Public Power Pt. 4: Game Over? — Episode 167 of Local Energy Rules

Cam Gordon:

I really saw it as a potential test to see if such a partnership could work. I think I had mixed objectives at that time, partly because I was part of the effort to municipalize our utilities here in Minneapolis. We have an electric company and a natural gas company that work here and I was interested in seeing if we could get more democratic control over there by municipalizing and having our own system. So the partnership was kind of a fallback or a compromise when it looked like that was going to be such a big reach and maybe not possible

John Farrell:

Welcome to the 4th episode in a special series of the Institute for Local Self-Reliance’s Local Energy Rules podcast focused on public power; utility companies owned by the cities they serve. This series, called The Promise and Peril of Publicly-Owned Power, responds to an upswell of interest in city-owned utilities. In addition to clean energy, advocates cite local control, lowering costs, and reinvestment in the local economy among the major reasons they want public, instead of private, power companies.

In the first three episodes, we shared why communities are pursuing public power, what specific benefits are found in the public power model, and the key ingredients to succeed. In this episode, we talk about the silver linings. In other words, what happens when community efforts to municipalize fail?

I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance and this is episode three in our multi-part series, The Promise and Peril of Public-Owned Power. It’s a production of Local Energy Rules, a biweekly podcast sharing powerful stories about local, renewable energy.

When cities set out to replace their private utility with a public one, they are motivated by a range of goals, as the guests in our first episode discussed. The list includes clean energy, affordability, equity, resilience, and more local decision making. So what happens when a takeover campaign falls short? Fortunately, results from many communities suggest that the effort is far from failed. We start with Boulder, Colorado, the inspiration behind many more recent municipal takeover campaigns. Boulder advocates campaigned from 2009 to 2022 in their effort to take over the utility. While the community ultimately agreed to sign a franchise agreement with the incumbent electric utility, Xcel Energy, the entire conversation had changed significantly thanks to broad community buy-in. Here’s Stephen Fenberg, former director of New Era Colorado:

Stephen Fenberg:

In politics you can either run a campaign with money or you can run it with people… We had hundreds and hundreds of volunteers that were just there for the right reason: they were there because they’re passionate about clean energy. They’re passionate about local control. They’re passionate about making sure a corporation wasn’t buying our elections in our local community.

John Farrell:

The community’s campaign, alongside its new franchise agreement, secured four things despite coming up short in the municipalization effort:

The utility agreed to provide 100% renewable electricity by 2030

The agreement includes continued opportunity for local input

The city’s franchise agreement with Xcel Energy has key accountability measures, including permission for the city to leave the franchise if the utility fails to meet emissions reductions targets starting next year, and for any reason beginning in 2026 (see below)

Between Boulder and Minneapolis, another city that attempted municipalization in Xcel Energy territory, it motivated the utility to be the first investor-owned utility in the country to pledge to provide carbon-free electricity by 2050

The rewards of the public power campaign aren’t limited to what’s in the city-utility agreement. Along the way, Boulder and its citizens also adopted a number of nationally leading policies in support of clean energy, including

SmartRegs – requiring buildings to become more energy efficient

A bulk discount program for buying electric vehicles and electric bikes

A first-in-the-nation local climate tax, providing local revenue for clean energy programs and the city’s public power campaign.

Boulder advocates like Fenberg weren’t just out for their own benefit, they wanted to set an example for other cities.

Stephen Fenberg:

In a lot of ways, people feel like their hands are tied on a local level. And so people were excited and it gave them hope that there actually are things we can do on a local level, like, and have a big impact, not only for your community, but could set an example for other communities as well.

Community should have leverage to be able to get what they’re asking for at the end of the day, they’re the customer. And if they’re being provided a product that’s not in line with their values, they should be able to have the leverage to demand something better. And if the energy company doesn’t provide it, then they should be able to have the leverage to municipalize.

John Farrell:

Boulder may have quote-failed-unquote in its quest to have a public electric utility, but it accomplished a great deal along the way. And, its settlement agreement with Xcel specifically allows the city to exit the franchise if the utility fails to hold up its end of the bargain. The city still has its leverage over its energy future.

Minneapolis was one of the cities inspired by Boulder to consider a municipal utility, with activists in the Minnesota city inviting then-Boulder mayor Susan Osborne to come speak about the Colorado city’s campaign. In a 2013 article, I listed out seven achievements in the city’s relatively young effort to consider public power:

A set of principles and desired outcomes for the city’s franchise negotiations, from the city’s Citizens Environmental Advisory Committee, reflecting a desire to make progress on clean, affordable, reliable, and local energy

A city-funded Energy Pathways study that would eventually explain how the city can reach its desired outcomes, up to and including by forming a municipal utility

A legislative agenda (see page 9 – Utility Franchise) focused on expanding the city’s flexibility in its franchise negotiations and removing perverse barriers to forming a locally-owned utility

A remarkable number of mayoral and city council candidate endorsements for considering public power, as well as a persistent focus on clean energy in the city’s 2013 municipal elections.

A historic memorandum of understanding with the city’s gas utility committing it to partner with the city on achieving greenhouse gas emission reductions of 30% by 2025

A letter from Xcel Energy promising to work toward the city’s energy goals (a start, with a suitably skeptical reply from the mayor)

A unanimously adopted “Framework for Reaching City of Minneapolis Energy Goals” (RESOLUTION 2013R-353) that articulates the need for progress, the steps ahead, and the city council’s commitment to using the franchise negotiations to move toward a better energy future.

When Minneapolis city council leaders proposed putting a municipal utility on the ballot in 2013, the utilities instead came to the negotiating table. Instead of a public utility, a unique city-utility Clean Energy Partnership was formed between the City of Minneapolis and its electric and gas utilities, Xcel Energy and CenterPoint Energy.  I spoke with city council member Cam Gordon in 2019 about the fruits of the municipalization campaign and the results, so far, of the Clean Energy Partnership.

Cam Gordon

I think we’ve got more public interest in how the utilities work, government interests 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 them 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. And so this really helped, I think, get communication going and we actually meet now and talk. It’s helped us to 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. We actually have a staff level meeting that happens at least quarterly where there’s policies, staff from the two utility companies and the city who meet and discuss the issues and haggle over things. And then we have our clean energy partnership board members where there’s representatives from the three entities that get together quarterly and also look at issues and discuss things. And I think that’s, those are all positive things.

We’ve also made some investments in community solar, our own community solar in terms of community solar gardens and being a major stakeholder or customer of those we’re talking about. Um, also helping support more gardens that will make it possible for low income folks. We’re talking about what we could do with our infrastructure in terms of making charging stations more available in our parking ramps or maybe even in our right of way for uh, electrification of more vehicles, we’ve actually got a pretty successful green cost share program where we’ll go out to businesses and we’ll try to give them some help in terms of financing if they’re gonna do installation or move towards kind of greener technology when some of that isn’t necessarily about climate.

It might be about air quality and those things. But some of it is about energy efficiency, but maybe the benchmarking and disclosure things are some of the potentially bigger things that we’re doing. We are looking at possibilities of making it easier for people to do some kind of district energy. We have an interesting project and a um, we call it the tower side area of the city where we’re looking at a large district wide geothermal project.

There’s this study on the clean energy workforce, kind of looking at how it can be more inclusive for people of color and for low income folks. There’s the city’s investment in a feasibility study for inclusive energy financing. There’s the city’s new energy disclosure policy for making sure that when people buy a home or rent a property, they’re learning about the energy costs associated with that. There’s a benchmarking program for multifamily properties and there’s of course there’s this big thing which is the franchise fee increase of a half percent, which has created this two and a half million a year fund to invest in local climate solutions.

John Farrell:

We’re going to take a short break. When we come back, we look at the results of a municipalization campaign in Decorah, Iowa, and the silver linings from that community’s narrow miss. You’re listening to episode 4 of The Promise and Peril of Publicly-Owned Power, a special series of Local Energy Rules from the Institute for Local Self-Reliance.

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John Farrell:

It was noteworthy that in the list of accomplishments Cam provided that were related to the city’s clean energy and climate goals — the underlying motivation for proposed public takeover — most of the list were things the city did on its own. Recognizing that many of the early benefits were city-driven, Cam went on to express skepticism that the Partnership was accomplishing as much as a city takeover would have.

Cam Gordon:

I really saw it as a potential test to see if such a partnership could work. I think I had mixed objectives at that time, partly because I was part of the effort to municipalize our utilities here in Minneapolis. We have an electric company and a natural gas company that work here and I was interested in seeing if we could get more democratic control over there by municipalizing and having our own system. So the partnership was kind of a fallback or a compromise when it looked like that was going to be such a big reach and maybe not possible …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 about, Oh, we can’t really do more because everybody’s in our rate base and we have to implement these programs across the board. We’ve had resistance even to go to the public utilities commission to ask for uh, opportunities or pilot programs or some special things we could do in Minneapolis as demonstration projects that could work well and that that resistance has come from the utility companies more than anything else. And so, um, it hasn’t necessarily gotten us there faster and I’ve had certainly had my moments where I’ve wondered is it even worth all the energy that we’re putting here or is that keeping us from maybe doing more in other areas?

John Farrell:

Fortunately, like Boulder, Minneapolis signed a renewed franchise that includes a number of mechanisms to withdraw earlier than the prior agreement’s 20-year term.

Cam Gordon:

One thing about the franchise, we also said if we decide we want to revisit it, we have to give a year’s notice so that people have a chance to understand and maybe begin negotiating. And so right now at this point I think we should talk about changes that we’d need to make to keep going and we should be doing a serious evaluation of it. Probably each of the individual entities should be doing their own evaluation of it and seeing if they think that it’s worth it to them. And I hope that the city will be engaged in that and even the broader community in the months ahead.

John Farrell:

Another electric utility municipalization campaign took place just a few hours drive south of Minneapolis, in Decorah, Iowa. While the effort fell just 3 votes short at the ballot box in 2018, it was not a total loss. Within 12 months of the vote, the incumbent utility Alliant Energy submitted a request to state regulators to increase rates by 25 percent, after promising during the public power campaign to raise rates less than 1 percent per year for a generation. Thanks to their organizing effort around public power, Decorah advocates like Andy Johnson were prepared.

Andy Johnson:

so that got a lot of people really mad, really fast, and that actually resulted in a pretty significant coalition of decorah entities, including the city, um, in the energy district, the medical center, the largest senior, um, nursing home and nonprofit care center, um, banded together. And there were a couple other entities as well to form what’s called a, a group, an a coalition that called themselves the core power group and intervened in the Alliant energy rate case at the, at the Iowa utilities board and said board, um, we were just fooled and lied to and misled and bullied by this investor own utility who told our community in order to maintain their franchise here, that they would not be raising rates significantly for a generation.

And now they’re coming and they’re wanting to raise our rates 25%. And so, you know, long story short, like all rate cases, it goes on through and they get an approval of a, of an increase than something less than what they asked for that exercise though was really, really, um, powerful, I think, but the decorah area group and, and partner interveners actually had a very significant impact on that rate case in many ways, whole, whole nother discussion. Um, but that also involved organizing communities around Eastern Iowa who saw what was happening. And there were over 60 communities that actually have submitted formal comments in that case have never happened before here in Iowa. Um, and in the ruling, the board actually severely chastised Allian energy, interstate power, and light in Lang language saying that they had misrepresented. And there was a serious lack of transparency in the Decorah case.

So they kind of took on the Decorah case as part of a state rate case, which is also really unique and said, um, that was wrong. You shouldn’t, you shouldn’t do that again. We’re gonna watch you. And they actually mandated the creation of a stakeholder, um, process coming out of that, that they hadn’t had in place before. So, you know, it didn’t give the community, its, its its service territory or redo the referendum, but it was very significant including for the community in terms of, you know, bringing the entities together and getting a ruling from the state regulator. It said, yes, you’re right. You were, you were misled, you were not treated fairly here. And hopefully that won’t happen again. So then looking forward the community, the council can say, well, okay, maybe things will be different next time. Maybe not, but if there is a next time, let’s think about that.

John Farrell:

City officials had another run at public power on their minds as they set out to negotiate a new franchise agreement, the local contract between the city and the utility that establishes the working relationship. Because a city can’t legally pursue a takeover if it has a current franchise contract, Decorah (like Boulder and Minneapolis) wanted a shorter agreement.

Andy Johnson:

Decorah was very clear on saying, okay, if we’re gonna renegotiate a franchise, we need outs. We’re not gonna be obligated for another 25 years without a chance to do this again. And of course the Alliant didn’t like that Alliant and Mid-American are the two largest electric investor own in Iowa. And they’re always really working hard for long, long term franchise agreements because that long term franchise agreement then locks a community in, um, does away with their choice.

So Decorah went two years negotiating and just refused to sign a franchise. Um, eventually the, the, the, the utility started making really big threats to make really big charges to the community for, um, infrastructure move movements during road projects, for example, well, city’s gonna do a big road project. The utility has to move poles and wires and they said, you know what? You’re not under a franchise, so we don’t have to cover those costs. We’re gonna start billing you in this case, a million bucks for a small town, that’s a lot of money. So those threats created some more back and forth. The city submitted a complaint to the utilities board said this isn’t right. Um, the upshot of that was a franchise agreement was signed with five, I believe, seven and 12 year outs. So at those time periods from the beginning of the signing, the city has a right to just cancel the franchise agreement.

John Farrell:

The city also took other steps to ensure that it would have sufficient information and community engagement to overcome utility opposition should it try to pursue public power a second time.

Andy Johnson:

At the end of 2020, I believe it was, uh, the city created a formal sustainability commission as part of, um, city government. They’d had advisory sustainability groups and the sustainability plan in, in the past years that we had worked with them on from the energy district side and others, but they created an actual city sustainability commission. The commission created a plan and one of the top elements was asking the city to create a new task force to study the issue of municipalization again. So that’s a process in early 2021, I believe it was the city went ahead and created that task force and charged the task force essentially with a couple of big ticket items.

One was a community engagement process. Do a lot of listening, do a lot of learning, do some educating, do hold some presentations, try and reach out to stakeholders and community portions of the community everywhere to both learn what people’s concerns are and to continue the education process of what if we tried the municipalization effort again, what that process really entails and make sure people’s questions are answered. And then together with the community engagement task, this task force with either up conducting a new or updating the feasibility study from 2017 and 18 for the present.

John Farrell:

Andy also noted that, like Boulder, the municipalization campaign inspired people from other communities to learn more about taking charge of their energy future.

Andy Johnson:

We’ve certainly had a number of inquiries from folks and communities around Iowa, as well as outside of Iowa around the country. Actually, we’ve had quite a number of conversations. I think there’s a growing interest for sure. In, in folks, again, taking, taking ownership of that, that energy future.

John Farrell:

Thank you so much for listening to this episode of Local Energy Rules, the 4th in our multi-part series, The Promise and Peril of Publicly-Owned Power. If you liked this episode, don’t miss the earlier parts of the series. Episode 1 covers the inspiration behind public power campaigns, episode 2 discusses the benefits of public power, and episode 3 explores the ingredients of successful public power campaigns. We also have many resources for advancing equitable clean energy at the local level on the website of the Institute for Local Self-Reliance, including the interactive Community Power Toolkit, a list of municipal utilities on our Community Power Map, and numerous other interviews and articles about the community efforts to achieve thriving equitable economies through clean energy.

Our next episode in the public power series, in two weeks, takes a candid look at existing public power. The flipside of episode 2 (where we discussed the benefits of public power), we talk with folks from California, Nebraska, and Tennessee — where their community’s electricity comes from a government-owned entity, but the policies and practices don’t fulfill the expectation of public ownership. Local Energy Rules is produced by me and Maria McCoy, with editing and sound production by audio engineer Drew Birschbach.

Tune back into Local Energy Rules every two weeks to hear more powerful stories of communities taking on concentrated power to transform the energy system. Until next time, keep your energy local, and thanks for listening.