Municipal Utility Offers Springboard for Minnesota City’s Energy Vision – Episode 42 of Local Energy Rules Podcast

Date: 6 Mar 2017 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Karlee Weinmann: Rochester, Minnesota is known worldwide as the home of the Mayo clinic. And in recent years, its leaders have turned their attention to charting sustainable, responsible growth, including in energy with its own municipal utility. This Southeastern Minnesota city has extra flexibility in calling its own shots and recirculating a greater portion of its residents’ electricity dollars within the community. Now in his ninth year on Rochester city council, Michael Wojcik champions this kind of local control. He spoke with John Farrell, who heads the Energy Democracy Initiative at the Institute for Local Self-Reliance about Rochester’s unique opportunity to promote economic growth through better energy policies.
Michael Wojcik: The issue is that all of our energy sources involve us purchasing fuel. That takes money from our community and sends it elsewhere. And that’s a real long term concern if you wanna be a financially sustainable community,
Karlee Weinmann: This is Local Energy Rules, a podcast sharing powerful stories about local, renewable energy.
John Farrell: The majority of Americans get their electricity from private companies, but Rochester, Minnesota has a municipal utility that’s owned by this city. Does that mean that this, you know, as a city councilor, that you’re helping to run the power plants?
Michael Wojcik: Uh, we really have no intention of doing anything like that. Those are kind of the days of the past, where a community would have a power plant that provides their needs. Really we’re dealing with a modern electricity grid where there’s a number of suppliers and a number of purchasers and places like Rochester, sometimes we’re net providing on the system. Sometimes we’re using more off of the system, but because we have a good distribution system in the United States, we are able to provide for power needs by either generating our own power or buying it off the market.
John Farrell: The management, the day to day management of the utility is not in a hands of city council. If I’m not mistaken, there’s a separate group of folks that at the city that are taking care of that?
Michael Wojcik: Our city charter, we’re a home rural charter city, specifies that we have a public utility, Rochester Public Utilities, that’s responsible for the electric utility as well as the water utility. And as a result of that, the power is largely delegated to those professionals. They have a five member board of directors of which one council member sits. And I happen to be the council member who also sits as a director for Rochester Public Utilities.
John Farrell: You know, Rochester was in the news a few months ago for pledging to get a hundred percent of its electricity from renewable resources by 2031. What role did you and the city council play in that? And how firm is that target?
Michael Wojcik: Well, I have to be totally honest here and say that I found out about that commitment when I read it in the newspaper and it was actually a proclamation made by our mayor. I think it’s an outstanding goal for the community to have, but actually the city council has not, did not take formal action in the establishment of that goals nor have we taken any action subsequent to that. But it certainly got us thinking about how we can get there.
John Farrell: Do you think that the city council is likely to do something to, I guess, for lack of a better term back up that proclamation or to make it more official, or is it, are you outside of the fact that it’s a stretch goal that you can aspire to?
Michael Wojcik: Anytime you have a goal like this, you have to be very careful on what it, what it is you’re measuring and what your outcomes intended to be. Obviously we’re not gonna turn over the entire vehicle fleet of the city of Rochester to electric vehicles between now and 2031 as such. What we’re really talking about is our net energy production. Do we produce as much in renewables as we consume? That’s a challenging target. Certainly there are some things working against us right now in terms of legal obligations we have with Southern Minnesota Municipal Power Agency. That said, we’re moving in this direction already. Certainly the things that we have great control over, that is the efficiency of our building and the design of our community. We’re making great strides and trying to become a more livable, walkable, sustainable city. And in 2031, we magically get out of the contract that we’ve been in for power supply for a long time. And that restricts what we’re able to do on the generation side greatly. And that’s going to enable us to really take a at, generating substantially more renewable post 2030.
John Farrell: That’s a great transition to the next question I had. You know, there are other cities that have adopted pledges like this. You know, many of them are targeting 2050. On the other hand, you have a city, Georgetown, Texas, also a municipal utility. And I I’m guessing with a similar scenario in terms of the expiration of their contract. So 2031 is the date because it’s the time when the city gets really an increase in its flexibility for how it can approach this.
Michael Wojcik: Absolutely.
John Farrell: And what do you imagine the sources of electricity will be for Rochester? You know, not just literally where the electrons come from, but what are, what do you think are the choices that the city will make about what are those sources or it’s solar or wind or, or what have you?
Michael Wojcik: Well, I can’t speak for the entire city, but from my standpoint, when I look at my community, energy has traditionally been a large sucking sound, taking wealth away from the community. We do not have coal here. We do not have natural gas. We do not have uranium, do not have petroleum. The issue is that all of our energy sources involve us purchasing fuels that take money from our community and send it elsewhere. And that’s a real long term concern if you wanna be a financially sustainable community. What we do have is we have great solar capacity. We have better solar capacity here in Rochester, Minnesota. The frigid north has some of your listeners might be thinking of us, we have better solar capacity here than parts of Florida and Texas. And that’s important to remember. That’s a great resource.

My home has been net powered by solar electricity for five years now. And we also have tremendous wind capacity. Southern Minnesota has a, essentially a wind belt where we can probably in the relatively near future generate the quantity of energy we need from both wind and solar over the course of a year. And we still have some storage issues and some timing issues, but technology, it continues to advance every single year. And I truly believe that wind, solar, conservation, hydro, and we have a waste energy facility as well. These are the sources that can power our community and keep our resource dollars local.

John Farrell: And I feel like you may have already answered my next question. We’re very efficient here. For a lot of communities, renewable electricity means, you know, minimum fuel costs and reducing pollution. Were there other considerations? You mentioned specifically this idea of keeping dollars local, are there other components to that idea of this transition to renewables?
Michael Wojcik: I think there are a lot of good reasons to do this. I grew up in Northern Minnesota, west co Hasset township and one of the biggest coal power plants in the state, it’s just a few miles from where I grew up and I didn’t realize how much difficulty I had with my, with my respiratory system until I had moved away for a few years. Just outside of the economic benefits and addressing climate change, there’s a lot of quality of life issues that are benefited from getting away from fossil fuels. Certainly when you get into city, diesel particulate can tend to be an issue. So this is about building a healthier environment for the people to live in. And if we want to be the world’s premier city for health, we need to make sure that we’re handling the environmental and environmental justice aspects of that as well.

I know I said it earlier, but I’ll restate that. Just keeping those dollars local, Minnesota loses something like 20 billion annually in fuel costs going to other states. That money stays in our state and it turns over and it builds the quality of life and opportunity for everyone here.

John Farrell: What advice would you give to citizens of other cities that have municipal utilities or elected officials in other cities who might admire what Rochester is committed to and wanna follow in those footsteps?
Michael Wojcik: One of the things that people in Rochester don’t necessarily realize is how much of an asset it is to have a locally controlled public utility municipality. And there’s always people that are willing to give you a big check or do other things to acquire your service territory, but the freedom for innovation, the freedom for leadership, the ability for citizens to decide your energy, future is something that you get with the municipal utility. So if you have a municipal utility, you have something that’s absolutely golden and don’t ever give up that opportunity, no matter how good the sales pitch is to do that. And overwhelmingly, I think you’ll find any community with municipal utility if you poll them, you’re gonna find that they score incredibly high in terms of customer satisfaction. And I’m proud of our public utility here in Rochester, and wanna keep us strong for future generations.
John Farrell: So I’m kind of curious, you know, one of the things that you mentioned earlier in our conversation was about, you know, the role of conservation, energy efficiency. Are there particular things you think that as a municipal utility that Rochester can do differently or more thoroughly, if you will, than maybe a private company like Xcel Energy or, or some of the other companies that have made their money by selling electricity?
Michael Wojcik: If you’re an investor owned utility, ultimately you have a fiduciary obligation to the investors. Because we are a publicly owned utility, we have a total commitment to the public, and that means that what drives an investor owned utility doesn’t necessarily need to drive a public utility. In our particular case, the community has spoken up that they want us to be a clean energy leader. There’s certainly more that we can do on that. And we don’t have to go to an investment panel to look at what the potential return on our investment is. We also have a group of citizens that care deeply about the environment here in Rochester. We are, we’re a scientific community. We understand that climate change is real. That’s a threat and it needs to be addressed. And we can prioritize that in terms of how we do business. And finally, by having a public utility, we have the ability to envision what we want that utility to be in the future with services they’re going to deliver. We’ve traditionally delivered water and electric, but there’s a great demand for a broadband source that is local competitive and fair to the public as well. This is another thing that we can do with both to enhance our communications, allow for a smarter grid in the future, but also serve the needs of the community,
John Farrell: Digging into the weeds of policy a little bit. We’re working on some efforts up in Minneapolis around energy efficiency. This city here has what we’re calling a clean energy partnership between the two investor owned utilities and the city around the city’s climate action plan. So it’s kind of an interesting hybridization of this notion of getting the public interest more in front of the utility companies. One of the things that we’re looking at around energy efficiency and, and you mentioned both environmental justice, which I think is a key component of what we’re looking at, but also kind of the goal of maximizing energy savings is this concept called inclusive financing or tariff based financing. And I’m curious if you’re familiar with that, and if that’s something that, you know, has been thought about, you know, given that you have a public utility, putting those utility resources and dollars to use for citizens to invest in energy efficiency.
Michael Wojcik: It’s something that I’m passionate about. I’m advocating for a process whereby we would use public financing to essentially allow citizens to invest in a combination of energy efficiency retrofiting and renewable energy purchases that ideally would keep the bill flat for a payback period, and then go away thereafter. Not everybody can write out a check for several thousand dollars to put a bank of solar panels on their roof or to change all their old appliances, but over time, if they were able to do that, they’d recoup that investment. So we as a public partner should have some financing options available to, while protecting our own financial interests, make sure that we extend the opportunity for clean energy and conservation to everyone in the community, not just those with the financial wherewithal.
John Farrell: Is that something you think is likely to happen in the next year or two?
Michael Wojcik: Timing is always, is always difficult because, speaking as a politician, you can never count on those politicians to get stuff done. It’s a real challenge for us to enact some of these policies and taking a look at the legal restrictions that we have. Certainly we have some restrictions on what we can do with renewable energy, but currently, evaluating our rate structure. And we have some questions related to this in terms of, if we do a community solar project potentially with our municipal power agency, is there a way that we can finance participation in that and, you know, pay back the initial capital with their energy created over time? And I do think I, I can’t commit that we’re gonna have done ’em next year or two, but I think we’re gonna have answers on what a program like that would look like and come to a decision point on it.
John Farrell: Last question here for you, you know, they have that game, that party game called seven degrees of Kevin Bacon. How many degrees is it between most people who live in Rochester and the Mayo clinic?
Michael Wojcik: Oh, well that’s most of my neighborhood. So we’re a city of 120,000 or so with, you know, 35,000 jobs at the clinic and a significant number of others supporting it. I’m not a Rochester local, but it’s an amazing facility to have in your community, hands down the best hospital in the world.
Karlee Weinmann: That was Rochester City Council Member, Michael Wojcik speaking with John Farrell, the director of the Energy Democracy Initiative at ILSR about how Rochester’s municipal utility is plotting an energy future that favors local control and local benefits. For more information on renewables, municipal utilities, and inclusive financing, head over to ilsr.org. While you’re there, you can check out other episodes of the Local Energy Rules podcast. Until next time, keep your energy local and thanks for listening.

 


Sprouting from southeastern Minnesota farm country, the city of Rochester is an unassuming mini-metropolis best known for its world-famous Mayo Clinic. But the city is also home to the state’s largest municipal utility and an ambitious plan to ramp up renewable generation, a one-two punch aimed at galvanizing the local economy.

A 2015 mayoral proclamation that Rochester target an all-renewable energy mix by 2031 added the city to a wave of others across the country deepening their commitment to clean energy. The pledge wasn’t binding, but it set an ambitious goal for the community, Rochester City Council-member Michael Wojcik said. Wojcik spoke with John Farrell, who leads the Energy Democracy Initiative at the Institute for Local Self-Reliance, in February 2017.

So far, city leaders haven’t taken substantive action toward the 100 percent renewables goal, though they are thinking about how to get there. Sustainability is already part of development discussions at City Hall. It’s also a key consideration in a citywide buildout, anchored by the Mayo Clinic, designed to reshape Rochester into an innovation and tech hub.

Flexibility with the End of a Contract

The real action on energy will start in 2031, when a long-running contract between Rochester’s utility and a power supplier ends, loosening restrictions on where the city can source its power. Wojcik, who in his ninth year on the City Council also sits on an oversight board for Rochester Public Utilities, predicted “substantially more” renewable generation post-2030.

“Certainly the things that we have great control over, such as the efficiency of our building and the design of our community, we’re making great strides in trying to become a more livable, walkable, sustainable city,” he said. Still, he’s already looking ahead to bigger-picture progress more than a decade out.

For now, Rochester — like most U.S. communities — remains hamstrung by an outdated energy economy that undervalues high-potential distributed resources (like rooftop solar and energy efficiency) in favor of more centralized, dirtier power generation. But city officials like Wojcik see ample room for locally sourced, locally owned energy options and the economic benefits that come with them.

Capturing Economic Benefits of Local Energy

“When I look at my community, energy has traditionally been a large, sucking sound taking wealth away from the community,” Wojcik said. “All our energy sources involve us purchasing fuels that take money from our community and send it elsewhere, and that’s a real long-term concern if you want to be a financially sustainable community.”

Minnesota overall sends more than $18 billion per year to out-of-state fossil fuel providers. A more robust network of locally owned generation, including the renewables Wojcik says are a natural fit for Rochester, ensures more of that money stays close to home. The retail sector offers a key lesson for energy spending: every $100 spent at local businesses feeds $58 into the local economy, while $100 spent at a chain store spurs just $33 in local impact.

In calling for all clean energy, Rochester Mayor Ardell Brede touched on the economic case for the shift. He advocated for more consumer choice that would in turn enable more residents to cash in on those benefits.

“At the heart of a successful 100 percent renewables strategy, it is fundamental to allow open participation in the development and financing of energy infrastructure,” Brede’s proclamation says.

With no coal or natural gas reserves of its own, the Rochester region contributes to Minnesota’s outflow of energy dollars. But the city has notable renewable resource potential, situated within a “wind belt” that stretches across the Upper Midwest and settled in a solar-rich swath of the state. In fact, Wojcik is among a growing number of residents powering their homes and businesses with solar panels.

Especially as storage technology and affordability improves, renewable energy can play a vital role in diversifying Rochester’s energy mix — and in a way that pays off. The city’s utility is already seeding that shift with a $0.50-per-watt rebate (worth up to $5,000) for households and businesses that install solar arrays between 0.5 kilowatts and 10 kilowatts.

“These are the sources that can power our community and keep our resource dollars local,” Wojcik said.

That line of thinking mirrors a bipartisan push, unveiled in February, to boost Minnesota’s statewide renewable energy standard to 50 percent by 2030, up from 25 percent by 2025. Lawmakers hyped the plan with an eye toward localized economic gains, crediting renewable energy with supporting 15,000 jobs and driving $1 billion in economic activity.

Leveraging Local Authority

Rochester officials have yet to take decisive action on an even more forceful all-renewable energy vision, but Wojcik said the city already has a pivotal advantage in catapulting a locally driven clean energy economy: its municipal utility, the largest of its kind in Minnesota.

Unlike an investor-owned utility, these power providers are accountable to the public rather than deep-pocketed shareholders. Because of that, they have more freedom to invest in strategies that directly reflect the needs and interest of their community — not just the bottom line.

“If you’re an investor-owned utility, ultimately you have a fiduciary obligation to the investors. Because we are a publicly owned utility, we have a total commitment to the public,” he said. “That means that what drives an investor-owned utility doesn’t necessarily need to drive our public utility.”

It’s that desire that’s driving other communities like Boulder, CO, to pursue forming a municipal utility (hear our podcast with Stephen Fenberg, formerly a grassroots organizer and now state senator from Boulder). Rochester already has that power at its disposal.

Rochester residents are already pushing for reforms to promote sustainability and clean power within city limits. The municipal utility enables the city to be more nimble and intentional in its approach to addressing those concerns.

“By having a public utility,” he said, “we have the ability to envision what we want that utility to be in the future and what services they’re going to deliver.”

Photo credit: Jonathunder via Wikimedia Commons (Creative Commons Attribution-Share Alike 3.0 Unported license)

This article originally posted at ilsr.org. For timely updates, follow John Farrell or Karlee Weinmann on Twitter or get the Energy Democracy weekly update.Eyton 

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Karlee Weinmann was a research associate for ILSR’s Energy Democracy initiative. She produced reports that spotlighted best practices in an evolving energy economy.