INCLUSIVE FINANCING: THE LINCHPIN OF UNLOCKING THE CLEAN ENERGY PARTNERSHIP’S EVENTUAL SUCCESS

 THE ORIGINATING VISION BEHIND THE MINNEAPOLIS CLEAN ENERGY PARTNERSHIP

Back about 5 years ago, Community Power originated as a campaign called Minneapolis Energy Options whose goal was to try to get both utilities (Xcel and Centerpoint) to be more willing to help the City of Minneapolis meet its Climate Action Plan goals. The early thought leaders behind the campaign were driven by a vision of Minneapolis having locally-owned renewable power projects that keep wealth circulating though our community with creation of good-paying clean energy jobs. At the time, Xcel Energy was using its monopoly power to make it difficult for us to do local renewable energy (to a greater extent than it is today). The result of our grassroots campaign (an interesting but long story) is that we led Xcel and Centerpoint 3 years ago to form the nations’ first Clean Energy Partnership with a local City Government on the pretext of helping the Minneapolis meet its ambitious climate and energy goals (which eventually included 80% greenhouse gas emissions reduction by 2050).  

 

  The Minneapolis Clean Energy Partnership spent the bulk of its first year and a half’s worth of work with getting data on energy use & demographics down to the census tract level in order to create targets and set the baselines to measure its eventual success. This was valuable so that the Partnership staff would have the info they need to be confident in guiding how to effectively and wisely spend an increased pool of funds for Clean Energy Partnership efforts such as knowing where the best opportunities are for energy efficiency. However, the Clean Energy Partnership could only go on for so long at its beginning stage before scaling up its promised work on actual reduction in our carbon footprint and fossil fuel dependency. That time has now come given that we have the Clean Energy Franchise Fee Funding plan. Even if what we have before us is not a perfect end-all be-all of a long-term climate plan, it is the plan we have before the City Council right now and would still be a vast improvement from the status quo.

 CLEAN ENERGY PARTNERSHIP MAINLY FOCUSED ON ENERGY EFFICIENCY

 

With the name of “Clean Energy Partnership”, one would presume that it would be about figuring out how to put solar panels on as many stable south-facing roofs as possible or how to install ground source heating loops whenever the City digs deep holes in the roads. 5 years after we started Minneapolis Energy Options and 3 years after the Clean Energy Partnership was formed, our original vision of Minneapolis maxing out opportunity for local renewable energy is still not much beyond the realm of abstract long-term goals in terms of the Partnership.  Instead, the vast majority of in-person meeting discussion and on-paper priorities in Partnership spaces is about how to get enough technicians, planners, and financial engineers to make uncontroversial improvements to the existing built environment. Perhaps energy efficiency in buildings is just what happens to be the political low-hanging fruit at this point while more fundamental changes to make deployment of local renewable energy easier is much more politically challenging territory for the Partnership.   

            On one hand, the Clean Energy Partnership’s comfort zone of predominantly focusing on building energy efficiency may sound a bit too incrementalist in the face of what we are truly facing in regard to Climate Change where decarbonization of energy supply is necessary. However, saving about half of the energy we consume by cutting preventable energy waste is a necessary precondition for a vision of 100% renewables to take place, so it is not fair to dismiss building energy efficiency as “incremental change”.

INCLUSIVE FINANCING- THE LINCHPIN OF THE PARTNERSHIP’S EVENTUAL SUCCESS

               The more accurate perspective is that, there are both incrementalist and paradigm-shifting ways of going about energy efficiency. Incremental change, where only 1% of Minneapolis households engage in energy efficiency programs like the Home Energy Squad each year, is what we are seeing now. Meanwhile, the prime proposal for a paradigm-shifting change would be a type of on-bill-repayment program we call “inclusive financing.” Inclusive financing would mean Xcel and Centerpoint giving its customers the option to pay off the price of (significant but cost-effective) home energy improvements on their monthly utility bill.

81% of the city’s GHG reductions is due to Xcel energy having a cleaner, less carbon intensive electricity sources. 71% of our GHG emission in Minneapolis are from energy used in buildings. In the Clean Energy Partnership’s second annual report, only 837 households in Minneapolis participated in Home Energy Squad visits. Only 15% to 20% of Home Energy Squad customers actually followed through on the HES auditor’s recommended energy improvements, meaning only about 100 to 200 households.

We can presume that the 80% to 85% who did not follow through genuinely want to save on their home energy but the up-front cost of the energy improvements (often $12,000 for attic insulation for example) is the biggest barrier. So therefore, Minneapolis customers having what we call an “inclusive financing option” to take away that up-front cost barrier is very likely tantamount to a mandatory requirement for the City to make good on its Climate Action Plan goals. Otherwise it might end up being like trying to stay warm by wearing a jacket without a zipper.

 The Clean Energy Partnership’s upcoming Community Engagement program on energy efficiency could be very successful in reaching an impressive number of person-to-person contacts and removing the social barriers to saving energy. But we might see the same people who are engaged make minimal actual progress in becoming more energy efficient if the same up-front cost barriers are still locked in place.  

On one hand, it is arguable that having an inclusive financing option is an essential step in Minneapolis being able to meet its local Minneapolis Climate Action Plan goals. But the City directly asking Xcel and Centerpoint to offer an inclusive financing option for Minneapolis customers is another example of going into politically challenging territory for the Partnership. Otherwise, Xcel and Centerpoint would have already offered the option. Investor-Owned Utilities in general are likely afraid that making the option available will make it just a bit too easy for their customers to use less of their product, while publicly stating some other more politically correct justification for saying no.

 

What are Xcel and Centerpoint’s current positions on offering an inclusive financing option? Currently, Centerpoint Energy has filed with State Regulators to start an On-Bill-Repayment program but it is for a loan-based version of the program which would only be accessible to the half of the population that already has a good credit score. However, Centerpoint management has voiced openness to doing the “Pay as you save” trademarked model which we do prefer. Xcel Energy, meanwhile, has stated that they will not consider making a decision on offering an inclusive financing option until they observe Centerpoint’s program and evaluate it as successful. This is a move which buys Xcel Energy at least an extra 2 years from now in having to make a decision. Xcel can theoretically rely upon Centerpoint to adopt an inclusive financing option for its Minneapolis Customers but such a move would exclude Saint Paul energy users since they only have Xcel and not Centerpoint.     

There is strong indication that Xcel has an interest in using inclusive financing to help transit buy electric busses, an arrangement which would reduce pollution in the City and increase electricity sales to Xcel.  

 

ADDRESSING ECONOMIC JUSTICE IMPORTANT FOR THE CLIMATE MOVEMENT

 

        A good rule of thumb for us is to mention economic fairness and references to people’s overall well-being whenever we talk about climate and energy. Reinforcing these priorities as indistinguishable from each other would create the political soil to where we can get a broad majority to support a populist, equitable climate agenda. Talking about inclusive financing is strategically valuable because it provides a vehicle to talk about economic justice in the same breath as meeting climate goals. Empowering and engaging low-income tenants frequently trapped in preventably high energy utility bills is an economic justice issue. Another face of economic justice is renewable power development that is owned by and builds wealth for the Community.

      I have learned from first-hand experience that it is rather awkward to build a broad, compelling mass movement by using a message about building retrofits. We can inspire a critical mass of people to engage with climate and energy-saving programs if we highlight its connections with underlying material needs. In the city now, we have a critical mass of people here are dealing with a reality of economic pain where housing is brutally expensive, health care costs are still rising, all while wages are stagnating. That is another reason to draw attention to economic fairness.  When the price of natural gas inevitably spikes again, we can expect the utilities to pass those fuel costs along to customers as opposed to taking in less profit. That scenario would place far more energy cost burden onto the low-income. So therefore, trying to pre-emptively address this energy cost burden now by scaling up energy efficiency work today qualifies as economic justice.  

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