The city of Minneapolis has reached new franchise agreements with Xcel Energy and CenterPoint energy regarding right-of-way and renewable energy. While the current agreements were set to expire at the end of 2014, thus necessitating all parties come to the table, the shape and scope of the agreements were undoubtedly influenced by a major campaign last year by Minneapolis Energy Options. This campaign sought to have the city study whether or not a municipal utility would be a better option than signing another twenty-year agreement with the two utility companies. See here for your Examiner’s coverage of that campaign and its effect on the 2013 municipal elections in Minneapolis.
A “Frequently Asked Questions” document from the City of Minneapolis’ website describes a franchise agreement as:
An agreement between a city and a utility service provider (like electric, gas, and cable companies) that outlines the conditions under which they can use public right of way to serve customers. State law allows cities to impose a franchise fee, which is intended to reimburse the city for the use of public right of way. Those utility franchise fees are typically paid by the company’s consumers as a fee on your monthly bill. A utility franchise agreement is not a contract between the City and utility for service.
The document also states that the city has little control over much more than setting the franchise fees and setting “conditions on the use of the public right-of-way.” The state Public Utilities Commission is the real regulator of utilities in the state, ruling on “the rates utilities charged to customers for services” and “the mix of generation sources used to produce electricity.”
Your Examiner wanted to catch up with the folks who helped ensure that these agreements reflected current energy realities and the need to increase renewables. Your reporter spoke with two current board members of MN Community Power, the group formerly known as Minneapolis Energy Options. Your Examiner did reach out to the City Council Member who has worked on these issues, Cam Gordon of Ward 2, but did not receive a response by publication time (Update: CM Gordon has since reached out to your Examiner – stay tuned for an update regarding his thoughts on this). Minneapolis has passed its own Climate Action Plan, which seeks “to reduce citywide greenhouse gas emissions 15 percent by 2015, 30 percent by 2025, and 80 percent or more by 2050 using 2006 as a baseline.”
Timothy DenHerder-Thomas, one of the board members, said in an interview that he considers the new agreements a good step forward. He cited a new energy management board (Energy Vision Advisory Committee), which will be formed by representatives from the city and the utilities to help shape the vision of energy usage going forward. He also spoke of “new reporting requirements” on the utilities, and noted that this agreement exists for only ten years (while the previous one lasted twenty), with an option to terminate after five years if the utilities aren’t living up to their end of the agreement. John Farrell, another board member with MN Community Power, said “we’ve established a terrific framework for giving the community and the city more control over their energy future and a real hope of achieving a more equitable and sustainable energy system.”
Regarding the role of the Energy Vision Advisory Committee, Mr. Farrell said he “expect(s) it to represent all of the key stakeholders in developing an equitable energy economy and to offer a lot of innovative ideas for the partnership, from on-bill financing to community-driven energy efficiency campaigns. It plays a crucial role in holding the city and utilities accountable to their promises.”
Mr. DenHerder-Thomas said it was important to create a “structure to share decision making power.” He said that Xcel Energy will need to commit to more community engagement with its customers under the current agreement, and said overall it brought more “pressure” to bear on both utility companies.
Your Examiner asked both gentlemen about the advantages to a shorter, ten-year franchise agreement (with the option to terminate after just five). Mr. DenHerder-Thomas said he thinks this helps to “keep the conversation alive” and gives the city “more leverage in closing the agreement earlier” if the utility companies are not being efficient or using enough renewable energy. Mr. Farrell said the advantage was simple: “Accountability. Both utilities have promised to help the city reach its energy goals. If they don’t, we need the leverage to quit the partnership and pursue other strategies for a better energy future.”
Asked how these agreements match up with MEO’s previous goal of a municipal utility, Mr. DenHerder-Thomas said the group was able to accomplish most of what it wanted. This included “increased community ownership of solar,” more “tribes and rural areas purchasing wind power,” and building efficiency savings. He also said that this agreement “creates a space for collaboration” among the different stakeholders and allows a “public venue to monitor utilities.”
The conversation then turned toward how this agreement affects the renewable energy space. Mr. Farrell stated that “both utilities have expressed a desire to help the city meet its goals, which includes both carbon reductions and more locally produced renewable energy. How that will happen depends on what gets included in the work plan, but we’ll be pushing for simple financing opportunities and taking advantage of doing renewable energy on public property to the greatest extent possible.” Mr. DenHerder-Thomas spoke of the “major potential” in renewable energy and said this agreement could possibly “coordinate the city and Xcel around Community Solar,” another citizen-powered venture to invest in solar gardens (see here for your Examiner’s profile on that company). He also said this could help residents gain more locally owned energy.
Finally, the discussion moved toward how these agreements mesh with the original goals of Minneapolis Energy Options. Mr. DenHerder-Thomas said that this was “not an endpoint” but a “new structure and process that gives the city power.” He said it was a “strategic victory” for the group. Mr. Farrell said much the same, concluding that “it’s a great fit for our pursuit of a clean, local, equitable, affordable and reliable energy future, but everything hinges on the outcomes. Within 6 months, we’ll have a sense of whether the utilities are really committed to making this work, and within 1-2 years we’ll know whether we can get meaningful outcomes.”
While these agreements are a landmark in the franchise negotiation process that began at the beginning of the month (and perhaps entered the public consciousness due to the large campaign issue it became last year), there still is a long road to go to ensure that these two utility companies live up to their promise to lead in renewable energy for the city of Minneapolis. Your Examiner will continue to follow these agreements and to see if all the stakeholders involved here live up to their word.