What is the current situation of the franchise agreements with Xcel & Centerpoint?

A:

On Jan 1st 2015, thanks to pressure built by residents during the Minneapolis Energy Options & the subsequent Energy Pathways study,  Minneapolis began a new shortened "franchise agreements" with both Xcel Energy (for electricity) and Centerpoint (for gas). Franchise agreements have traditionally spanned 20-year periods, and exist to formally allow utility companies to construct and maintain energy distribution infrastructure like wires, poles, and gas pipelines along public roads, highways, and other publicly-owned land.

Our new, shorter, franchise agreement is set for half the usual length - a period of 10 years. A key feature of the new agreement, is the option for City to opt out of the franchise agreement as soon as 5 years if 9 City Council Members vote to opt out. Because the new franchise agreements were negotiated concurrently with the terms of the Minneapolis Clean Energy Partnership (a city-utility partnership), evaluation of the new franchise agreements will be closely tied to the success of the city utility partnership. If the partnership with both utilities goes well, then the new franchise agreements would also be extended for 2 additional 5 year terms after the initial 10 years.

At the time of the 2013 Minneapolis Energy Options campaign, Minneapolis was nearing the end 20-year franchise agreements with Xcel and Centerpoint that were set to expire on December 31, 2014 and January 1st 2015 respectively.  

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  • commented 2013-05-02 14:13:01 -0500
    Apologies for the confusion. The title of this question was changed for confusion – we shouldn’t have used “municipality” in this context. A municipal utility is having a city managed and maintained system of customer accounts (just as the city currently manages for water and waste) and the infrastructure to distribute that energy.

    Minneapolis could form a municipal utility for either gas or electric service, or both, and could choose to do so to serve part or all of the city. While much of the existing infrastructure in Minneapolis is aging and in need of repair, in general the city would buy the existing infrastructure to distribute energy (poles, wires, gas pipelines) rather than build new ones. The cost of buying that infrastructure would need to be negotiated (it is a lot of infrastructure, but it is also aging and has mostly been paid off by utility rate payers (everyone who uses energy) over the last several decades) and compared to the $450 million/ year in revenue that the city could gain.

    I hope that clarifies and sorry for the confusion.
  • commented 2013-05-02 10:32:05 -0500
    Is being a “municipality” the same as have a city managed and maintained system of customer accounts, meters, poles and wires to sell and distribute electricity?

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