How Local Control Empowers Cities to Fight Climate Change (Episode 109)

Date: 17 Sep 2020 | posted in: Building Local Power, Energy | 0 Facebooktwitterredditmail

On this episode of Building Local Power, host Jess Del Fiacco talks with John Farrell, Director of ILSR’s Energy Democracy Initiative, about how cities are taking action around climate change. It also features perspective from leaders in Burlington, Vt.; Boulder, Colo.; Pueblo, Colo.; and Minneapolis, Minn., who have tackled ambitious clean energy goals — tune into ILSR’s Local Energy Rules podcast to hear full interviews with each of them!

Jess and John’s discussion touches on:

  • Where we’ve seen strong local commitments to clean energy standards and other climate action, and what’s needed for cities to actually achieve these goals.
  • How municipalization efforts can give cities valuable leverage, even if they do not result in a utility takeover.
  • How local control makes it possible for cities to address racial and economic disparities around energy issues and makes it easier for residents to hold officials accountable.

“…that lack of control really does make it a lot harder to make progress on cleaning up the electricity system of course, but also more broadly on climate change. Electricity is where we’re going when it comes to the fuel we’re going to use of the future, because we can make it renewably and cleanly. So if you can’t control your electricity system, it would be a lot harder.”

 

Jess Del Fiacco: Hello, and welcome to Building Local Power, a podcast dedicated to thought provoking conversations about how we can challenge corporate monopolies and expand the power of people to shape their own future. I’m Jess Del Fiacco, the host of Building Local Power and communications manager here at the Institute for Local Self-Reliance.
Jess Del Fiacco: For 45 years ILSR has worked to build thriving equitable communities where power, wealth, and accountability remain in local hands. Today I’m here with John Farrell, who is a co-director of the Institute for Local Self-Reliance, as well as the director of our Energy Democracy Initiative and I’m glad you’re here today, John, because it’s looking a little apocalyptic out there. We’ve got fires and smoke and orange skies and hurricanes, and God knows what’s coming at us tomorrow. It seems like a good time to talk about climate change, that little problem.
John Farrell: Yeah. I love that idea that we just have this enormous force, if you will, that we’re contributing to, and we call it our little problem.
Jess Del Fiacco: Starting to think that it might be an issue for us. In actuality it seems like a very big problem, a global issue for everyone. But we’re ILSR. Can you talk about why we need action on the local level and what advantages there are to local efforts regarding clean energy and addressing climate change issues?
John Farrell: Yeah. I think really in the last decade, what we’ve seen is that in particular because our federal government in the United States has been pretty dysfunctional when it comes to clean energy and climate policy, that a lot of the burden of taking action has fallen on cities and states. What you see happening in cities in particular is that you have relatively progressive population. So folks who are interested in taking the science at face value and doing something about it, and with enough political will around that to make a commitment to doing something significant. So you see cities, over a hundred cities now in the United States representing about a third of the total country’s population have made some sort of very bold commitment to 100% renewable electricity, sometime in the next decade or two.
John Farrell: That’s probably the biggest thing that we’re seeing, is making some really significant commitments. And then underneath that commitment we’re actually seeing cities both try to build out serious plans for achieving that goal, which is complicated and we can get more into that. But also some cities even reaching that goal or getting well on their way toward that goal. We’re seeing a lot of ways in which communities, in which cities are able to actually move the chains, make some progress on climate change despite the fact that our federal government has really not taken a serious interest in doing something about it.
Jess Del Fiacco: You say it’s complicated for cities to actually achieve these goals. Has it happened anywhere? Has anyone reached 100% renewable electricity and is there a reason why or why it is complicated?
John Farrell: Yeah. Well, there’s a couple of prominent examples. One is Greensburg, Kansas. In that case it was aided by a tornado that literally leveled the town and so when they rebuilt-
Jess Del Fiacco: Helpful.
John Farrell: … they thought, “Hey, we could do this in a better way.” And so they built some wind turbines to produce the electricity that serves on an annual basis all of the community’s needs. Now they’re a relatively small town and they did own their electric utility and that actually really is the common theme that we’re seeing. So another city, a larger city that has also succeeded in reaching 100% renewable electricity is Burlington, Vermont. We actually spoke with some folks from there, the mayor and the head of their electric utility and their success was in part due to common clean energy sources like wind and solar, but also a biomass plant that they built a number of years ago that burns waste wood and stuff from the forestry industry there. It was a combination of resources that the utility was able to put together to reach that 100% goal. But really it was the fact that, whether it was Greensburg or Burlington or many other cities now that have made progress on this, Georgetown, Texas is another one. It was the fact that the city owned its electric company. It was just another department in the city.
John Farrell: And so when the elected officials said, “Hey, folks here are telling us this is a really important thing for them that we should pursue,” they were able to turn over and say to the electric department, “Figure out how it works. Make it happen.” Whereas in most major cities in the United States, in most cities in general, they don’t own the electric utility. It’s a private company. It might be regulated by the state, or it might be a cooperative. There are 2000 municipal utilities. Most of them were pretty small cities. I believe that’s about one in 10, maybe one in eight cities across the country does own their utility, but the vast majority don’t. And that lack of control really does make it a lot harder to make progress on cleaning up the electricity system of course, but also more broadly on climate change. Electricity is where we’re going when it comes to the fuel we’re going to use of the future because we can make it renewably and cleanly. So if you can’t control your electricity system, it would be a lot harder.
John Farrell: I think one thing that might be helpful actually for folks is we have a clip of that interview with the mayor and the head of the electric department from Burlington where they talk about why it was that they were able to get to that 100% goal. That might be helpful in terms of understanding that.
Darren Springer: I think one of the interesting things to me about this net zero roadmap effort is having such a big public release. I’ve had anecdotal examples when I go to a coffee shop, when I’m talking to my neighbors. People who have taken in what this goal is and have embraced it and are thinking about different things in their own life. “Should we get heat pumps? Should we get an EV? Should I take the bus more? Should I look at getting an electric bike,” for example. I’ve heard all those conversations. I think for communities just setting the goal and getting it out there, that that’s a shared goal as the mayor talks about with political will is a really powerful tool. I think on the utility side, I agree completely that there are opportunities for innovation with investor owned utilities, as well as public power, as well as cooperatives. Green Mountain Power is a great example in Vermont. We’ve got great utilities doing work.
Darren Springer: I think one of the challenges that needs to be looked at is utility regulation. We in Vermont have a creative regulatory structure that allows our utilities to make investments in rebates and incentives and programs that help reduce fossil fuel use in the heating and transportation sectors. I think as a nation we want our utilities to compete because we have a cleaner source of energy, generally speaking, than petroleum or other fossil fuels. We want our utilities to compete for market share with EVs and with cold climate heat pumps and we want regulatory structures that are going to properly incentivize that competition.
Darren Springer: Utilities are regulated monopolies when it comes to providing electric service, but in the transportation sector for example, we’re essentially upstarts that are competing against an entrenched incumbent industry with a lot of capital available. So I think we need utility regulatory structures around the country that match the ambition that we have to decarbonize through electric technologies.
Miro Weinberger: Well, I think it was maybe possible to do through a different structure, but probably would’ve been much less likely. I think it’s not an accident that it was a city with a publicly owned utility that got there first. I say that because I’ve come to think there are really two essential ingredients to reaching the goal. One was political will. It was a decision back in 2004 first for the city to stop purchasing nuclear energy and to replace it with a goal of getting to 100% renewables. That was the essential first step.
Miro Weinberger: The city was only buying approximately 25% renewables at that time. In 2014, a decade later I had really a privilege, an honor of being the mayor as we completed that journey and purchased a hydroelectric facility that got us over the final, that milestone, that threshold. That political will was essential. It was sustained throughout that decade period of time. The other element of it was excellent technical expertise at the Burlington electric department. I think with a city owned utility, the directness of setting a goal that, is it somewhat of a political? Was easier to achieve than probably would have been likely in some corporate setting where you have to balance that goal maybe more explicitly or in different ways against shareholder profits and whatnot. So, I think it’s no accident.
Jess Del Fiacco: That was Burlington Mayor Miro Weinberger and Darren Springer, general manager of Burlington Electric discussing their city’s commitment to 100% renewable energy and why a city owned utility was so important to their success. For communities who do have this control, have they always had it? Is there some reason why not very many communities control their electric utility?
John Farrell: Yeah. I just find the history of how some cities have control and some cities don’t fascinating. Because what it really comes down to is in the Wild West, if you will, of the beginnings of the electricity system at the early parts of the 20th century, you’ve got multiple competing private enterprises building grids. You have probably a fair amount of bad behavior on part of those companies who are all just madly trying to get market share, to string new wires. And it’s a mess too, because you have multiple companies trying to wire up different parts of the city and these grids don’t even work together.
John Farrell: So in that craziness you have some industry barons who realized, “Hey, a strategy for private companies to survive this is going to be to cut a deal with the state and to say, if we can have a monopoly over a certain community then we can provide that service and we can do it cost effectively.” That negotiation led to a lot of communities where you had only one utility then. You didn’t have competition anymore. But it never really took away the other power that cities always had, which is if that one private provider didn’t do a good job or was charging excessive rates or other things, they could always take it over. Most cities that own their utility system took it over a hundred years ago or more at this point. It’s something that they’ve had for a long time that was at the dawn of the electricity era and was either done to preempt the problems they saw with the crazy competition at the beginning of the electricity system, or to discipline a private utility that was doing a terrible job.
John Farrell: In fact, Franklin Roosevelt used to call municipalization, when a city takes over its utility, the birch rod in the cupboard that you use to discipline those private companies or that you have available to discipline those private companies that don’t do a good job. So, again for most cities that have their utility, they’ve had it really since the electricity business was started.
Jess Del Fiacco: You said Wild West, so I pictured this whole story taking place on horseback. Electricians with wires walking their horses around town and fighting each other. Anyways, probably not exactly how it went down.
John Farrell: Well to be fair, at the time we were stringing wires for electricity. We did not have internal combustion vehicles really or trucks or things like that. So it is very plausible-
Jess Del Fiacco: Hey, so I’m right.
John Farrell: … that the first spools of wires that they were stringing up were in fact in wagons pulled by horses.
Jess Del Fiacco: It’s a great image. But how about in the present day? So we are still seeing cities who are taking this action to take over existing electric utilities, right? Or at least attempting to do so. Can you talk about where that has happened or is happening or has been attempted?
John Farrell: There are a number of communities that are doing it. It’s not terribly popular, frankly. But what I would say is that in the last decade we’ve seen a lot more communities exploring the idea. So on this spectrum of looking into it, talking about it in a city council meeting, doing a feasibility study. We’re seeing a growing number of communities who are at least asking themselves the question, “Should we be looking at this idea of taking over our electric utility because the private provider is not meeting the goals that we have,” whether that’s for affordability or for clean energy, or for many other reasons.
John Farrell: There are several prominent examples. Boulder, Colorado really stands out in my mind as the North Star of municipalization efforts for a number of reasons. Number one is they’ve been at it for almost a decade. Their initial ballot initiative which we covered on ILSR’s energy program and several articles that we wrote and in interviews with folks from Boulder at the time, was narrowly passed. They had to overcome several attempts by the utility to shut down the process. But it was really driven initially by the city’s recognition back in 2010 and 2011 that there was no way that the private company was going to help them meet climate change. They had, in fact, just finished constructing an incredibly large, one of the largest coal plants in the country just outside the city that they intended to operate clearly until 2050 or 2060 or beyond. They were looking at this and saying, “we want no part of this. We don’t want to be helping pay for this and we’re not going to be able to meet our climate and clean energy goals if we don’t get rid of the utility.”
John Farrell: Anyway, we do have a great clip here of Jonathan Koehn. We did an interview with him a couple of years ago about Boulder’s persistence in pursuing municipalization. And he talks, I think really passionately about some of the things that were important to the city that they couldn’t just get even if the utility changed its tune. Like even if the utility closed its coal plants, et cetera, the truth was Boulder wanted to see the economic rewards of this clean energy transition. They wanted to see solar projects and wind projects built in their community. They wanted to see energy bills lowered in their community and those were things that they didn’t think they could get if they simply went back to getting service from the incumbent electric company.
Jess Del Fiacco: Here’s Jonathan talking about Boulder’s municipalization efforts.
Jonathan Koehn: The majority of us in the city are pretty agnostic on how we get there. We develop a whole series of goals, one of which is access to renewable energy. But there were other commitments that were made and other goals that related to price stability and looking at high levels of reliability. Being able to work with entrepreneurs and our local energy companies to test and model some of their devices and technology, and really shifting the notion of what a utility does and becoming more of a service provider rather than the seller of the commodity, which is kilowatt hour.
Jonathan Koehn: There’s been a lot of talk about the utility of the future, not just here in Boulder, but across the country as markets shift and as the desires shift and as customers become more literate on choice. So it’s always been our aim to really figure out how the utility functions in a much different way. Now you bring up a really critical point, which is we knew Xcel Energy was going to move in the direction that we’ve always hoped they would move in terms of procuring more clean electricity, more green electrons and offering that to consumers. But it matters how they do it in terms of ownership structure. So as we think about a decentralized model, one which everyone has the ability to have a power plant on their roof, have the ability to over generate and sell or donate excess power, that whole transactive energy concept. How we start to harmonize the components of electrification of our thermal system, electrification of our transportation system. Those are really, really cutting-edge things that we all hear about and the utility plays a central role in that.
Jonathan Koehn: So we’ve always said where we need to go is, one, that a utility is that facilitator and it enables a new marketplace, so to speak. So Xcel is moving in the right direction. The question is, are they going to get far enough? Are they going to get there fast enough? This last round of bids and the selection of their resources and their last ERP just in the past couple of weeks, really is exciting. It’s exciting to see that the market has responded and it is now much … it’s actually cheaper to build new wind and include storage than it is to run existing coal plants in the state of Colorado. That is extraordinary.
Jess Del Fiacco: That was Jonathan Koehn, the regional sustainability director for Boulder, Colorado.
John Farrell: So as you can see, Boulder obviously had these really concrete things that they were thinking about in this, and what’s really interesting actually is that since that interview was done, Boulder now is going to have a settlement agreement with Xcel Energy that’s going to be on the ballot this fall to not go ahead and do a city takeover. There is a lot of robust conversation among energy nerds about this, frankly, where some people are like, “See, it was just a big waste of time.”
John Farrell: But ultimately the truth of the matter is that Xcel Energy, which is this big monopoly utility company serving Boulder, but they also serve places like Minneapolis, Minnesota. They have some service territory down in New Mexico, all where they have no competition. They really didn’t start turning the ship toward clean energy until communities like Boulder and Minneapolis started talking about municipalization and explaining explicitly that the reason behind it was they wanted more clean energy. We can talk more about that in a little bit, but I think it’s important to note that Boulder’s efforts are not in vain. that even though it did cost them quite a bit of money and even though it took a long time, that they have managed to reach an, to the fact that they’ve managed to reach an agreement with the utility is not that they’re giving up, but that they actually have finally been given what they’ve been asking for.
John Farrell: We see other cities trying to do the same thing. Decorah, Iowa also had municipalization on the ballot. It failed to pass by four votes. So as we look forward to the 2020 election, I would like to encourage you, everybody listening to vote because your vote can matter very much. But it was a similar effort there where the rates that they were being charged were much higher than for other utility customers in Iowa and they felt like they could do better if they had a city owned utility as well as had a utility that was headquartered in Decorah, as opposed to one headquartered in a different state that had their own shareholders, distant shareholders that they’re interested in serving.
John Farrell: We actually did an interview with Andy Johnson and a few other folks who were leading up that municipalization campaign. We won’t play a clip today, but if folks want to listen in, they can hear more about what was motivating that municipalization campaign. What we will share a clip of though is we just did a brand new interview with Jamie Valdez from Pueblo, Colorado about that city’s efforts to municipalize. They’re also based in Colorado like Boulder, but served by a different utility, Black Hills Energy. For them, it was about affordability really. That the utility that had come in there had been … it was a recent switch of utility ownership. I think they had bought out a co-op or something like that and the utility built a brand new gas plant that was proving to be very expensive and had significantly raised rates for a community that had a lot of low income folks. Pueblo used to be a mining town and a lot of the mining jobs have dried up and so affordability is a big issue for them.
John Farrell: So I do have this clip from Jamie Valdez talking about not just the aims that they had in their municipalization campaign, but also the fight that the utility put up. They were outspent 50 to one by the utility in that campaign. And so, in a two month period between when they surveyed residents of the town and had a fairly significant majority in favor of forming a city utility, the utility spent $10 million basically to advertise the hell out of the community and to bury the municipalization ballot initiative that then ultimately was not successful.
Jess Del Fiacco: All right, here’s Jamie Valdez of Pueblo.
Jamie Valdez: Black Hills Energy and through their political action arm, which was called Pueblo C.A.R.E.S. spent above $1.5 million to defeat our effort compared to our campaign was able to raise through grassroots efforts about 31,000. So I think those numbers right there pretty much say it all, especially since like you said, just a couple months prior to the election we had this survey, not even a couple of months. A month and some change prior to this election, we had this citizens satisfaction survey, which is done every year by the Pueblo City Council. Only this year they included that question of municipalization like you pointed out. It showed like you say, about two thirds, actually a little over two thirds support for breaking away from Black Hills Energy and forming a municipal utility. And then less than two months later, we have the election and we’re beat by about that same two thirds margin. I really feel that it was the money. The money played the largest role in that. Black Hills Energy was able to have commercials in nearly every commercial break on TV, on the channels that they advertised on and that had a major effect on the people of Pueblo.
Jamie Valdez: They were able to really spread a lot of misinformation about stoking the fears of the Pueblo community. Admittedly, our community is a risk averse community, and that really played into Black Hills’ strategy. They painted it as a government takeover, but really from our perspective, what really was the government takeover was our city council giving Black Hills Energy that exclusive franchise agreement in the first place, which really amounts to a legislative monopoly and it takes government to legislate a monopoly. I feel that the reverse is actually true. But they very effectively played that narrative repeatedly over and over and over again throughout and it worked.
Jess Del Fiacco: That was Jamie Valdez of Pueblo Colorado. Being up against that pushback from the incumbent utility, so it’s difficult. It’s maybe not super popular or it’s difficult to make it happen even if you have that initial support. When it doesn’t work out, do cities get anything of it? It sounded like it worked out well for Boulder, but has it happened elsewhere where they haven’t been necessarily successful, but they have gotten other things out of it?
John Farrell: Yeah. Actually, well this is a little bit of history that’s fascinating for me as somebody who’s been learning about this for now a long time and working in this area. But when I first looked into the history of cities that had municipalized or talked about taking over their electric company in recent years in the modern era, as opposed to back when the electric grid was being built, I came across Chicago. It was an old article from 30 years ago from Chicago and it was about when their franchise agreement was up. There’s these parallel laws in the energy system about which utility serves the city. So there are state laws that say, everybody who lives here based on your address is served by utility X. And in over 30 states that’s how your electric utility is chosen. There’s a state law that says this utility serves you. But there’s also a parallel agreement between the city and the utility in many cases that governs how that utility can use public property and public right of way to deliver services.
John Farrell: Imagine most likely there are some electric lines running down the alley behind your home, or if you live in a suburb, they might be buried under the street. But they are running on or under public property. Cities usually have a permitting process for any business that needs to do something on public property when they need to dig up a street to do a repair or what have you. A franchise agreement is a global agreement to smooth that whole operation of how a private utility uses that public space. They are time limited usually. A lot of times they’re about 10 or 20 or 30 years long. But when they expire it’s a logical time for a city to evaluate how’s this relationship working. Chicago pretty prominently about 30 years ago, looked at its franchise expiration and they were having a lot of issues with reliability where a Commonwealth Edison, the incumbent private utility company which had a state granted monopoly, was doing a really crappy job keeping the lights on, which is the basic premise of an electric company. Legitimately there were some issues there. Chicago started talking about taking over as this franchise agreement expired. It led to a settlement agreement with the utility to make significant investments in substations and in power lines and distribution lines around the Chicago area to improve reliability as part of that negotiation. It was a piece of leverage for Chicago.
John Farrell: More recently we have another example of that kind of leverage being exercised in Minneapolis. So I was involved in this, as you might imagine, living in Minneapolis myself and being a nerd for energy things. But the city of Minneapolis had a franchise agreement with Xcel Energy whose name may sound familiar from the conversation about Boulder, that expired in about 2013 or 2014. I worked with advocates around the Twin Cities area to try to pressure the city, or to encourage the city rather to say, “What are our options when it comes to meeting the climate goals we’ve expressed?” The city had just recently published its climate action plan and it was pretty clear that cleaning up the electricity system was a big part of that and that the utility had no plan to meet that goal.
John Farrell: What the city was able to do was really interesting, is they started talking about municipalization. They had people from Boulder come to Minneapolis to talk about what they were going through. The utility started to send a lot of people in suits to city hall to talk to elected officials. They even printed up this beautiful two page glossy mailer and mailed it to every resident in the city of Minneapolis telling them why a city owned utility would be an utter disaster. But what the city got out of it was that when it renegotiated its franchise agreement, it got two things. It shortened the agreement so that it had an opt out provision at the five year point which we’re very close to now. But it also got the electric and gas utility serving Minneapolis to agree to a clean energy partnership in which all three parties, the city and its two private utilities, would agree to collaborate to try to help meet the city’s climate goals.
John Farrell: While that collaboration isn’t necessarily completely successful in the sense of having addressed climate change or gotten to 100% renewable energy, what it’s really done is it’s localized energy decision making in a different way. Every quarter the VPs of those utilities are in the room with city council members from Minneapolis talking about this energy planning and cooperation that is more or less happening. I think that to me is an indication of how you can have this conversation about a takeover without actually having a takeover. We did do an interview with city council member Cam Gordon last year at the five year anniversary of the formation of the partnership in which he gave a candid assessment of whether or not it was sufficient, but also acknowledging that value of that leverage.
Jess Del Fiacco: Here’s a clip of Minneapolis city council member Cam Gordon.
Cam Gordon: I think we’ve got more public interest in how the utilities work with government, interest from the utilities and also from city government itself. Prior to the partnership, I think there was very little interaction between city government and even the community at large and the utility companies particularly around clean energy and what we would do. I think most people saw their opportunity to influence those things occurring at the legislature because there was more state control and regulations. And I think the utility saw the city as something to work with when they needed access to the right of way, when they were hooking up wires and when there was a power outage, those kinds of things.
Cam Gordon: This really helped, I think, get communication going. We actually meet now and talk. It’s helped us leverage different policy changes I think on the city level where we’ve been motivated just because we want to be a good partner. So we’ve taken action to build up our efforts to move towards cleaner energy and more energy efficiency. We actually created a community advisory group that looks at it and specifically looks at our energy vision and our climate action plan and how to implement those. So from the perspective of somebody who worked hard on that energy vision and the climate action plan, I see a lot more infrastructure came to help support that work at the city level and I also think that we have the utility companies at the table.
John Farrell: Do you feel like in terms of the outcomes, in terms of progress towards the climate action plan, that this partnership is moving things along fast enough to reach the city’s goals? There were some ambitious things in there. For example, I remember as someone who has sat on that advisory committee, the committee advisory committee that you mentioned, one of the city’s goals is to retrofit something like three quarters of Minneapolis homes by 2025. Are we getting there fast enough through this partnership?
Cam Gordon: No and probably not. There’s been a lot of things that have been very frustrating about the partnership. It really hasn’t given us much more control over our energy future, direct control. Sometimes it feels like the city’s still mostly doing all the work and the lifting and we don’t have that much influence. There are certainly examples where we think maybe we’re making some progress, but one of the utilities will simply go and work at the state legislature and do things directly opposite of what we think are our goals in terms of our energy here. Typically what we see is more interest in having the city cooperate with utilities in implementing the programs they’re already required to do. And we hear this pushback from the utilities, but we can’t really do more.
Jess Del Fiacco: That was Cam Gordon of Minneapolis talking about the city’s clean energy partnership with local utilities. And now I think is a good time to take a short break before we get to the second half of our conversation.
Jess Del Fiacco: Thank you for tuning into this episode of Building Local Power. If you too, think we need to address climate change at the local level, I hope you consider making a donation to the Institute for Local Self-Reliance. Your support makes this podcast possible of course, but it also helps us produce invaluable resources for communities, including the research John and the rest of our Energy Democracy team does. Please take a minute and go to ilsr.org/donate. Any amount is sincerely appreciated. And if you’re enjoying these clips and you enjoy hearing John talk like an energy nerd, you should tune into the Local Energy Rules Podcast, another podcasts from ILSR.
Jess Del Fiacco: We’ve talked about a lot of cities doing really cool things. Do you know of any state level action that’s happening?
John Farrell: Yeah. There’s a couple of examples. One is going to take us back to the top of this episode and orange skies out in California and I think it’s a really prominent one. We’ve got one from the completely other side of the country in Maine and then I think a few examples of ways that states spanning from California out to the East Coast are doing some interesting things, making options easier for cities around climate action. But let’s start with California. Those orange skies and the wildfires and everything that’s going on there are absolutely crazy. I mean the social media images of what’s happening there are really stunning. The sad truth is whether or not this particular wildfire was caused by the utility company. In fact, I’ve heard that it was caused by a gender-reveal party which just adds to my belief that those are ridiculous in general. But be that as it may, a lot of the wildfire problems that California has had in recent years are driven by two things.
John Farrell: One is climate change and the fact that they are simply in this cycle of drier windier weather as a result of climate change and hotter weather that is ripening the conditions for wildfires. But the second one is that the incumbent utility, Pacific Gas and Electric in particular in Northern California, has deliberately under invested in the maintenance to protect the grid in order to divert money to shareholder dividends, and has caused massive problems. So not only do they have the risk of wildfires, which have bankrupted the company among other things and caused untold property damage and loss of life, but then the utility in response to that legal liability that has been levied on them, which they had previously avoided liability for has decided that they’re going to preemptively turn off the electricity to avoid sparking wildfires. While I generally applaud their notion that it is more important to protect life than it is to have the power on, the problem is that that’s unfortunately not either or.
John Farrell: That there are actually in fact people in hospitals or who are using oxygen machines or many other folks who rely on electricity to preserve their life and it’s really an essential service. And so California has found itself in quite a pickle and has really had to think hard about what to do with Pacific Gas and Electric. And there were many calls, especially when the company declared bankruptcy, for California to simply borrow money at very low interest rates like they can right now and buy the company and make it public. I mean, there’s really no reason not to do that. I mean, they probably would have had to pass a law allowing them to do it. I can’t imagine that PG&E’s shareholders were enthusiastic about a sellout, as most investor owned utilities aren’t when the public comes calling for ownership. But it’s clear that the company had very little value given all of its liabilities. On top of that, it’s pretty clear that California electric customers are going to pay for that liability, that wildfire liability whether or not they own the utility.
John Farrell: California is in a situation right now where if they leave the company private they will still have socialized all of the risk of operating electric utility in California because they will be paying through their rates to cover the cost of wildfires. But they’ll still have private profits that only the shareholders of PG&E are ones who are going to reap the rewards of operating that electric company. It’s a really bizarre situation and frankly, I’m still a little surprised that out the other end of it, they have a settlement agreement with some fairly strict terms, but they still intend to keep that private company.
John Farrell: Conversely, on the other side of the country in Maine, where they fortunately haven’t had these epic natural and human related disasters from their utility company but have merely just had the typical story of large corporations screw customers, the legislature is considering a bill to buy out the big transmission companies that deliver power across the state and that have been making really questionable and expensive investments in expanded transmission capacity that have raised rates significantly for Maine electric customers. Again, there’s this issue of who’s making the money and is it serving the needs of our customers in terms of both affordability and cost? This policy called Community Choice Aggregation says you can just choose where the energy comes from for the customers in your city, the small businesses and the residential customers, without having to buy the poles and wires. Frankly, that’s really what most communities are interested in. They don’t really want to operate a utility and own all that infrastructure because what they really want to do is decide what gets delivered on that infrastructure.
John Farrell: This policy has, what we’ve seen especially in California, is that groups of cities band together to get economies of scale, to get hundreds of thousands of customers and then they go out in the market and they can shop around and get better deals. It’s like the Costco model of energy purchasing where you say, “Let’s go out and buy in bulk and we can get better deals as a result of it and we can also negotiate for things that we care about, like local jobs and energy production or long-term contracts for clean energy.” It’s a really innovative policy that I’m hoping to see more of, and as a tool that can be used as well to both do the things that communities want to do around climate and clean energy. But also give them leverage against utilities that might not otherwise want to do it by saying, “Look, if you don’t do what communities want to do, then they can just leave your service.”
John Farrell: So I think that’s actually a really important market check, a market based check on the behavior of private utility companies to say, “Let’s give customers a choice around an option of which we don’t really need a monopoly to make a decision about where energy comes from. Cities can decide that for themselves on behalf of their customers.”
Jess Del Fiacco: So when there is more control at the local or at the state level, I’m curious if that has any impact on equity issues. Does that help? When you have local control, is it easier to address health disparities, racial disparities that are related to energy usage?
John Farrell: I think that it is easier to do that and I think it’s … what’s really important is that you let communities decide for themselves what are the important issues that they need to address. So in the interview with Jamie Valdez from Pueblo and in the interview we did with folks there a couple of years ago, Larry Atencio, their city council member, this issue of affordability was really important to them. They were concerned about the low income households in their community basically being priced out of energy and having their electricity shut off.
John Farrell: I remember we did an interview with folks in Atlanta and they were thinking very seriously about how does their climate action plan help to address racial disparities? In Minneapolis, it’s very clear that the climate action plan has a lot of specifics about eliminating disparities and energy burden and basically saying, “We don’t want race to be a factor anymore when we measure how hard it is for people to pay their energy bills. We want to be able to solve that problem.” We don’t often see those commitments at a state level and so I think it’s really important. Cities frankly, are the places where the disparities show up because you have more diverse populations. And so you have significant concentrations of immigrant communities or communities of color or low income folks. Cities tend to be more of a melting pot and mixing bowl, if you will, of the different folks in society and so you see them having much more explicitly these commitments to equity in their work.
John Farrell: Now, whether or not they’re going to be successful, that depends a little bit. I think the more that we localize the power over this system, the more cities can actually act upon those desires and goals. I remember I did a great interview for Local Energy Rules with Leah Bamberger. She’s the sustainability director at the city of Providence, Rhode Island. They have probably one of the best climate action plans of any city. It’s actually called a Climate Justice Plan and they really focused on asking their most burdened communities like, “What do you need us to solve?” And they talked about things like local air pollution that caused asthma in their kids, not carbon pollution. But it just so happens that frankly, the stuff that dumps those pollutants in their community and causes asthma is the same, is also throwing lots of carbon pollution in the air. So it gave them a different lens for approaching the issue that I don’t think would have been developed in a state climate policy, for example. Because they were able to go out and talk to their communities and say, “What’s the most important thing that we address?”
Jess Del Fiacco: Yeah, it makes sense. And then I assume it’s easier for those communities to hold them accountable if it’s local officials versus state or federal level.
John Farrell: Yeah. What is it? Our colleague, Chris Mitchell loved to talk about this fellow he interviewed down in Louisiana. I think he called it the strangle effect where it’s like you can find someone to go and strangle when you’re frustrated with how things are going if it’s locally governed.
Jess Del Fiacco: There you go. For cities who have made major commitments, whether or not they’ve achieved them or not yet, is there some common ingredient between them? Is it geographical, like they’re facing wildfires or having issues with their utility already, or residents are really pushing hard for it? Or is it just … is there no pattern?
John Farrell: I think there is a pattern. I mean, what I’ve seen successfully, frankly, and I think credit has to be given to the Sierra Club. Nationally they’ve had what’s called a Ready for 100 Campaign and they’ve helped to put organizers into work with communities around climate action and climate justice in a lot of these cities that have made those 100% commitments. They went in and they helped to pay for folks who are volunteering time otherwise, to give them time to go around and organize folks and to elevate this as an issue that cities should care about.
John Farrell: So I think the most important ingredient is people caring about it and people being willing to organize and go talk to their elected officials about it. And this gets back to what you said about people being more accessible at the local level. You don’t need a thousand folks or like 10 lobbyists to convince the city to care about an issue that is meaningful for all of its residents. City council folks, a few phone calls can make them sit up and take notice of an issue that’s important. I think frankly, most people who’ve gotten elected to city office across this country already know that climate change is a problem that they should deal with. But it’s when residents organize and say, “Hey, this is something that we are going to vote on. This is something that is going to matter in your reelection campaign. This is something that we want to see action taken on,” is really important. I think as well, it probably doesn’t hurt that, frankly, a lot of the problems that we see with the existing energy system persist in a lot of different places even if it’s in a different manner.
John Farrell: So you see racial disparities in energy burdens everywhere. It’s not just a Northern or a Southern or a Western issue. You see people who are low income getting shut off from electricity. So important in these days, of course, where we’re all working or doing school from home and you need electricity to have internet access in order to dial in to these different meetings. And it’s why shutoffs have often been, at least temporarily ended, even if they should be permanently ended. And then of course, no community likes to suffer the effects of pollution from power plants that run on dirty fossil fuels. Everybody wants clean energy especially in their community. It’s, I think no surprise that we’ve seen this rise up in so many different places. That one in three Americans lives in a city that’s made of 100% clean energy commitment.
John Farrell: I mean, I think maybe one other thing that’s worth mentioning as far as a special ingredient is that I feel like a lot of folks have been motivated to act out of a sense of getting screwed by the incumbent utility power, right? Pueblo, Colorado, they’re motivated because their prices were jacked up. In Boulder, there was this thing called smart grid city that Xcel energy invested in, which is going to supposedly offer all this great data that the city and the utility could use to help deliver energy efficiency and clean energy and it went over budget by millions of dollars. And the utility went to the commission and tried to get all that money, collect all that money even though there were a lot of ways in which they’d mismanaged it.
John Farrell: In Minnesota, Xcel Energy blew the retrofit cost for a nuclear power plant to the point where it was supposed to be 300 million and ended up being like $650 million. And they went to the state regulators and were successful in recovering all of those costs, even though it was clear that a lot of the reasons those costs had been incurred was because they had horribly mismanaged the project. There really is nothing like that sense of injustice to motivate people to look for something different or even just something simple. Like I said in Chicago about reliability, Winter Park, Florida is one of the few cities that has successfully taken over in the past 20 years from their utility company, maybe past 25 years. And for them it was just the blinking clocks on their VCRs because the power would go out so regularly, even for a short period of time that you’d have to go around and reset all of your clocks. Never underestimate the accumulated power of little irritations, I guess.
Jess Del Fiacco: Local power fueled by annoyance.
John Farrell: Yeah. Yeah. It can mean a lot.
Jess Del Fiacco: Okay. Well, thank you so much, John. I think this was a great conversation.
John Farrell: Yeah, thanks Jess.
Jess Del Fiacco: Thank you for tuning in to this episode of the Building Local Power Podcast from the Institute for Local Self-Reliance. You can find links to what we discussed today by going to ilsr.org and clicking on the show page for this episode. That’s I-L-S-R.org. While you’re there, you can sign up for one of our many newsletters and connect with us on social media. We hope you’ll also take the opportunity to help us out with a gift that helps produce this very podcast and supports the research and resources we make available for free on our website.
Jess Del Fiacco: Finally, we ask that you let us know how we’re doing with a rating or review on Apple podcasts or wherever you find your podcasts. This show is produced by me, Jess Del Fiacco, and edited by Drew Birschbach. The songs featured in this episode are Favorite Tweet and Funk Interlude by Dysfunction_AL. For the Institute for Local Self-Reliance, I’m Jess Del Fiacco and I hope you’ll join us again in two weeks for the next episode of Building Local Power.

 

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Audio Credits:

Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

Favor Tweet by Dysfunction_AL Ft: CC_Asia_Band, Anji Bee. Copyright 2014 Licensed under Creative Commons Attribution Noncommercial (3.0) license

Photo Credit: iStock.com/RoschetzkyIstockPhoto

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Jess Del Fiacco

Jess Del Fiacco is ILSR’s Communications Manager. In this role, she works closely with program staff to develop and implement communications strategy that supports ILSR’s mission. She promotes ILSR’s work through the organization’s newsletters, website, social media, events, and more. Jess also hosts the Building Local Power podcast. Contact Jess for media inquiries.