10 years later - Minneapolis is again negotiating a grand bargain with Xcel and CenterPoint

Community Power published in the Star Tribune! 

We are at a crossroads…again.

City leaders must negotiate assertively with Xcel and CenterPoint in July and August or risk failure on urgent climate goals before this key window of opportunity closes.

Community Power staff and board members co-wrote an opinion exchange printed in the Star Tribune June 15th, as a publicized some specific guidance on how to make best use of that opportunity

Minneapolis' once-a-decade chance to fight for energy and the climate




What are the 4 most important things to win in the Utility Franchise Negotiations?  

At the end of 2024, these agreements between Xcel and CenterPoint and the City of Minneapolis will expire and are currently undergoing for renegotiation. 

While the following list are not all the possibilities for wins in the utility franchise negotiations, these 4 are the bare minimum of what we should ask city leaders to accept in the renegotiated Utility Franchise Agreements. While some of these ideas were mentioned in our June 14th Op-Ed in the Star Tribune, some are restated with a bit more nuance:

  1. A shortened 5-year contract - Given their pace of achievement, neither utility has earned another 10 years. It will only be 5 years until 2030 when the most urgent carbon reduction actions are needed according to the IPCC, too late to meet some of Minneapolis' own climate goals. So the city council should definitely have the power to revisit the contract with a simple 7 vote majority by that time. 
  2. Allowing and requiring Xcel’s to collect a franchise fee based on carbon intensity (or carbon intensity equivalent) and attaching volume-based pricing to CenterPoint’s franchise fee. If CenterPoint agrees to enable franchise fees to be calculated based on the volume of gas delivered where a $/CO2 fee could easily be equated to a $/therm of gas, and if Xcel commits to enabling franchise fees to be calculated based on the carbon intensity of the electricity a customer uses then that will enable the city to adequately fund local climate action in coming years at the scale we need to meet the city's ambitious climate equity plan goals. For Xcel, a $/CO2 fee can easily be equated to a $/kWh in any given year but needs to be flexible to adjust for 1) The carbon intensity per kWh as Xcel lowers the carbon footprint of their electricity each year as well as exempting customers who offset their carbon footprint in ways such as rooftop or community solar from the fee. Note that carbon intensity is not to be confused with the social cost of carbon but is highly coordinated with it. This builds up incentives on the electric side for Xcel to decarbonize its energy mix, for the city to help ensure that the most vulnerable residents get access to renewable options and for all users to take advantage of renewable options. There has been growing interest among Minneapolis constituents about the Polluter Pays principle for resourcing citywide carbon reduction efforts which this fits right in. Please read in a separate blogpost what the implementation would look like.  
  3. Clear, annual performance metrics - with consequences for failure to meet them. While this gets into the realm of the Minneapolis Clean Energy Partnership more so that the usual parts of a utility franchise agreement, we need to have performance-based metrics on an annual basis that are evaluated with some type of consequence if they aren't met. The utilities have managed to delay (or make so vague as to be unmeasurable) any evaluation goals - and we all know that unspecified or indirect requirements are notoriously difficult to enforce. The City must determine its own specific criteria of what makes a "good partner" and not only evaluate them but establish boundaries and consequences for the utilities if they fail to be such a partner. Performance metrics are essentially a way of saying “Prove us you prove to us you did a good job.” Prior to the Clean Energy Partnership, the only serious "evaluation" point has been franchise renegotiations. These evaluations must instead be annually reviewed so that the utilities have an incentive to shape up their behavior quickly, and not just stall for 10 years until the next renegotiation.   
  4. Commitment to timely, third-party vetted transparency about the cost of our local energy system, particularly for Xcel. The utilities are required by law to disclose the "net value," annually of its total infrastructure. The city deserves to know this number, and not have it overblown out of fear that the city would consider municipalization. 

Key History + How we got here + Why this is important

Community Power originated 12 years ago, specifically to empower residents and City leaders to seize this very same opportunity. Minneapolis’ previous utility franchise agreement was set to expire at the end of 2014. Renegotiating this agreement governing the relationship between a city and its investor-owned utilities had previously been a mundane process happening once every 20 years. –  But we turned it into powerful leverage to use with utilities who were doing too little too late on equitable climate action. In 2013, when we were called Minneapolis Energy Options, we campaigned to give Minneapolis the option to municipalize and form a green municipal utility, in hopes of shaking both electric and gas utilities from their obstructionist behaviors.

And it turned out, the utilities’ biggest fears are threats to their market share, or specifically that the city would dump them to form a green municipal energy utility. That is what brought them to the negotiating table and made repeated public offers to "be good partners" on the city's ambitious climate goals. 10 years ago, Minneapolis did assert its power - and as a result, got some unprecedented wins: 

  • A shortened agreement with the utilities from 20 years to 10 years.
  • Allowing the City to modify the franchise fees it charges the utilities (for permission to work on city owned property) to once a year instead of only during what used to be once every 20-year negotiations. This set the stage for winning the $3 million-per-year climate-equity fund in late 2017, followed by the launch of the $10 million-per-year Climate Legacy Initiative in 2023. None of that would have been possible without the unlinking of the franchise agreement from the City's authority to set the franchise fee.
  • Forming a first-in-the-nation "Minneapolis Clean Energy Partnership" where city officials, CenterPoint and Xcel have ongoing dialogue in public meetings. This also includes a 15-member Energy Vision Advisory Committee (EVAC) so that the Partnership can have some method for community input and oversight. 

 (Fun Fact: these assertions of power meant our Mayor at the time won accolades from both the Obama administration & the Pope…!?!)

Now this opportunity is back!

What is the "CenterPoint" on making the Minneapolis Clean Energy Partnership "Xcel"?

While further discussion of the utility franchise agreement gets quite policy dense, there are some key, important and straightforward questions to ask: 

  • Have Xcel & CenterPoint been good partners these last 10 years? 
  • Do they deserve to be our utilities? 
  • If so, under what conditions? 

The City is - right now - deciding that. 

At the end of 2024, the memorandum of understanding (MOU) for the Clean Energy Partnership between Xcel and CenterPoint and the City of Minneapolis will expire and is up for renegotiation. This MOU is a separate document from the utility franchise agreements, but all will be renegotiated concurrently. 

First of all, the idea of and the intention behind a city and its utilities showing up in ongoing dialogue with each other is quite valuable and nothing to give up, particularly when it includes meetings that are open to the public.

But we must ask, what do the utilities have to show for their original promise from 2013 to be good partners with the city? A frustrating amount of time in the Minneapolis Clean Energy Partnership meetings is taken up by the utilities Xcel and CenterPoint sharing about initiatives that they are already doing outside of the Partnership and would be doing anyway. However, there is not much that immediately comes to mind as far as major breakthroughs the utilities have accomplished specifically because of the Partnership with Minneapolis or in the Partnership.    

In that space, Xcel and CenterPoint are very good at making progressive sounding promises to do things they were already required to do under state law. But on some occasions in the Partnership, the utilities have been resisting action on climate goals behind the City's back. For reference, you can read former councilmember Cam Gordon's review of the partnership half-way through, in 2019, and former council member Lisa Goodman's op-ed about utility behavior just a couple years ago.

Here are some specific examples of where the utilities have fallen short of earning the status of fully trusted partners or worked against the Minneapolis' goals:

  1. CenterPoint reneged on its promises to offer a field-tested version of Inclusive Financing,
  2. Xcel failed to seriously explore or attempt Inclusive Financing for energy efficiency despite receiving 1300 petition signatures from customers who wanted it; 
  3. CenterPoint continues their Builders Club North program that offers bribes and kickbacks to installers of gas appliances despite being told to end it in the partnership meetings;
  4. Xcel has repeatedly been asked in partnership meetings and state-level actions to stop slow walking local solar projects through excessive interconnection fees or delays.


Will Xcel and CenterPoint take this moment to finally commit to the goals of empowering residents and transforming their businesses fully away from fossil fuels? Or will they do what they've done in prior negotiations in other municipalities - lure City leaders into letting the utilities dictate the terms of the negotiation, and attempt to let the opportunity die quietly in a dark room full of attorneys while controlling the narrative outside of the public eye? 

That remains to be seen.

What is one thing Minneapolis residents can win in the upcoming negotiations of the Clean Energy Partnership Memorandum of Understanding? 

  1. For the utilities to send real decision-makers not just public relations and outreach staff AND give real offers rather than redundant, old commitments. One way the utility achieves delays is by sending staff members that don't have authority to commit them to anything; AND repurposing requirements they already have been obligated to by the state…while making them seem like big sacrifices, concessions, or commitments. The utilities must send real decision makers to meet with the city and deepen commitments, not just restate obligations that they already have.

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