Mayor Rybak was one of the first mayors to sign the U.S. Mayors Climate Protection Agreement approved by the Minneapolis City Council, which established a goal to curb greenhouse gas emissions and increase renewable energy. Taking the agreement one step further, the city of Minneapolis also established its own, more ambitious goal of a 30 percent decrease in greenhouse gas emissions by 2025 (based on 2006 levels).
Xcel Energy and Centerpoint Energy are responsible for roughly two-thirds of our city’s greenhouse gas emissions. They have made some progress, yet last year the carbon intensity of Xcel Energy’s electricity increased and the city has no guarantee from either utility to meet the city’s greenhouse gas targets. Neither utility has shown strong support for local renewable energy programs and Xcel proposed eliminating the popular Solar Rewards Program.
In the next few years both Xcel Energy’s and Centerpoint Energy’s franchise agreements with the city of Minneapolis are coming up for renewal. These 20-year contracts give each utility a monopoly over electricity and gas service, respectively, and are common to most cities.
This pending expiration of contracts makes this the perfect opportunity to align Minneapolis’ goals to reduce emissions; increase local, renewable energy; and reduce energy usage with these long-term agreements. Minneapolis has three options:
1. We can negotiate new 20 year franchise agreements with Xcel and Centerpoint Energy that provide guarantees the utilities will meet their part of the greenhouse gas emission reductions, increase local renewables and energy-efficiency.
2. Sign a short-term three- to five-year franchise agreement with Xcel and Centerpoint Energy while the city explores other options like creating a municipal utility.
3. Sign another 20-year franchise agreement with no guarantees Xcel and Centerpoint Energy will reduce greenhouse gas emissions, investments in local, renewable energy and energy efficiency.
If Minneapolis chooses to pursue municipalizing our energy system the city has several advantages. As a public entity with a better credit rating, the city has a better borrowing rate than either Xcel Energy or Centerpoint Energy, and could fund infrastructure at a savings to energy consumers. Municipal utilities also pay roughly 25 percent more back to their communities than utilities that have signed franchise contracts.
Nationwide, residential customers of municipal utilities tend to pay less for electricity than residential customers of investor owned utilities (IOUs). Municipal utilities are also more reliable, as measured by the average number of minutes a customer spends without power each year.
The current renewable electricity standard of 25 percent by 2025, will not be able to decrease greenhouse gas emissions enough to meet Minneapolis’ emissions goals. In part, this is because it only applies to Xcel Energy (electricity) and not Centerpoint (gas). Various studies have shown that it is theoretically possible for our city, state, or even country to provide 100 percent of our power from renewable sources like wind or solar, both of which are becoming more economically competitive energy technologies options. A study done for the city of Boulder, Colo., found that it could get 40 percent of its electricity from wind and solar, effective immediately, and without raising rates, if it developed a municipal utility.
Several municipal utilities (and some with a smaller population than Minneapolis) have more solar than the entire state of Minnesota. For example, the San Antonio municipal utility recently completed a new 20 MW solar project (the entire state of Minnesota has 7 MW of solar installed) and now has the most wind capacity of any municipal utility, while maintaining the lowest electricity rates of any of the 10 largest cities in the United States. Gainesville, Fla., has 10 MW of solar installed, with a population of just 130,000.
Minneapolis should try to reach new franchise agreements with Xcel and Centerpoint Energy that can meet its greenhouse gas targets and dramatically increase local reneawable energy development. But if Xcel and Centerpoint are not able to help the city meet its goals, then we should consider taking our energy future into our own hands.
To find out more, please visit Minneapolis Energy Options — minneapolisenergyoptions.org.
Originally appeared in The Downtown Journal on Oct. 8, 2012. Click here to see the original article.