On Monday February 24th 2014, the Health, Environment and Community Engagement Committee (HE&CE) in the Minneapolis City Council will hear a presentation of the long-awaited Energy Pathways Study. The City Council approved this study to consider alternative pathways to the status quo energy system in preparation for renegotiating the franchise agreements with Xcel and Centerpoint that expire at the end of this year.
Here are the four different energy pathways examined, ranked by increasing city responsibility and control:
1: Enhanced (broader set of goals) Franchise agreements
2: A City-Utility Partnership
3: Community Choice Aggregation (Minneapolis contracting directly for energy supply)
4: Independently owned and operated Municipal Utility
For the immediate term, the Energy Pathways Study recommends a dual strategy that combines pathways #1 and #2 yet still considers pathways #3 and #4 on a longer-term scale.
Following pathway #2 means the establishment of a “Clean Energy Coordinating Partnership” where both City and Utility Leadership steer program and policy goals that focus on achieving the ambitious clean energy and energy efficiency goals Minneapolis set in its 2013 Climate Action Plan.
Such a partnership will hopefully leverage positive innovations in the utility business model that honor our compelling vision of re-directing the 450 Million Minneapolis spends each year on electricity/ gas into local jobs, resilient modern infrastructure and clean efficient energy that benefits our communities. A chief concern has been that incumbent utilities have so many sunken costs into coal and nuclear baseload that they will be unable to decrease their KWH price when we succeed in consuming less energy.
As for pathway #1, we are grateful for the broad consensus that a renewed franchise agreement should be far shorter term than the previous 20 years and renewal should be a reward for utilities meeting additional agreements made with the city. But in exchange for the incumbent utility meeting the city's clean energy goals, it could mean Minneapolis temporarily suspends its right to form a municipal utility for the duration of such an agreement.
Such a deal should not include Minneapolis waiving its right to lobby for changes to obsolete state statutes that the Pathways Study recommends. If the City of Minneapolis were to acquire electricity distribution infrastructure currently owned by Xcel, state law suggests that the price would have to consider the profits the utility would have otherwise made, thus hugely inflating the cost. Consumers who switch phone companies face a similar dilemma where they have to pay compensation for the loss of future revenues to a phone company whose service they no longer use.
The recommendation for pathway #3 is to do a detailed study on how Community Choice Aggregation could operate in Minnesota given that the state does not have deregulated retail electric service.
Discussions will continue in the coming days on how thorough the policy alternatives were evaluated and how useful the study’s recommendations are. Council Member Cam Gordon, the chair of the HE & CE committee, welcomes comments, questions and advice for him to share with other committee members.