Minneapolis Energy Pathways
Mike Bull, Jenny Edwards, Megan Hoye, Carl Nelson, Sheldon Strom — Feb 2014
In June of 2013, the Minneapolis City Council contracted with CEE to develop a vision for the City’s future energy system and potential legal, regulatory, and program options to achieve that vision. The City, through its Climate Action Plan, established goals for reducing the greenhouse gas emissions from electricity and natural gas consumption in buildings, which makes up two-thirds of communitywide greenhouse gas emissions in the city.
The study includes an examination of multiple pathways to this future, including potential city-utility partnerships, modifications to state law or rules, changes to how the City uses energy utility franchise fees, and the potential for municipalization of one or both energy utilities.
Key recommendations include:
- Renew the City’s utility franchise agreements with targeted enhancements, and for shorter terms. Traditionally and by law, franchise agreements have been limited to the subject of payment by utilities for the use of City rights of way for utility infrastructure. Because of statutory limitations in the use of franchise agreements, the study recommends that the scope of existing agreements be extended to cover some reporting, reliability and right of way goals. However, these agreements should be of a shorter term, and renewal should be made contingent on satisfactory progress being made through additional agreements with the utilities.
- Pursue additional, broader “Clean Energy Agreements” with utilities in which the City suspends its right to municipalize in exchange for utility commitment to meet the City’s clean energy goals. These agreements would include the formation of a Clean Energy Coordinating Partnership, made up of City and utility leadership. This partnership would set program and policy goals, and help provide planning, leadership, coordination, promotion, and accountability for meeting these goals.
- Use this Clean Energy Coordinating Partnership to leverage statewide policies, City municipal regulatory authority and community relationships, and utility expertise and funding to increase the penetration rate of efficiency and renewable energy, reliability, and equity of energy services in Minneapolis. Significant progress can be made on specific programs and policies to advance energy efficiency and renewable energy were the City to take full advantage of existing and enhanced utility programs in concert with specific City regulatory functions.
- Continue to engage in state energy policy decisions that can improve the City’s ability to meet its goals. Policy decisions made at the Public Utilities Commission, the Minnesota Department of Commerce and Minnesota Legislature have a direct impact on energy outcomes. The City should continue to dedicate attention and resources to legislative issues, and participate in regulatory proceedings. Examples include legislation that clarifies the purpose and role of City-utility energy partnerships, solar rate reform, utility resource planning, and data privacy and access.
- Continue to pursue mid- and long-term options for increasing the City’s control over its energy future. Pathways like Community Choice Aggregation (CCA) and municipalization offer the City the most control over its energy supply, albeit with greater risk, higher cost, and a longer time frame. Should sufficient interest exist, the City should advocate for a detailed study of how CCA could operate in Minnesota and for changes to state law that would remove barriers to municipalization.
This assessment indicates that moderately aggressive action will not meet Minneapolis’ 2025 carbon goals for the building sector. The City and utilities will need more aggressive program and policy options than currently exist.