When a Win is a Win, and a Loss is a Lesson — Episode 162 of Local Energy Rules

And so, there has been a few cities that have looked at taking over their energy companies. This is a process called, municipalization. But the idea is that they take over and then they do have control over this part of the energy system that is so crucial to meeting their clean energy goals. Maybe they have climate goals or just shortly after Joe Machin sank yet again, congressional action on climate change. And a lot of these cities are filled with people who are really passionate and committed to doing something about it. And so, they want to have the ability to control that future. And so the idea behind the podcast series is to help people to understand why, why are cities looking at doing this? What are their motivations to help them understand what’s possible from public power. There are over 2000 public utilities already, and to give them a sense of, would it really pay off, especially in the timeframe that we’re talking about with the urgency of action that many cities are feeling to move to renewable energy? So, really just giving people a sense of context for this in light of these very significant commitments by communities across the country that are looking to do more around clean energy and to address climate change.

Like I said, I’m really excited about this first episode because it helps give a sense of the wide variety of communities that are really thinking about this and considering it. And then we’ve got interviews with folks like Ursula Shriver she’s with the American Public Power Association. They’re the trade organization of municipal utilities. So, they provide like technical support and services to that group. So she really just gives a really nice broad overview of, what is public power? She even talks about in the interview, I didn’t know that there were different kinds of utilities, when I first started at this job. And a lot of Americans don’t either, don’t realize that if I live in Austin, Texas, the company I pay my electric bill to is actually owned by the city, or in San Antonio, Texas, or in Sacramento, California. There’s, and like I said, over 2,000 cities. We’re also going to talk with an attorney, John Coyle. He has represented cities that have gone through this public power process that have tried to do the takeover. He’s given really good advice. He has four key ingredients, he calls it, to how communities can be successful in their public power takeover. And so, we talk with him and he kind of runs through those and explains, if you don’t have these things, if you don’t have the political will and the willingness to make financial investment, it’s not going to be possible. I can’t give away all four of the things.

The sort of second half of the series is actually going to be focused on what happens if you win. So in communities that have public power that have cared about renewable energy, what have they managed to accomplish? But it’s also going to look at this question of, what if you lose or what if you fail? I’ve sometimes described this of what you can win when you fail, because the truth is, that even in going through this process of pursuing public power, a lot of communities have actually gotten something very substantive. Whether it’s leverage and negotiations with their incumbent utility company that’s going to do something different, or other ways that it has benefited them in terms of organizing the community around the idea of needing to address these issues of energy.

And then we are going to hopefully wrap up the series then, looking at, what are the alternatives? What other ways do cities have they can leverage their power to address things around climate and clean energy and local economic development and racial equity, all of these things? How all these things tie together, because honestly, this road is really challenging. It’s really hard for cities to go through with the public power takeover. Boulder, Colorado famously was at it for a decade and didn’t complete the process. But there’s some really great stories from them and from other communities about what they can do instead.

So I remember when I first read the feasibility study that was done in Boulder, what they wanted to look at is, “Okay. So if we owned the utility, if we could change where the energy came from, what difference would it make? Could we actually do it? Can we physically make the changes and build the infrastructure we want, the wind turbines and solar panels and batteries? How much would it cost? Would it be as reliable as the electric service we have now? If it’s reliable, will it be more reliable?” And try to answer those questions. And what I have found almost universally, is that every single feasibility study a city has done has said, “Yes”, to almost all of those things. Yes, we can get more renewable energy than the utility is planning to provide. Yes, we can do it and it will actually cost less. Yes, we can do it and it will be just as reliable as the electricity service that we already have. And it will have all these other benefits.

One of the things that Ursula described when we were talking about public power, is this idea of local accountability, that you could just… She even mentioned this general manager of the Burlington, Vermont electric utility, having a conversation with a customer in the grocery store. Right? They shop at the same grocery store. He’s right there. The person who runs your utility. You’re not going to run into the CEO of Exelon or Xcel Energy or PG&E in your local grocery store. They’re not accessible to you in that way. But these local folks are, and that really is, I think, one of the key elements that cities are looking for too. I’ve certainly heard it from all of these folks in our earlier episodes, the things that they care about. So anyway, that feasibility study, I think, is so important, because it really helps to describe for the community why this could pay off, why it’s worth the political investment, the financial investment, the time commitment in order to consider it.

It’s actually, no. One of the things that does come to mind for me is, I’ve heard about… Whether it’s the person in the grocery store or sort of the general citizen in the grocery store, the utilities sort of person in the grocery store, there are different audiences who might all be able to take away something from this series. And so the question is, can you identify somebody, some sort of set of people, who’s going to get the most from this? Who should really be tuning in and making sure that they take away the lessons that are going to be given throughout this series?

And there are fewer lobbyists at that level. There are fewer big corporations making donations to municipal campaigns, that kind of thing. It’s just much more accessible and democratic. So, I think for people who have really wanted to see change in the system in ways that relate to energy, this is an important series to understand how this is such a crucial tool for leverage in a system that is normally very resistant to change. That public power has been… There’s a great speech, actually, that John Coyle references in our interview from Franklin Roosevelt. It was in 1932, he was running for president in the midst of The Great Depression. The Great Depression, by the way, which was actually new to me and the past year learning this, was in many ways actually triggered by electric utility monopolies going and messing around in other industries. And people invested in them thinking these were very safe investments. A lot of Americans sort of first tried putting money in the stock market by buying utility stocks. And it was like a house of cards and it all collapsed in 1929.

A second audience I think is really crucial is, city leaders themselves. City council members will run on issues of climate. Mayors have famously made climate commitments. Sustainability offices are often trying to figure out, how do we actually meet our climate action goals? This is a really powerful tool. You do have to be willing to put yourself out there to stand up to this big utility. But it also is because it’s a place where the city has actual leverage and actual power to threaten a takeover of the utility, that you can actually get some movement in a way that just begging or pleading a utility to change its behavior is not very successful.

The last audience that I would just mention is, I think it’s really important for energy system regulators. So, these are often folks at the state level, public utilities or public service commissioners are pointed by governors. Some of them are directly elected. But also state legislatures. Our energy system is mostly made up of utilities that have a monopoly, a publicly granted monopoly. And what this also highlights in this conversation is, what an incredibly valuable resource that we have given these private companies is, we have given them this public trust to say, “You will not be shielded from competition.”, in the most fundamentally anti-American idea of, you will be shielded from competition to provide an essential service, the electricity or gas, or what have you. And it’s so, so important that legislators and commissioners understand that communities need as much leverage as possible to hold these utilities accountable, because it does not always happen from the legislature. And it does not always happen at the commission. We need as many different levers as we have to make sure that these companies are adhering to that public interest, and that they’re living up to that sacred trust that they’ve been given.

So to tell this story, I’ll just sort of go back and tell a little of the history. So in about 2012, a number of climate and clean energy folks got together and were just talking about, “How do we get cities to do more around clean energy?” They have these climate action plans that they’ve approved, but the climate action plans kind of look like two paragraphs of some really great things the city can do. And then a lot of blank pages, ultimately about, how do we fill in the rest of what needs to actually happen? And I don’t mean that as a critique of city folk who are doing the best they can with the powers they have. But there was a lot of hand waving and hope involved in these climate action plans.

So we were doing some homework about the idea of municipalization, and one of the things that we discovered was this idea of the franchise. So I mentioned just in that previous question, this idea of a public trust of a monopoly. So in the early days of the electricity system, cities were the ones who decided who their electric utility was. It wasn’t done at the state level. And they would do what’s called, a franchise. And this is actually common… This is common language in terms of cable companies used to have a franchise for a monopoly, a utility company would have a franchise. It’s basically a grant to use the public property. So the polls and wires for an electric system need to be installed on public property, the franchise gives the utility that exclusive right to do that. Well, these franchise agreements in most places around the country, come due every 20 or 30 years. So, they’re not perpetual. In fact, they were intended not to be because the idea was, you want to be able to hold this utility accountable, so it needs to renew every once in a while. And we found out that Minneapolis had their franchise contracts with their two energy utilities coming due in 2013. 2013 was also a municipal election year, and so it was this great dovetailing of, “Hey, here’s a crucial decision point in terms of your city’s goals around clean energy. It’s also a municipal election year. We can talk to people and we can ask them, ‘Hey, if you care about climate and clean energy, what do you think about the franchise? Do you think the utilities are doing enough? Do you think the city should be asking more from them?'”

So without getting too much into the weeds of what happened during that campaign, ultimately the city council was discussing whether or not to put municipalization on the ballot during the campaign. The utilities came and basically begged them, “Please don’t do that. We’ll help you instead.” And so what came out of that instead, was an agreement to have what was called, a clean energy partnership. So utility would send some of its executives to meetings with leaders from the city, so city council and the mayor, every quarter, and come up with collaborative plans that would be used to meet the city’s climate goals that were articulated in its climate and energy vision. So included putting more solar on rooftops, doing more energy efficiency, helping the low income folks finance clean energy projects, all sorts of things like that. And the best part of it, was that there was a 15 member community advisory committee that would also meet quarterly, and that would provide advice to the city and to the partners and feedback and critiques of what they were planning. And so, we didn’t get a publicly owned utility. We didn’t even get it on the ballot in Minneapolis. But what we did get is this system of requiring the utility to come participate at the local level, and have local conversations about what the needs were from the city. Probably the biggest transformation, honestly, isn’t in what the utilities are doing, but it’s in how the city is thinking about it. So, the city has become much more skeptical of whether or not the utilities are actually living up to their promises in part because they can now see firsthand, “We’ve asked you to do this, are you doing it?”

The city hired someone, for example, to represent them before the state Public Utilities Commission. So most cities don’t bother to send somebody there, where they regulate state energy utilities. But Minneapolis has someone who works full time on checking in on, “Hey, are our goals as a city that the utility has promised us that they’ve agreed to help us with, are those showing up in the utility plans that they tell those state regulators or not?” And sometimes the answer is, “No, they’re not showing up there.” And so the city’s able to say, ‘Hey, Xcel Energy, you’ve promised us that you will be able to deliver us 80% carbon-free electricity by this state. But interestingly in your resource plan before the commission, that’s not what it says. So how are you going to reconcile those two things?”So, it’s been really interesting to see the way in which it allows the city to think more intentionally about what power it has and where it can intervene. And there have been some interesting kind of collaborative projects that have come out of the conversation with utilities. I wouldn’t say that it’s been as bad as one politician described it as a quarterly coffee klatch. But it hasn’t really been transformational, I think, in the way that people hoped. But the transformational part is in getting to have the decisions at the city level.

And now back to that idea of the franchise, so as I said, it was coming due in 2013. The city signed a new franchise agreement in 2013 with both of the utilities, but for only 10 years this time, instead of for 20. And it even had an opt out option after five years. And so, those contracts are going to come do again next year. And the city now has 10 years of evidence of its working with the utilities to be able to say, “Should we keep this franchise or not?” And I think that’s something really powerful that the city now has, is that it created this body of evidence and experience in working with these utilities that can inform them making that decision, so that it’s not something that… And honestly in most cities, you will be hard pressed to find an elected official that has even heard of the franchise contract. It is one of those things that it’s like it’s in the city coordinator’s office, it’s in the city’s attorney’s office, someone from the utility calls up and is like, “Hey, this thing’s due in three months. Can we just get you to re-up it?” And they just print off a new copy, change the date, and sign it. So making that into something that you can leverage as a city to change this conversation, what Minneapolis has been able to do with it is really important. And we have other podcasts actually on, on our Local Energy Rules podcast that I’ve done with the city of Minneapolis, where they talk about some of those things. And it will be included as well, in some of this series around what are some of the alternatives or what happens when you quote, unquote fail.

I think one of the things that I want to follow up on is, there are inevitably…. And you’ve touched on the moments when things get hard or they’re not going your way. What is your council to advocates or city leaders when they run into these roadblocks? What does the encouragement to not just give up and say, “Okay, the big guys win again, the monopolies win again. They have all the power and influence.”? How do you encourage people to sort of push through that [inaudible]?

And sometimes building that muscle, you go out and you run a race or you do a competition and you lose. But it’s not like you’ve lost all of the things that you gained in doing it. So I think remembering too, that you’re getting something out of that, even if it’s just the next time we want to fight, I’ve got some friends that I’ve talked to before and we know how to do this. And then in the end in Minneapolis and in a lot of other places, you do actually get something meaningful, right? We have this clean energy partnership and once it was formed and we got this community advisory committee, numerous people from our coalition campaign were appointed to the advisory committee. And so, we were able to continue pushing in there to help set the stage for how the city would react with the utilities to help make sure that the goals of the partnership would be very ambitious, and that they would actually move the needle beyond what the utilities were normally going to do. And also to hold them accountable by saying, “In those meetings, you promised to do this stuff and you didn’t.” Or, “Hey, it’s great that you’ve done all this partnership stuff. But when we look at the measure of whether or not we’re actually going to succeed at the goals that have been outlined by the city that you all agreed you were going to do, you’re going to fail. So it doesn’t matter how successful you’ve been at working together if the ultimate outcome is failure.”

And I think one of the things that is really important to understand, is that the strategies that you’re going to apply in your community are going to differ from what is tried other places, because you may have different opportunities. I remember interviewing Mayor Gamba from Milwaukie, Oregon. Which first of all, I always just enjoy because I didn’t know there was another Milwaukie anywhere in the country. It’s not spelled the same either, for people who are curious. It’s a suburb of Portland. But one of the things that they had an opportunity to do is that the utility there basically said, “We would be willing to offer you a product that essentially gives all of the customers in the city, a hundred percent renewable electricity. It might not be free, it might be at a slight premium. But we are willing to do that through our business model, to just come up with a way to charge everyone in the city. And you can opt in as a city and we’ll do it for everybody.”

I mean, most utilities have not been interested in playing ball. And so, it was interesting that Portland General Electric was. And it’s an important lesson, I think, for how this can play out. Most of the cities that I’ve talked to, they have to do some fighting with the utility to get stuff to happen. But you never know, you might have a relationship already with someone there, someone on city council who used to work at the utility, a utility that’s all of a sudden thinking a little creatively. Maybe they’ve got a new incentive from the state regulators or from the state legislature to work with cities or to specifically advance local clean energy. Maybe there’s an opportunity there. And if they can make a little money doing it too, and it’s not terribly expensive, maybe there’s a way to get a compromise out of that.

So, I think that’s one of the lessons that we try to share, is that there’s this menu of things that are out there. And in fact, actually, we put them together in terms of a interactive project on our website called, The Community Power Toolkit. And the idea was, let’s let people see what that menu of options looks like. Give them some stories of how it’s been tried in different places. Push them and let them see the podcast conversations we’ve had with people, if they want kind of more context for how that stuff happened. But also to help them understand, there’s no one way to do this. I wouldn’t say every city should have a public power campaign and try to pick a fight with the utility. It just may not be very practical. You might have a city, for example, that runs a water utility or a garbage utility and does a terrible job. That’s going to be really hard to pitch like, “Let’s take over the electric utility. You’ll get service as good as our trash service.” Right? If it’s been bad, then it’s going to be a real hard sell.

Fortunately, the converse is true for what it’s worth. Most cities that are going to go try to operate on electric utility already operate other utilities and do it very well. In fact, in Winter Park, Florida, the interview I have with Randy Knight as part of this series, that’s what he talks about, is one of the ways they pitched this, was to say, “We already run a water utility.” He’s like… And I love this too. He was specifically saying, trying to address the utility myth, essentially, that cities couldn’t do this. And he is like, “I don’t know how to run a water utility, but I know how to hire a water utility director. I don’t know how to… I’m not a police officer, but I can hire a police chief. As a city manager, I can do the things, I can find the talented people that can run the things. I don’t have to know how to do all of it myself.” And the utilities sort of make this out to be like, “This thing is so complex and technical. Nobody could possibly do it.” And it’s like, “Yeah, but where do you hire your people?” Right?

Communities have so many ways that we can benefit, whether it’s places where people have had abnormally high energy burdens, whether it’s resilience and having cooling centers during really hot periods where people don’t have air conditioning in their homes. Creating jobs by having community-based solar installations and then choosing to hire people specifically out of that community to apprentice them and to train them and give them a good paying job and a future. I mean, all of that is possible through investments in clean energy. And what’s exciting to me, is to say… And that we can do it at community scale. We don’t have to do it a nuclear power plant where it’s tens of billions of dollars and only big capital can do it. It can be done at the scale of hundreds of dollars and thousands of dollars. So, there’s just a real opportunity to invite everybody into this and for everybody to win.

These public resources, there’s a picture in her book of this almost palatial looking public pool in this Southern community. Thousands of people swimming in it. And you just think about during a heat wave, right now that kind of public resource could be so valuable. Everybody able to show up for free to use this resource. Or I’m sure if they had to pay, it would be very low cost, a place to get out of the heat, to relax a little bit. Enormous public benefits, health benefits for people, recreation benefits, cooling benefits, all of these things. And so, I think the lesson for her book for me was, look for what the win-win is. And for anybody who talks about it as zero sum, question their assumptions and question their motives and look carefully at what it is that they’re trying to do. And I think it’s really been helpful for me looking at how utilities often respond to what we talk about, about the democratizing of energy is. They’ll say things like, “Oh, well, if wealthy white people go solar, then poor people will have to pay more for electricity.” They offer no proof for this, whatsoever. And it’s a rhetorical tool to try to divide us to say, “Oh, poor people, people who advocate for low income folks, you should oppose solar because it might, in theory, harm you.” And what you’re really doing is you’re just standing up for utility shareholders who are the ones who are going to be most protected by that, a very small subset of our population and wealthy utility management.

So, I just found the book so powerful. I think also, I mean, I can’t talk about it without also saying that it did more for me than a lot of years of public education and even college education, to understand sort of the lingering effects of racism in our economy. And how much we owe it to ourselves, no matter whether we’re working in energy or independent business or any of the other areas in which ILSR works or that people are doing great advocacy work, that we have to be thinking about that legacy and that through line. People who can afford to have solar have some wealth that probably was built up over generations by owning a home, that was an opportunity prevented for African Americans for decades by official government policies. You can’t undo that. The racial wealth gap is because the government took action to prevent African Americans from owning homes. And it comes up even now. And so, we will solve a lot of our collective problems, if we can do things that are a benefit to everybody. And to look for those messages of zero sum and be skeptical of them because especially in clean energy, this stuff literally produces stuff that makes money. There’s an opportunity for everyone.