More utilities are seeing municipalization nipping at their heels

More utilities are seeing municipalization nipping at their heels

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By: SGN Staff

By Doug Peeples

SGN News Editor

 

Boulder, Colorado's unhappiness with power provider Xcel Energy has received quite a lot of news coverage. In January, Smart Grid News ran a story on whether a "messy divorce" might be on the way for the troubled couple. But Boulder isn't the only city considering a breakup with its electric utility.

 

A New York Times story this week noted that while Boulder's "level of activism may be unusual," interest in pulling out of long-term relationships and going municipal certainly are not. Santa Fe, New Mexico, and Minneapolis, Minnesota, are exploring options and Massachusetts legislators are looking at ways to make it simpler for cities and counties to make the split and go their own way, the story said.

 

Why? In all cases it's mostly about climate change concerns and the desire for more renewable energy, in addition to concerns over utility responses to power outages. Ursula Schryver, education and customer programs director at the American Public Power Association, was quoted in the Times story as saying "Right now, a lot of communities are looking at it for climate reasons. The biggest benefit about public power is the local control."

 

Boulder's City Council may decide as soon as next month if it wants to move ahead with plans to develop its own municipal utility. A report released in mid-February includes six paths the city could take including continuing with the status quo, entering into a new type of partnership with Xcel or pursuing its own utility.

Minnesota's Minneapolis Energy Options (MEO) is a grassroots effort pushing for more conservation, energy efficiency and local renewable energy "through - or instead of - its contract negotiations with Xcel Energy and CenterPoint Energy, in order to meet its aggressive climate goal of cutting greenhouse gas emissions 30% by 2025." The organization knows opportunity when it sees it: The city's 20-year franchise agreement with Xcel expires in 2014 and its CenterPoint agreement expires the following year.

 

The MEO effort has options too:

·         Sign new contracts with the city's power providers that guarantees they will do their part in emissions reductions, increase local renewables and promote energy efficiency

·         Sign a short-term agreement of 3-5 years while looking at other options, like a muni

·         Sign another 20-year contract with no guarantees from the utilities that they will help the city work toward its goals

 

While Santa Fe city councilors haven't formally taken steps in response to a preliminary study, there are options:

·         A public utility that buys power

·         Establish an operation that becomes a power producer over 20 years

·         Become a major shareholder in new power production systems

 

Municipalization certainly carries a burden of risks and extremely high costs, as has been pointed out time and again. And utilities generally don't like the idea for obvious and not so obvious reasons: they don't want to lose control or customers. And they also say they aren't hot on the idea of assets they've invested in for the sake of future customer needs being stranded with the possibility there may be no way for them to recover those investments. It's not likely that many people would willingly accept that proposition, so it's no surprise utilities generally don't.

 

The Times story also quoted David Eves, chief executive of the Public Service Company of Colorado, the Xcel division that provides power to Boulder. In addition to noting that Xcel operates in eight states, which gives it the ability to concentrate on efficiency, he said "This is our business. This is what we do. We don't run other parts of the city operation and deal with those kinds of things. It's our specialty."

 

Supporters of municipal utilities in Maine point to the outages caused by Hurricane Irene in 2011. Municipals in some of the most damaged areas restored power in one or two days while investor-owned utilities took about a week to get the lights back on for some customers.

 

The municipalization issue raises some pretty tough questions and there are lots of strong opinions on both sides. Please use the Talk Back form below to share your thoughts. We look forward to hearing from you.

 

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