Cam Gordon
BY CAM GORDON
This month, the city council, mayor and two large utility companies are poised to sign agreements that will give CenterPoint and Xcel exclusive rights to be the city’s natural gas and electricity providers for 10 more years, with options to extend it another 10.
When the gas and electric franchise agreements were last up for renewal in 2013, there was a push led by the group Minneapolis Energy Options, for a municipal, or city, ownership option. Under state law, that is the only legal alternative. In Minnesota, electric and gas utility companies are granted monopolies and are not subject to market competition. But, with a favorable vote of a ballot initiative, cities can own and run their own utility instead.
Back in 2013, after meeting well-funded opposition from the utility companies who seemed eager to avoid a ballot campaign – and facing state laws that favored the private utilities – the municipalization effort looked unlikely to make it to ballot and was leveraged to approve shorter, (10 instead of 20-year) franchise agreements and create the Minneapolis Clean Energy Partnership (CEP). The partnership, which includes the two utilities and the city, was created through memorandums-of-understandings (MOU) that said the utilities would help the city reach its clean energy goals.
If judged on its use as a tool to improve public relations, and to make all sides look like they are doing more to address climate concerns, the CEP can easily be seen as a success.
If judged on its ability to divert community activists and city elected officials away from municipalization efforts and towards managing work plans and meeting agendas, it also appears to be successful.
But if we judge the success of the partnership on how well it has helped the city reach its clean energy vision, it might not look so good.
In one of CEP’s annual reports, released in 2023, only 2 of their own 7 measurable goals were scored as being “on track,” and those 2 were under city control and totally due to changes in city operations. The 5 that required utility cooperation all failed to be on track.
Earlier, despite agreeing to prioritize an on-bill pay-as-you-save – or inclusive financing initiative that has successfully been used in other cities – the utilities failed to provide the needed support and assistance. Despite studies, experts and strong support from the community advisors, it has yet to be implemented.
John Farrell, co-director of the Institute for Local Self-Reliance, director of the Energy Democracy Initiative and member of the city’s Energy Vision Advisory Committee, is one of those experts. “The partnership gave the utilities an opportunity to prove their willingness to aid the city’s ambitious climate aims,” he wrote last June in a Star Tribune commentary. “Ten years later, the results are clear: Utilities are doing little absent state policy or regulatory requirements…”
It is easy to imagine how things could have been worse. Prior to the CEP, the utility managers and executives rarely met with elected officials and often ignored city council regulations, including a city law passed in the 1960s that required all new electric lines to be buried. Xcel also fought the council over burying the powerlines along the Midtown Greenway that they insisted should have been above ground.
With the CEP, city and utility company staff at least meet regularly to discuss work plans with approved goals and CEP efforts. An appointed community advisory committee, the Energy Vision Advisory Committee (EVAC), was formed and the utilities have agreed to shared goals and work plans with the city.
Some progress has been made, like required energy disclosure when properties are sold or rented, zero-interest financing for energy-burdened households, and matching grant funding to support clean energy and energy efficiency projects. But most, if not all, the work for those was done by the city and could have happened without CEP.
Too often the utilities have used the partnership to slow down or back away from commitments that company leaders may have reassessed as too cumbersome or threatening to future profits, like the Resilient Minneapolis program that could have led to much more local clean energy by now, or the inclusive financing initiative.
Now, with this agreement, it seems clear that the companies are more interested in managing city and community concerns, rather than seeing the CEP succeed.
In a report about the current franchise agreement negotiations, city staff acknowledge that “The city sought but was not able to secure structural enhancements to the Clean Energy Partnership that were recommended by city staff or members of the Partnership’s Energy Vision Advisory Committee.”
Both utilities, apparently, opposed city and community supported efforts, including funding and hiring an independent CEP administrator to staff the partnership, adding a board seat designated for a member of EVAC and the “procedural inclusion of EVAC if and when a utility does not meet their established goals and commitments.”
Imagine how much further along we would be if the city owned and managed the utilities.
In 2023 Xcel took in $489,000,000 and CenterPoint made $248,000,000, from Minneapolis rate payers. That is a total of $737,000,000, used to cover costs of providing energy to properties in the city as well as profits to pay dividends to stockholders and help cover other expenses like the $21,181,951 in compensation paid to Xcel’s CEO Bob Frenzel that same year.
What if we kept that in our local economy? What if that could be used to cover the costs of providing fossil-free heat and electricity, to invest in energy efficiency, and for the creation of new, clean energy through small scale thermal energy districts, solar gardens and more?
We need better energy options and changing the energy system through these partnership agreements has not worked.
The upcoming approval process of these latest agreements could be more than a celebratory look-good opportunity for elected officials and utility companies. Can we use it also to pivot towards something better? While likely to pass, let’s make this our last set of franchise agreements with the for-profit monopolies. Let us use the time and the likely ongoing existence of the CEP, EVAC, as well as the option to cancel any time with a 12-month notice, to clear the path to municipalization. What legislative barriers do we need to address? What do we need to know and do before we finally put the question before the voters? And, once approved, how do we ensure a smooth transition?
Through independence and democratic oversight, we can join hundreds of municipal gas and electric utilities and secure the freedom and opportunity to create the clean, reliable, affordable, and renewable energy future, and quality green jobs, that the people of Minneapolis deserve, and the future of our species requires.
