Public Power Pt. 6: Alternatives — Episode 170 of Local Energy Rules

Date: 9 Nov 2022 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Successful utility takeovers are few and far between. What other options do communities have to get what they want from their electricity provider?

For this episode of the Local Energy Rules Podcast, host John Farrell explains five alternatives to a public power takeover that can still advance a community’s clean energy and environmental justice aims — with examples from the Local Energy Rules archive. This is part six of a special series: The Promise and Peril of Publicly-Owned Power.

Listen to the full episode and explore more resources below — including a transcript and summary of the conversation.

John Farrell: Welcome to the 6th and final 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.

So far in this series we’ve shared why communities are pursuing public power, what specific benefits are found in the public power model, why it’s hard to win a municipalization campaign, how communities can make gains even in failure, and a few examples of how public power can fall short. In this episode, we explore what alternatives communities have to a public power takeover that can still advance their clean energy and environmental justice aims.

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

In the arc of this series, we’ve intended to capture the desire many communities have for more power over their energy system and the promise they see in public ownership. We’ve also explored the difficulty of success and even the need for ongoing vigilance of any utility, public or private, to ensure it continues to serve the public interest. Fortunately, a municipalization campaign isn’t the only strategy available to a community that wants to take charge of its energy future. With the help of the Local Energy Rules archive, I’m going to walk through five measures communities can take to get more accountability from their electricity provider and to meet their needs themselves.

These ideas come with a disclaimer. In some cases, such as community choice energy, there’s as much of an uphill battle to get state legislation as there would be to run a local municipalization campaign. In other situations, advocates have acknowledged that these alternative strategies are necessary, but not sufficient to replace the power of local control. Judge for yourself which ones seem like they’d work best in your community.

One option comes so close to public power that I’ve often called it “municipalization lite.” It’s called community choice aggregation or community choice energy, and it typically requires an enabling state law. For a deep dive, see ILSR’s report on Community Choice published in Feb. 2020 or David Hsu’s interview on the Volts podcast in March 2022. We’ll have links to both in the show notes. The short version is that community choice allows a city to become the energy purchaser on behalf of its residential and small business electricity customers. Then the city gets to decide where the electricity comes from, usually buying more clean energy at a lower price than the incumbent utility. Marin Clean Energy, the first successful community choice program in California, provides a good example. When they took charge in 2010, they immediately offered customers a higher share of renewable energy at a lower price than incumbent utility, Pacific Gas & Electric. I interviewed CEO Dawn Wiesz for Local Energy Rules episode 19 about the project back in 2014.

Dawn Weisz It was absolutely worth the effort because we’ve been able to achieve many of the goals that we set out and actually even exceed many of the goals that we set out as far as getting more renewable energy onto the grid and reducing greenhouse gas emissions. And we’ve been able to do that by purchasing more than double the amount of renewable energy that customers were getting before, and offering rates that are competitive and in most cases, lower for customers than what they would have been paying with the incumbent utility

We’re able to offer competitively priced renewable energy because we have low operating costs. We are a small and nimble shop here in the community. We procure in a very prudent way. We, we are careful about not overspending, but maximizing renewables within our portfolio. Another key factor is that we don’t have shareholder profits to account for. All, any revenue that comes into the agency is used to keep rates low, or to help fund other local programs that benefit the community, like solar rebate programs for low income individuals, energy efficiency programs, electric vehicle charging, that sort of thing.

We have a deep green local renewable development fund that’s been created by the customers in our service territory that have chosen the deep green energy product. That’s a 100% renewable energy offering that we offer to customers. And 50% of all of the deep green customer revenue goes into a local renewable development fund to pay for the pre-development costs of local projects that we will build and own within our jurisdiction.

John Farrell: Initially, Marin’s community choice program — like other early programs in California — relied heavily on buying renewable energy credits and renewable energy from more remote areas. In subsequent years, the program has increased its focus on local procurement, aligning with the more ambitious efforts of other programs in the state. For instance, Redwood Clean Energy, another California community choice agency, found a way to marry their authority over clean energy with their local forestry industry, paying for biomass-generated electricity. CEO Matthew Marshall explained the opportunity in our early 2020 conversation, for episode 99.
Matthew Marshall We serve the County of Humboldt in Northern California and all the incorporated cities within the County and so we’re kind of in the far North of California on the coast, about five or so hours North of San Francisco. We really kind of have set the priority of not just kind of saying, Hey, we want to do, you know, renewable energy procurement and hit the state targets early. I mean I think that’s a, an important goal, but we want to kind of look at ways to both achieve that while also providing broader benefits to the local community. We’re, I think still the number one forest products producing County in the state of California and there’s still a strong part of our economy that really depends on our forest and working lands. And then, a piece of that puzzle is local biomass facilities that utilize mill waste and other wood waste to generate electricity. And that’s a community resource.
John Farrell: Redwood Energy’s efforts weren’t just about tapping a local resource, but about increasing their self-reliance.
Matthew Marshall The community really wanted to focus on the use of local renewables, those are existing facilities and so we could afford to initially pay a little bit more to basically provide that power locally. And it started out as sort of a way to keep local jobs and local generation going. And I think as actually been seeing the energy market’s changing even, you know, just the last couple of years, the ability to have base-load renewables and have local generation as we’re looking at things like public safety, power shutoffs and the technical potential to keep local generation powering our community.

One of the things that’s very exciting about this and we’ve gotten a lot of support and funding for this project from the California energy commission is the opportunity to do this kind of a multi customer micro grid set up really opens up the opportunity to look at neighborhoods or areas where maybe there’s multiple hospitals or or other kinds of situations where it isn’t sort of like what you might say typical microgrid where it’s a single customer in their own kind of campus that they can Island and isolate from the grid but be able to operate a whole section of the grid that includes multiple customers really will hopefully broaden the range of opportunities where you could deploy micro grids to provide resiliency and emergency response capabilities.

John Farrell: East Bay Clean Energy, serving Alameda County, California, and associated municipalities, leveraged its local control with a local development business plan. The plan laid out how the community choice program would redirect the electricity savings of switching to local power into other local initiatives. There’s this great quote from the program launch press release from Reverend Ken Chambers, the pastor of West side missionary Baptist church in Oakland. QUOTE: We need to create opportunities for low income people traditionally shut out of the clean energy economy. We need to train and employ local people like the formerly incarcerated and people of color with family sustaining wage jobs so that we can afford to stay in the Bay area.” (Body9.mp3)

To learn more about the business development plan, I spoke with Jessica Tovar, coordinator of the East Bay Clean Power Alliance, for episode 98 in 2020.

Jessica Tovar The local development business plan, our point for for advocating for that was really the creation of jobs and stimulating our local economy and at the same time really providing benefits that benefit people who are otherwise shut out of the clean energy economy, but it’s not just limited to wind and solar, but it includes things such as energy efficiency for example, and other benefits like creating opportunities for people to start shared solar programs for example. And really kind of opening the door and having a plan for the different options and opportunities that we could be actually having a more clean energy incentives in the East Bay. So, for example, creating like a community innovation fund to begin funding projects such as the community t-shirt, solar program or cooperative, other things that are in there is like energy efficiency kind of incentives like on bill repayment for example. So that we can actually do energy efficiency retrofits to low income people’s homes. You know, a lot of homes in the, in the Bay area are old and obviously contribute to a lot of energy. And so to begin to be able to upgrade our homes and actually reduce that waste and really acknowledged that, you know, it’s, it’s expensive to do those things, but if we have this opportunity of pain for that kind of program through our savings, then that’s beneficial to low income folks in the East Bay area.

There’s a lot of stuff in the local development business plan, but one of the things is there something called community benefit adders. And so an adder would be to incentivize, you know, if there is some family sustaining wage or union wage job creation. So there’s incentive for that. If you’re like doing a particular project in a income community, there’s a low income community adder. There’s also an adder for storage, for example. So there’s all these different opportunities to incentivize. And you know, this is something that even though it’s created for our community in the East Bay area, Alameda County, it’s still also a useful tool for other communities to look at opportunities that go beyond installing wind and solar energy in your community. Right. And as you mentioned, feed in tariffs are important because if we’re incentivizing our municipal buildings to become solar, then we’re able to provide solar energy into our East East Bay community energy program that then local people could be buying that energy. And you know, over time that stable energy, it’s local clean energy. It’s, it’s a way to stimulate our economy, create jobs and create that clean energy infrastructure that we want so badly to combat climate change and all these other injustices in our community.

John Farrell: As of this year, the community innovation fund has only distributed $160,000, far less than anticipated when the community choice program launched. However, the agency promises over $2 million in additional funding over the next three years. Another interesting use of community choice energy is from Ohio, where several communities that are part of the Southeast Ohio Public Energy Council opted to add a fee to their electricity bills to fund local clean energy projects. Mathew Roberts, information and outreach director at Upgrade Ohio, explained in 2018 on episode 56 how the new fee would work in the city of Athens.
Mathew Roberts So the fee is 0.20 cents per kilowatt hour and the average assets customer in the southeast Ohio Public Energy Council’s electric aggregation program uses between 800 and 900 kilowatt hours a month. So the fee would add up somewhere between a dollar 60 and a dollar 80 per month per customer. This is for households and small businesses that don’t fit into the larger energy user categories. All of the fees now that it is passed will be collected and used explicitly for solar projects on city owned and public serving buildings in the city of Athens.

We’re anticipating about 80 to $90,000 per year and the aggregation program has about, at any given time, 70 to 80% of the residents of Athens City involved in the aggregation program. The rest of the 20% or more are either in their own supply contract, so they’re not in the aggregation program or they simply opt out of the aggregation program and get the default rate by the utility. And over each year we’re anticipating that we can build a 60 kilowatt installations, you know, saving roughly $10,000 per year throughout the service life of each system and again, each year we have that fee to use from. So the savings will really compound creating a big benefit for the city of Athens. What we like to point to is that because the solar systems will be installed on public serving buildings, this will actually be a net benefit to all taxpayers, whether you’re in the aggregation program or not. And that’s because the city of Athens will be saving on their utility bills, supplying their energy needs with the solar first and then going to the grid to supply the rest of the energy that they may need. And that frees up money within the city’s budget to use on other programs and services that benefit everyone.

What we’re doing pretty soon in the next few months is going to the community again and asking what’s the best way to use the fee money? We’ve been playing around with the idea of using the fee money to attract new capital so that way we can leverage our annual fee for bigger and better projects. But as this carbon fee was initiated through a democratic process in voting, we also want to honor that and create public forums for people to contribute how they think this carbon fee should be spent. If they’re interested in simply taking as much that was gathered each year and spending only that for projects, then we will honor that. But we also want to share our, our ideas knowing that we’ve been in this industry space for a little while, showing the value of kind of leveraging that, that money for more capital.

John Farrell: Through October 2022, the Athens Public Solar Fund has collected nearly $200,000 and solar installations are planned for the community center and the city pool parking lot.

Even in states that don’t have laws supporting community choice programs, cities can work with electric utilities to develop alternatives. In Milwaukie, Oregon, a suburb of Portland, clean energy leaders in the city didn’t have access to community choice from state legislation, so they pursued direct talks with the utility, Portland General Electric. Natalie Rogers, the city’s Sustainability Coordinator explained how the city was able to get carbon free electricity for municipal buildings.

Natalie Rogers: Our utility PGE does have a product called Green Future Impact, which is for large commercial, industrial, essentially large loads to take advantage of. And what that is, is it’s an aggregation product where for a 10 or 15 year contract, they essentially built out or are building out a new solar array east of the cascades. And so Milwaukie signed on for a hundred percent of our city load for this product. So we’re at a hundred percent operational carbon free electricity, which is really exciting. And other large commercial entities can take advantage of it if they don’t want to place a solar array or have any generation onsite, but they still want the value of carbon-free electricity.
John Farrell: Mark Gamba, Milwaukie mayor, jumped in to share that the city was partnering with the utility on legislation to enable them to offer this renewable electricity option to all residents of the community.
Mark Gamba We also have a bill in conjunction with PGE this year is to be able to negotiate for renewable energy for the entire city, not just city operations, but for all, all residents, all businesses, besides maybe two or three of the large industrial businesses. And instead of having that be an opt in system where people can say, yes, I would like to, to join that, the city council would negotiate that deal. Everyone would have it. And if you chose not to have it, you could opt out. And it’s really a giant difference in how many people will be involved in something like that. They’ve been doing that in Utah now for a while. And the difference is pretty extraordinary in the number of the uptake. So what that does that’s very beneficial to rate payers is that it drives down the price initially of the, whatever the premium is. But as Natalie has just pointed out, the premiums on these renewable systems are dropping dramatically all the time. One of the things that we would like in this bill is that if, if our green energy becomes cheaper than their base load, uh, that we actually benefit from that, that our citizens actually get a reduction. We’ll see how that works out.
John Farrell: Oregon House Bill 2021 was signed by the governor in July 2021, to allow this potential city-utility partnership to move forward. You can listen to my full conversation with Natalie and Mark in Local Energy Rules episode 131. In all, nine states offer cities the option of community choice. The full list and numerous examples of the policy in action are in ILSR’s Feb. 2020 report on the issue.

Communities typically only pursue public power once they’ve exhausted efforts to win support from incumbent utilities, but another approach is to change the incentives for utilities. In 49 out of 50 states, utilities make money by spending on power lines, power plants, or energy distribution, instead of by meeting goals for reliability, clean energy, and other metrics. One state has changed that formula, in a decision described by news outlet Hawaii Tech as quote, “a landmark ruling for the entire nation, putting Hawaii at the leading edge for realigning the electric utility business with a 100% clean energy future.” On episode 130, Isaac Moriwake of Earthjustice explained how the concept of performance-based regulation has the promise to change what the utility does for its customers.

Isaac Moriwake: I think folks generally familiar with the clean energy scene, understand that the traditional utility, the model, which goes back a hundred plus years at this point, is basically based on this cost plus or cost of model of making money where the more capital they invest in building and owning stuff, the more profit they make. Now, now that paradigm worked for, let’s call it the industrial age, where we needed to build the modern grid. And one of the wonders of the world that we see today, but it’s ill suited going forward for the new clean energy, informational, digital age. I would say of the 21st century where the utilities are continually on this treadmill of building more and more stuff. And yet again, in the climate era, in the clean energy era, it’s more about downsizing our footprint and building more efficiently and smartly rather than just more for its own sake. And so that’s the fundamental incentive that we need to turn around and that’s the heart of performance-based regulation.

There was a study that was commissioned by the legislature for 2 million bucks about, what’s the best model going forward? How do we change the system? And they consider co-ops, they consider munies, to consider divestiture and all that. And I think that the answer that came of that and not to say that it was the end all, but certainly the, the commission I think had independently come to a similar conclusion that working with what we’ve got, in terms of a vertically integrated, privately-owned utility, but aligning or realigning the incentives, was the best way to get the most bang for the buck in the near term.

John Farrell: So what will Hawaii’s investor-owned utility get paid to do?
Isaac Moriwake: They’re going to get paid to be more efficient. They’re going to get paid to deliver service and performance along the lines of what the customers want and in line with interest mandates, like our 100% clean energy mandate our RPS and, you know. We can get into the nuts and bolts, but you know, traditionally utilities come in for rate cases every so often and increased their rates. And it’s driven again by increased investments on which the utilities tack on a rate of return. And that’s the engine that ever points upwards as far as increasing the utility’s revenues and customers rates. So instead of that vertical engine, the fundamental beginning that the foundation for performance-based regulation, I think starts in principle in general, as well as how Hawaii implemented is what we call a revenue cap or revenue index in store. And basically instead of ever increasing rate through ever increasing rate cases and mind you, these rates always go one way, one direction, no utilities ever come in for a rate case to decrease rates, right?

Instead of that, a treadmill, we’re just going to cap utility revenues and keep it there for a long period of time. In this case, in Hawaii’s case, five years. We pushed for more, eight years, but it’s going to be five years for starters. And then the utility is turned loose to basically find any kind of efficiencies, cost savings so that anything, any savings underneath that cap where that index, which is externally calculating driven, will go straight into the utilities pocket. And that is said to mimic a competitive environment and as close, I guess, as monopoly utility regulation is going to get where the utility is basically left to its creative competitive juices to, to basically maximize his profits and increase efficiencies across the board. So that’s key. And, and how does that work in terms of, you know, creating customer value? Well, whereas traditionally, the utility would automatically reach for that centralized fossil fuel plant as a way to boost its profits and its revenues, now it will consider hopefully on a more level playing field, distributed energy resources, non wire alternatives, alternatives to traditional utility infrastructure investments, as a way to get the job done, to reach our clean energy goals without spending utility and ultimately rate payer money. And so again, leveling the playing field between all options, de-linking from that traditional cost plus engine of just more utility stuff is the fundamental premise and starting point for performance regulation. And then on top of that, once we have an idea of, okay, there’s certain areas where we want better targeted utility performance, whether it’s faster interconnection, whether it’s greater customer satisfaction, whether it’s more sort of attention to low and moderate income needs, then you can establish what they call performance incentive mechanisms for PIMS, for short, to drive utility performance in those targeted areas. But I want to emphasize that unlike, I think some people, when they think about PBR, they automatically think about PIMS the performance incentive side. What we really need to focus first is that foundation of breaking the link between cost of service and utility revenues first. And that’s what Hawaii did for sure, as a foundation.

John Farrell: Another way to change the utility business model is that electric utilities could become benefit corporations, which would commit them to rigorous standards for sustainability, accountability and transparency. However, of the more than 100 investor-owned utilities in the United States, only one is chartered as a B corp: Green Mountain Power in Vermont. Could more utilities use this triple bottom line incorporation structure? Mary Powell, at the time the CEO of Green Mountain Power, explained back in episode 38.
Mary Powell: From my perspective, I’m actually amazed there are not more organizations, whether they’re utilities or non-utilities, that are not actively pursuing something like a benefit corporation status. And the reason I say that is because, in my business experience, which is of course, you know, I’ve been in this business for quite a while, but I’ve been in many other industries, what I think it really drives home is that when you focus on the customer, the community, and the broader suite of stakeholders, that is where you find the real opportunities to think differently about how you serve society, how you serve your customers. It’s what breeds a lot of innovation in your thinking. And ultimately my view is, whoever your ultimate stakeholders or investors, you ultimately also become a stronger financial entity as a result of that type of focus.

I think that through innovation and collaboration, no matter what industry space you’re in, you get to better and different solutions and you’re sort of guaranteed to always be forward looking and forward moving. So to me, being a benefit corporation really ties in very well with that. And I think particularly in a business where you’re providing, at the end of the day, a really critical essential product and service to society, to say that you want to go about doing that in a way that is providing benefits to multiple stakeholders and to the communities that you serve and the environment. I mean, my gosh, it’s very, very intuitive that any business would wanna do that, but certainly that a utility would.

Yeah, so again, my view is, when change is gonna happen, the best way is to embrace it and focus on how you can create a new and different value proposition for yourself and your company and for your customers as you look to the future. So, on many levels we’re excited about the disruption that’s happened in solar. You know, going back to you referenced, 2008 and the energy vision that I launched, as well as the fact that we actually led the discussion around valuing solar in our state by creating a solar adder that we gave our customers that wanted to put rooftop solar on their homes. And we came to that through really aggressively analyzing how can we go in this direction that we know our customers wanna go in, but do it in a way that creates value for all of the customers that we serve.

John Farrell: Despite Mary’s optimistic view of the intersection between being a utility company and serving the public, no other investor-owned utility has opted to become a B corp in the intervening years.
John Farrell: We’re going to take a short break. When we come back, we’ll talk about city-based equitable clean energy and climate funding, and energy districts, a model for expanding clean energy access based on Depression Era soil and water conservation districts. You’re listening to episode six of a special series of the Local Energy Rules podcast, the promise and peril of publicly owned power.

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John Farrell: In some cases, communities decide to create their own clean energy funds, instead of taking over the electric utility or pursuing any of the other alternatives I’ve mentioned so far. These cities, which all have ambitious climate action goals, are holding non-utility corporations accountable to their climate impacts and asking them to foot the bill.

In Portland, Ore., residents passed a ballot initiative creating the Portland Clean Energy Community Benefits Fund by levying a new tax on big corporations, pouring $30 million per year into equitable clean energy development. I spoke with Alan Hipólito at Verde, a nonprofit in the Cully neighborhood, on the eve of the 2018 election about the local renewable energy resolutions and community interests that led to the ballot initiative.

Alan Hipólito: Multnomah County and the city of Portland in 2017, advanced tandem 100% renewables resolutions and Verde along with a number of other frontline community-serving organizations like, The Coalition of Communities of Color, OPAL Environmental Justice Oregon, as well as a number of mainstream environmental organizations, were able to access those processes and really move the ball forward on the commitments the two resolutions made to meeting the needs [and] addressing the priorities low income people and people of color. We call them frontline communities because, as your readers know well, low income people and people of color are on the frontline of climate change in the United States and around the world.

There were really three commitments that we moved forward in the resolutions. The first was working with rate payer advocates to protect low income rate payers from price impacts during these transitions. The second, was, advancing workforce and contracting diversity goals. So, that workers and business from all communities have the opportunity to participate in the development and construction of our renewable energy infrastructure. But, then there was a third commitment, that, we think is especially connected to the Portland Clean Energy Initiative.

As, I mentioned we did some pretty good work on advancing workforce and contracting equity commitments in the resolutions. But, a lot of these projects that will be done will be very big scale projects. So, it will be done by, big contractors, big companies working at big institutions. And, there’s a lot of reasons why that make sense. But, that’s a difficult level for frontline communities to compete. So, we wanted to open up a new playing field for low income people and people of color and their community serving institutions to be a part of our transition 100% renewables. And, we called that “community-based renewable energy infrastructure.”

So, each resolution recognizes that that’s a model to ensure that the benefits of our transition are made available to low income people and people of color communities. Then each sets standards for what percentage of community-wide energy will come from community-based renewable energy infrastructure. Each of them says that by 2035, two percent of all the energy in the city of Portland — so, not just things that are owned by the city out right or city building — but, every unit of energy that’s consumed within the city, that two percent of all of that will come from this kind of infrastructure. And, then the city goes even further and says by 2050, 10 percent. So, one out of every ten units of energy in the city will be created by community-based renewable energy infrastructure. This is a massive transfer of generative capacity to the community level. The Portland Clean Energy Initiative is really of one of our first efforts to increase the toolkit. Both, in terms of funding, as well as policy, to give communities the opportunity to respond to that challenge.

John Farrell: The ballot measure provides funding for local priorities by taxing big retail businesses. It adds a one percent tax on their local gross receipts if they have sales of more than $1 billion nationally and if they do at least a half million in sales per year in Portland. I asked Alan why the community targeted big retailers.
Alan Hipólito: Sure, well I would say a few things. First, retailers have, from a climate perspective, have very long supply chains. Those supply chains have greenhouse gas emission impacts, and they’re not accounted for. Second, retailers need to be physically in place to sell their goods and services to people. And so, trying to evade what’s often a made up argument of: “Well, if this passes, we’re gonna leave.” Right. Thirdly, Oregon is actually a very business-friendly place. Seven out of every ten tax dollar in Oregon comes from individual taxes, not from corporate revenue. So, they have the resources to contribute, to pay their share, in what is clearly a society-wide, civilization-wide challenge. And then, of course, in addition to that favorable treatment, they just received a roughly 40 percent tax cut from the federal government and the Trump Administration. So, they have the resources available to lean into the solution with us. And we’re not asking for a lot. One percent on their general revenues within the city of Portland for … If that company has $500,000 in local revenues, in addition, of course, to meeting the $1 billion national box they have to check as well, that’s just $5,000 on that $500,000, so we’re not … It’s a very targeted, very narrow, and devoted to very specific purposes, from companies that can afford it and that have climate impacts.
John Farrell: You can hear the full interview with Alan on episode 63 of our Local Energy Rules podcast, published in October 2018. I also spoke with Jaimes Valdez, a member of the Portland Clean Energy Community Benefits Fund startup team, in December 2020 about what happened with the initiative.
Jaimes Valdez: That passed overwhelmingly the voters of Portland supported on almost a two to one margin. It was over 65% of the vote. And so it’s been a couple of years since that November, and we’ve been really busy in the last couple of years getting the program launched.
John Farrell: As Jaimes explains, the two years between the passage of the ballot measure and our interview highlight the focus on procedural equity, including seating an advisory committee made of community members.
Jaimes Valdez: One of the milestones was the formation of the committee itself and having a decision-making body of these volunteers that can help guide the program. And then they really worked along with community input and that was in November of 2019. So just about a year ago that we had a fully seated decision-making body. And then we identified the need really for guiding principles for the program and to have values that then were leading the other decision-making for the launch. And so there was a public input process for that and community engagement to develop a set of guiding principles. And we have those posted on our website, but I’ll just, I guess, summarize them here. The first guiding principles of the program, be justice driven, advanced system change to address the stark and current discrimination that it’d be community powered. That there’d be a real trust in the community knowledge, experience, innovation and leadership that the program be accountable, that it’s implementing our funding in a transparent way with oversight and engagement processes that promote continuous learning. Um, and that really all of the, the kind of vessel for that or the umbrella for that is that we’re focused on climate action with multiple benefits that we’re not just seeking the lowest kind of market-based carbon emissions per dollar, but we’re really embedding social values. And looking at who benefits from the different deployments of funds or different projects that arise from Portland Clean Energy Fund. So that’s kind of the overall umbrella is that dual climate action with social benefit. And so we then adopted those guiding principles and that was in April of 2020.

We’re now in the process of distributing those funds and getting organizations ready to apply for this round of funding that is open right now, again, that $8.6 million and in future rounds we’ll have significantly more resources. The kind of annual budget for the Portland Clean Energy Fund is more on the order of 40 to $60 million per year. But this introductory round is kind of a ramp up to that full funding amount.

John Farrell: You can learn more about the Portland Clean Energy Community Benefits Fund and even see diagrams of the project funding on the show page of my full interview with Jaimes, episode 120 of Local Energy Rules.

In Seattle, citizens similarly targeted high-wealth businesses to source a new fund to support city priorities. Of the $230 million per year Jumpstart Seattle tax revenue, $20 million will be dedicated to equitable clean energy and climate work, or what locals call a Green New Deal. Like Portland, the program will be overseen by an advisory board. Jill Mangaliman, Executive Director of Got Green, and Abigail Juaner, Equitable Program Development Manager at Puget Sound Sage, joined me in October 2020 to talk about the organizing effort and intent of Seattle’s new fund. Here’s Abigail describing how the fund works:

Abigail Juaner: Jumpstart is the progressive revenue legislation that the Seattle City Council passed this summer, in July. It’s estimated to bring around 214 million a year. And who’s paying for it? It’s businesses with payroll expenses for employees with at least $150,000 in annual compensation. It is structured in three tiers. Businesses with payroll expenses up to a hundred million? Their rates are 0.7% of employees with annual compensation between $150,000 and $400,000. Then it will be 1.7% of those with annual compensation above $400,000. The next year is for businesses with payroll expenses between a hundred million and 1 billion. The tax rate for that is 0.7% for employees at annual compensation between $150,000 and $400,000, and then 1.9% for those with annual compensation about $400,000. Then the third tier is for businesses with payroll expenses over 1 billion. The rate for that is 1.4% for annual compensation between $150,000 and $400,000, and then 2.4% for those annual compensation above $400,000. Businesses with parallel expenses under 7 million are exempted from this.
John Farrell: Jill explained how the community came to the decision to do a progressive tax to support this work.
Jill Mangaliman: We were doing a lot of talking with community during the time we were push for the Green New Deal, and that kept coming up, the question, “How are we going to pay for this?” This is very ambitious to transition the entire economy to one that’s sustainable. It became very clear from all our conversations and surveys that people wanted something that wasn’t going to fall on the backs of working people. Abigail said, sales tax is really regressive. There were some initiatives on the table around property tax levies. We can’t keep continuing to squeeze every day people who are not responsible for these climate disasters. That we really should be going to the top 1% or the corporations. So it was very clear alignment with what we were hearing from the community.
John Farrell: Jill also explained the intersection between the work of Got Green and its allies do protecting vulnerable communities from gentrification, and the city’s clean energy aims.
Jill Mangaliman: Considering that we view displacement as something that also creates pollution and increases climate impacts. Right? The more that we can keep people rooted in place with stable housing, the more resilient there’ll be. Also we can reduce carbon emissions as well at the same time. So it’s complimentary planning. But also by building housing, that’s also the potential for creation of jobs, as well as potential for creating green infrastructure, making it more accessible to the local communities here, the working-class and BIPOC communities. Something that came up while we were advocating for Green New Deal is around the transition. Right? How do we move away from fossil fuels? Not just new infrastructure, but also existing infrastructure needs to make that transition. And again, how do we support the communities and the workers in that transition? There has to be some real investments. And right now, yeah, there aren’t a whole lot of programs out there that help support the costs to go from natural gas and oil to electric or healthier types, or solar. There’s very little support and programming for that. So we really want to make sure that if we are going to make those goals by 2030, to move away from climate pollution, that we actually do so in an intentional way that doesn’t leave any of our community behind. I think that, yeah, the more that we can continue to have really strong place-based solutions, and support the local communities in building up their resilience plans, whether it’s like increasing their food security or emergency plans, or creating centers and where folks can access health services in times of crisis, or even shelter during wildfire, all of these will help not only create jobs locally, but also will help kind of meet many of our goals at the same time. And yeah, they should be around these areas of affordable housing. So they should go hand in hand together. See a lot of potential for partnership and also a lot of alignment in goals. But yeah, it’s a lot. It’s a lot. The Green New Deal, it’s a big deal, and much needed.
John Farrell: Minneapolis also pursued local funding for its clean energy efforts. As we shared in the fourth episode of this public power series (episode 167 of Local Energy Rules), the city concluded its municipalization campaign with a compromise Clean Energy Partnership between the city and its utilities. But, the city also developed its own new source of funding via its utility franchise fee. By increasing the fee by half a percentage point, the city brought in an additional $2-3 million per year to fund equitable clean energy work from solar on low-income properties to cost-sharing energy efficiency for local businesses. For more about Minneapolis’s fight for equitable clean energy, listen to prior Local Energy Rules interviews with city council members Cam Gordon and Jeremy Schroeder.

We’ll conclude by looking beyond cities and utilities to a novel community-centered approach to advancing clean energy and climate goals. In Iowa, Andy Johnson organized one of the country’s first energy districts, modeled on soil and water conservation districts of the New Deal. He explains how the Winneshiek Energy District in northeastern Iowa has accelerated clean energy deployment by focusing on technical assistance.

Andy Johnson: So efficiency and renewables are essentially the two parts, to one big game here. And we can all save tremendously on efficiency. It’s not very sexy and it’s not always easy to accomplish. The numbers out there are always thrown around and said, well, 20 to 30% of just about everybody’s energy use, whether it’s a business or a home or a farm or whatnot, could easily be saved through efficiency. And it’s true that it could be a saved through efficiency, but it’s not always easy, especially when you talk, for example, whole building, weatherization, insulation and shell. So a lot of what we do actually try to do is, is actual boots on the ground, technical assistance. There are a lot of great local energy efforts out and around and doing good things. What most of them don’t do is that sort of technical analysis and implementation with customers.

And it’s not easy. There’s good reasons why people don’t do it. Traditionally, it’s been done, it’s been understood of energy auditing. Many people have had an energy audit, most unfortunately that have had an energy audit, haven’t actually implemented any major changes from it. It’s just the way the industry is has evolved over the years. So what we try to do is a, is a much broader level of energy analysis and typical audit. We try to include the efficiency and renewables opportunities. We look carefully at the economics and then we try and help people make those changes. And we’ve done this with hundreds of homes and businesses and now farms increasingly here in northeast Iowa. And to conversion rates of, you know, 50 to 95% in terms of projects that actually get done. So that work is a little bit costly and it’s a little bit intense. But we’re seeing really great results there. So of course the other side of what we do is a lot of the engagement, outreach, education, engagement, awareness and working directly on projects with partners like local governments, helping folks understand, hey, y’all could build a solar array. Here’s how it works, here’s how third party ownership works. Here are how all the incentives work and essentially being the catalyst that drives change at the local level

We’ve done a great deal of efficiency as we mentioned, renewable energy is on a tear here. And we’ve worked with all kinds of partners, for example, the community college there and Luther College and other entities, and solar installers. So there’s a lot of catalyzing that can be done when you have an organization whose mission is to do it. Of course it takes energy to build that organization here in Decorah. We’re pretty confident we have more solar per capita than any other town in Iowa now and possibly any other town in the Midwest. It’s really rolling along. And again, it’s not easy to build those organizations to try something new that’s not just a subset of, say, a city government or a county government or something else, but it pays dividends. And part of what we’re really excited about now is that we’re talking with neighboring counties and startup groups nearby and far away about starting an energy district and a network of energy districts. And we think that’ll really create increasing movement awareness, power and everything else. So we’ll share resources, which to share some services, but everyone needs that local mouthpiece and catalyst for change.

John Farrell: You can hear my full interview with Andy in episode 35 of Local Energy Rules. 

Thank you so much for listening to this episode of Local Energy Rules, the 6th and final episode in our multi-part series, The Promise and Peril of Publicly-Owned Power. We hope you enjoyed hearing about strategies that cities and communities have employed when public power isn’t probable. We also hope you’ve enjoyed the entire series, covering an entire arc from why cities want public power to why it’s not a panacea. You can find all six episodes on the Local Energy Rules podcast feed — episode 163 is the first of this series, and episode 170 is the last — with a couple bonus episodes sprinkled in.

If you’re working to support community and city level equitable clean energy progress, we also have many other resources on the website of the Institute for Local Self-Reliance. Our interactive Community Power Toolkit provides case studies and sample ordinance language of city-level actions. Our Community Power Map shows the policy environment in each state and the location of every existing municipal electric utility. And our wide range of research explores the technology and market structures that can prioritize local and community ownership of clean energy.

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.

Community Choice Energy

As part of a community choice aggregation, municipalities and counties band together to procure power for their residents and negotiate better deals. The incumbent utility still distributes the electricity. This measure, which Farrell calls “municipalization lite,” is only available to communities in the nine states with enabling legislation.

Marin Clean Energy revolutionized the community choice model when the entity fought to procure more clean energy for customers.

We’ve been able to [purchase] more than double the amount of renewable energy that customers were getting before, and offering rates that are competitive and in most cases, lower for customers than what they would have been paying with the incumbent utility

— Dawn Weisz, Executive Director of Marin Clean Energy

In some cases, communities have been willing to forgo bill savings when the community choice agency reinvests in local initiatives. Redwood Energy supports the local forestry economy, East Bay Community Energy has a local development business plan, and an Ohio community instituted a carbon fee to fund solar on public buildings.

Change the Utility’s Incentives

When investor-owned utilities spend money on new infrastructure, they can recover their costs from customers — plus a rate of return for their shareholders. This “cost plus” business model pushes utilities to build more things, whether they are needed or not. Hawaii’s performance-based regulation, in contrast, rewards utilities for increasing efficiency, advancing toward the state’s 100 percent clean energy mandate, and overall customer satisfaction. The utility is pushed to compete with itself in a market that otherwise lacks competition.

In the climate era, in the clean energy era, it’s more about downsizing our footprint and building more efficiently and smartly rather than just more for its own sake. And so that’s the fundamental incentive that we need to turn around and that’s the heart of performance-based regulation.

— Isaac Moriwake, Managing Attorney of the MidPacific/Hawaii office, EarthJustice

Alternative Utility Business Models

Investor-owned electric utilities must keep an eye on the bottom line: profit. A certified “B Corporation,” in contrast, operates with a triple bottom line that includes social and environmental sustainability.

Green Mountain Power serves 270,000 electric customers in Vermont. The utility was first designated a B Corporation in 2014 by non-profit group B Lab, which certifies corporations that meet certain environmental and social standards. Green Mountain Power offers many enterprising programs, including solar for low-income customers and an off-grid package.

When change is gonna happen, the best way is to embrace it and focus on how you can create a new and different value proposition for yourself and your company and for your customers as you look to the future.

— Mary Powell, Former CEO of Green Mountain Power

Create a Local Clean Energy Fund

Portland’s Clean Energy Community Benefits Fund adds a surcharge to businesses that collect one billion dollars of revenue each year and at least $500,000 of revenue in Portland. Essential goods and services are exempt from the fund. Voters established the fund through a 2018 ballot initiative and expect to raise between 40 and 60 million dollars per year. Organizations will apply to a grant committee for support funds.

One out of every ten units of energy in [Portland] will be created by community-based renewable energy infrastructure. This is a massive transfer of generative capacity to the community level. The Portland Clean Energy Initiative is really one of our first efforts to increase the toolkit both in terms of funding, as well as policy, to give communities the opportunity to respond to that challenge.

— Alan Hipólito, Executive Director of Verde

Seattle also taxes corporations in the name of climate justice. Jumpstart Seattle, a corporate payroll tax passed in 2020, only applies to businesses with payroll expenses of seven million dollars or more. The resulting fund will go toward affordable housing, small business support, and the Green New Deal.

Organize an Energy District

Northeast Iowans established the Winneshiek Energy District in 2009. The organization provides energy assessments, technical assistance on weatherization, and solar site assessments — to an astounding result. Winneshiek County has 10 times more solar per capita than any other county in Iowa.

A lot of what we do actually try to do is, is actual boots on the ground, technical assistance. There are a lot of great local energy efforts out and around and doing good things. What most of them don’t do is that sort of technical analysis and implementation with customers.

— Andy Johnson, Director of the Winneshiek Energy District

Want to hear more from the featured interviewees? Check out the full conversations (in order of their appearance in the episode) below:

Episode Notes

See these resources for more behind the story:

For concrete examples of how towns and cities can take action toward gaining more control over their clean energy future, explore ILSR’s Community Power Toolkit.

Explore local and state policies and programs that help advance clean energy goals across the country, using ILSR’s interactive Community Power Map.

This is the 170th episode of Local Energy Rules, an ILSR podcast with Energy Democracy Director John Farrell, which shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion.

Local Energy Rules is Produced by ILSR’s John Farrell and Maria McCoy. Audio engineering by Drew Birschbach.

This article originally posted at For timely updates, follow John Farrell on Twitter, our energy work on Facebook, or sign up to get the Energy Democracy weekly update

Featured Photo: Illustration by Maria McCoy

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Maria McCoy is a Researcher with the Energy Democracy Initiative. In this role, she contributes to blog posts, podcasts, video content, and interactive features.