate it, but it calls for the option to buy back the grid from utility companies,” Kesti said.
Private energy corporations like Xcel are not backing down without a fight. The company stands to lose at least 5,800 customers in Boulder and roughly 183,000 in Minneapolis. When contacted by Mint Press News, Xcel shared a letter that was sent out to its customers, claiming that the company provides reliable service and continues to meet the needs of its ratepayers.
“We believe Minneapolis residents want reliable, affordable and clean energy — Xcel Energy and our 2,500 Minneapolis employees deliver just that. Because energy is our only business, we’ve become a national leader in reducing carbon emissions while keeping our electricity rates below the national average and our service reliability above the national average,” writes Laura McCarten, regional vice president.
The company claims to be reducing carbon emissions by integrating new green energy, including wind turbines, into its energy portfolio.
An exit by Xcel could mean the loss of more than 2,000 jobs and vacant office space in the Twin cities area. “There is not a utility in the nation that has their headquarters in a city that has municipalized,” said Xcel CEO Ben Fowke in a recent interview with the Star Tribune.
As both sides continue to vie for public support, the city council will soon decide whether voters get to make that decision during November elections. Seven of the 13 city council members need to support municipalization in order for it to be put to a voter referendum. “We have pretty high confidence that we can get this on the ballot,” Kesti said.
How do the voters feel about all of this? Early indications are mixed. The The The Minneapolis Regional Chamber of Commerce recently surveyed 400 people on the issue, finding roughly 35 percent support for full utility municipalization.
Kesti and campaigners at Minneapolis Energy Options found a different result. “We have found a really different result after we knocked on 55,000 doors, the majority saying they are voting ‘yes’ and 5,000 individual voters supporting the campaign with a contribution.”
The issue has divided elected officials and political candidates, sometimes putting same party officials at odds with each other.
The New York Times reports that New York Gov. Andrew Cuomo (D) called for the privatization of the Long Island Power Authority (LIPA) after Hurricane Sandy struck the Atlantic coast last year.
More than 90 percent of the 1.1 million LIPA customers on Long Island were without power, some for as long as two weeks after the storm. “For years, LIPA has provided lackluster service while asking ratepayers to foot the bill for its financial problems. LIPA’s failure during Superstorm Sandy was a wakeup call for action,” Cuomo said.
Candidates for in the Minneapolis mayoral race are split on the issue, some lambasting municipalization, others praising it.
“It’s reckless and irresponsible to put something on the ballot that win or lose is going to dramatically set back the mayor’s ability to strike a deal on the franchise agreement next year or the year after,” said Mark Andrew, Minneapolis mayoral candidate.
“Unlike Mark Andrew, who tells different people different things about the franchise agreement, my position has always been that Minneapolis needs to negotiate the best deal possible by considering all options for energy that is affordable, green and reliable,” said mayoral candidate Betsy Hodges, responding to Andrew’s position.
But is it a panacea to reverse the effects of climate change? Probably not, but statistics from other communities show that historically, when the public has control over its own electricity output, green alternatives are high on the list of priorities, which has allowed some cities to make major strides when it comes to reducing carbon emissions.
Proponents look to the Sacramento Municipal Utilities District (SMUD), which currently serves 600,000 households, or about 1.4 million people in California, one of the largest public utilities in the country. By most accounts, it has been an overall success since its formation in 1946.
SMUD was formed in 1923 and became operational March 1946 after a California Supreme Court decision denied Pacific Gas and Electric’s final plea to halt the move to municipal utilities, a move that was supported by a majority of residents at the time. Since then, Sacramento ratepayers have owned the utilities, controlling policy democratically. Voters in each of seven districts elect representatives to serve on the SMUD board, which ultimately decides policy.
“What you get from that political process is political pressure from the elected board members on our staff to deliver for the customer ratepayers. It always keeps us focused on delivering for the customer,” said Chris Capra, public information officer for the Sacramento Municipal Utilities District to Mint Press News.
As a result, SMUD claims that rates have dropped for customers. “We’re about 26 percent lower across the board than Pacific Gas and Electric and we’re among the lowest utility rates in the state,” said Capra. “They get a direct return on any good things that we do because at the end of the day they own the company.”
What about clean energy? It appears that SMUD is ahead of the curve when it comes to reduction of carbon emissions.
“For about the last 25 years or so we have worked hard to develop renewable sources of energy that would provide a big enough portion of our power mix to make a difference. We have also embarked on getting more folks into electric vehicles and promoted that technology with free charging. We’re now about 23 percent renewable with the solar, bio-gas and wind. Over the years, since 1946, we built a huge hydroelectric power project up in the Sierra mountains that delivers hydropower, about 680 megawatts.
“If you take the renewables and the hydro generation, we’re about 50 percent carbon free.”