Debate heats up over municipal energy in Minneapolis

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August 1, 2013 // UPDATED 7:24 pm - August 1, 2013
By: Nick Halter
People sit in a waiting room, watching the public hearing over the possible city takeover of the electric and gas utilities
Nick Halter
Nick Halter
City Hall was packed with people speaking passionately about whether or not Minneapolis should take over as the energy provider for its residents.

City Hall was packed today with people speaking passionately about whether Minneapolis should take over as the energy provider for its residents.

The Council Chambers and two overflow rooms were jammed with residents, business owners and electrical workers. For perspective, the Vikings stadium hearings last May only required one overflow room.

In total, about 50 people testified, with a solid majority of them opposed to two resolutions that would begin the process of Minneapolis taking over for Xcel Energy and CenterPoint Energy as the city’s electrical and gas provider.

If the City Council approves the resolution on Aug. 15, the authorization to begin that process would be up to voters in the form of a ballot question this November.

“Can a municipal utility be more effective that a privately run one? I don’t think we know that. I’d like to know that,” said Randy Snyder, a teacher and social worker. “I want to make an informed choice, but I don’t feel like I am going to be able to right now.”

The City Council listened to three-and-a-half hours of testimony.

Opponents said they didn’t believe the city had the expertise to run a utility and raised concerns about the cost of acquiring eclectic wires, poles and other infrastructure from Xcel.

In a rare partnership, trades unions and business leaders teamed up to oppose the resolution. Business people argued that the city would raise energy rates on businesses and consumers.

The Minnesota Building and Construction Trades Council and the International Brotherhood of Electrical Workers Local Union 292 opposed the resolution at the hearing. So did the Minneapolis Regional Chamber of Commerce, the Downtown Council and several building owners.

IBEW represents 1,000 Xcel workers from Minneapolis to St. Cloud, said IBEW President Tom Koehler. The group’s membership tops 3,000.

While the first half of the hearing was dominated by the opposition, a group of activists wearing yellow T-shirts made their case during the second half. Most were part of Minneapolis Energy Options, a nonprofit group pushing for more renewable energy in the next franchise agreement.

They argued that by putting municipalized energy on the table, the city would have leverage to make Xcel increase wind, solar and other renewable energies in its portfolio.

The city’s 20-year franchise agreement with both Xcel and CenterPoint expires at the end of 2014. CenterPoint, however, has agreed to work with Minneapolis Energy Options to meet Minneapolis Climate Action Plan goals. CenterPoint didn’t suffer the same criticisms that Xcel did today.

“This is not Pollyannaish.  This is not reckless. This is the beginning of a thoughtful discourse, from our perspective,” said Joshua Winters, executive director of the Minnesota Public Interest Research Group.

Minneapolis Energy Options argued that Xcel is not serious enough about increasing renewable energies and decreasing power from coal.

David Sparby, an executive with Xcel, told the City Council that his company has plans to add 1,500 megawatts of renewable energy. He said Minneapolis residents already get half of their electricity from renewable sources. His colleague, Laura McCarten, said she thinks it will cost the city several billion dollars to take over as the electrical provider.

The city of Minneapolis estimates that 78 percent of Xcel energy comes from non-renewable sources, with 35 percent from coal, 29 percent from nuclear and 13.6 percent from natural gas.

The city has hired the Center for Energy and Environment to conduct a study on the feasibility of owning its own utility. That study is set to be completed in early 2014.

Under the franchise agreements, Xcel and CenterPoint pay the city a cut of their revenues that they collects from city customers in exchange for use of public right-of-way. In 2012, Xcel paid the city $16.7 million and CenterPoint paid $5.9 million.

Xcel has threatened to pull 2,000 jobs out of downtown Minneapolis if the city goes the route of municipalized energy.  

Council Member Cam Gordon (Ward 2) authored the resolution. After Thursday’s hearing, Gordon said he did not have a vote count among his 12 colleagues.

Seven out of 13 City Council members would need to approve the resolution. Ten of them voted to proceed with a public hearing, but Gordon said he doesn’t know if those 10 will support the resolution on Aug. 15.

“No, I don’t know where (support) is at,” Gordon said. “I think a lot of the discussion today will give council members pause, and they’ll think, OK, there seems to be some consensus that maybe it isn’t the right time this year. But maybe there isn’t (that opinion).”

Minneapolis Energy Options Campaign Coordinator Dylan Kesti said much of the testimony came from Xcel executives and employees.

“I think the corporate special interests came out in force today, and I think a lot of the people who support Minneapolis Energy Options have full-time jobs and can’t take time off to do this, but they show their support with their emails, postcards and calls to their council members,” Kesti said.