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Minneapolis mayoral candidates deeply divided over potential utilities takeover

The debate over  publicly owned gas and electrical utilities heats up Thursday with a public hearing.

Xcel Energy's Riverside power plant in northeast Minneapolis.
MinnPost file photo by Mike Mosedale

In Minneapolis, when you turn the faucet, water comes out. What you don’t need goes down the drain. That’s called water and sewer services.

For the last 146 years, starting in 1867, Minneapolis has been pumping water out of the Mississippi River, cleaning it and sending it on to customers. It started with one pump to supply water to the Fire Department. Today it has become the largest water utility in the upper Midwest.

From Day One, the water and sewer utility has been owned and operated by the City of Minneapolis, which now pumps 57 million gallons of clean water through a thousand miles of pipe every day.

Minneapolis now is about to begin a process that could end with the city taking over the electrical and gas utilities. And every candidate for mayor has an opinion about what should happen.

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“Some of our basic kinds of needs should not be for profit,” said Jim Thomas, a schoolteacher who is a political newcomer. “I think we need to control those to make sure we have stable, affordable energy for our citizens.”

“Corporations are not looking out for our interests,” said Thomas. “They’re looking primarily for profit.”

Put Thomas down as a yes vote.  Dan Cohen, a former City Council member, is a no vote.

Clueless on how to run a utility?

“The members of the Minneapolis City Council and candidates for mayor, and I include myself in this, are clueless about how to run an electrical utility,” said Cohen. “If we can’t run a pulltab operation, how can we run a municipal utility? Answer: We can’t.”

“There’s no way we could possibly pay for this,” said Cohen, who estimates the cost of buying Xcel at $14 billion — a number that he thinks would be equal to about 200 years’ worth of municipal improvements.  “That’s a long time to go without fixing a pothole.”

Minneapolis’ 20-year franchise agreements with Xcel Energy and CenterPoint Energy expire at the end of 2014 with negotiations set to begin early next year. The City Council has scheduled a public hearing on the topic of publicly owned gas and electrical utilities for 10 a.m. Thursday in Room 317 of Minneapolis City Hall.

“Xcel pays us roughly $17 million a year in a franchise fee based on gross revenues,” said mayoral candidate Stephanie Woodruff, who serves as vice chair of the Minneapolis Audit Committee and is an accountant by trade. The Audit Committee studied the Xcel franchise agreement and discovered there was no formal monitoring process to make sure Minneapolis was being paid the accurate amount. That has since changed.

“I just don’t see spending billions of dollars to get into the energy business when we’ve got these other critical issues as a priority,” said Woodruff. “I’m totally against it. I think, bottom line, we’re in the people business, not in the energy business. It’s a very expensive proposition, and I think it’s a dangerous slope to go down.”

A recent precedent

The city of Boulder, Colo., recently voted to take over the electrical utility, which has been operated by Xcel Energy. One of the issues in the takeover campaign was the reliance on coal by Xcel for most of the electricity production, instead of renewable energy like wind or solar power.

“Greener power costs more money,” said Cam Winton, a candidate who is also an attorney for a wind power company he helped build. “It’s more expensive for a producer of electricity to generate that electricity from a green source, solar or wind. It’s just more expensive, and one way or another they’re going to pass that cost on to us.”

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Minneapolis Mayor's RaceDespite that view, Winton favors the idea of Minneapolis keeping its options open on the question of public utilities but sees the takeover effort as too little too late.

“We absolutely need to re-up with Xcel and CenterPoint at the end of the existing contracts,” he said. “There’s simply not enough time to municipalize between now and when the current contracts expire. We absolutely have to re-up.”

One option following the public hearing would be a council vote to place the question of publicly owned utilities on the November ballot. Some see the ballot questions as a way to strengthen the city’s negotiating position with the utility companies. 

“I support putting it on the ballot. I do support allowing the city to ask the question, and I support the timing,” said Betsy Hodges. “I want the City of Minneapolis to be in the best negotiating position possible. I don’t know if I support a municipal utility or not. There’s a lot of information we will need before we even fully ask that question.”

Study won’t be done before election

Minneapolis has commissioned a $250,000 study of the energy systems to aid in franchise negotiations with Xcel and CenterPoint. That study will be completed after the first of the year and after the election that may have the utility takeover question on the ballot.

“The vote in November asks the question of whether we should explore the options,” said Hodges. “If it’s on the ballot in November, we’re not asking people to support a municipal option. We’re asking people to support asking the question and giving ourselves the capacity to act, should we choose to.”

“The strategy is problematic,” said Mark Andrew, a former Hennepin County commissioner. “Putting an initiative on the ballot 120 days before an election, when you don’t have a budget and no proven grass-roots support, it’s a prescription for failure.”

“Getting the results of that study in January argue against putting it on the ballot in November,” he said, adding that he supports the environmental principles and the desire for more renewable-energy sources.

“I’m not sure this City Council is going to vote for this,” said Andrew.  “These are smart people, and they understand that this is, in effect, picking a fight with the company they have to negotiate a deal with, an unnecessary fight.”

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(Andrew has acknowledged that his green-marketing firm, GreenMark, had Xcel among its clients in 2008.)

Andrew is not alone in questioning the timing of the energy study results. It is possible that some information could  be available before the election, but the complete study will not be available until two months after the election.

‘A little heartburn’

“I have some real concerns and more than a little heartburn around the notion of the city taking over the utilities,” said Jackie Cherryhomes. “I think putting something on the ballot before that study comes back and provides its wisdom — which is why we did it in the first place — is precipitous, and I don’t support putting it on the ballot.”

“I understand wanting to negotiate with the utilities, being in a strong negotiating position,” said Cherryhomes. “I absolutely think that is our responsibility as stewards of the public’s money, to be in a strong negotiating position. But I don’t think being strong negotiators means that we’re taking over the utilities.”

Before Minneapolis could take over the utilities, it would need changes in state law during the next legislative session, which will be shorter than this year’s budget session. The need for the law to be changed could make the takeover problematic.

“I don’t see anything wrong with public utilities,” said another candidate, City Council Member Don Samuels. “I’m for whatever works. I’m not for tampering with things just for the sake of being cool or current or modern. I’m for what works for most people and doesn’t have victims.”

“If people have a desire to explore or feel a commitment to explore the options, and someone raises that in our democratic community, I think we need to listen,” said Samuels. “But we can’t act without being sure that it is not going to cost more than it’s worth because we are stewards of resources.”

Samuels voted in favor of the public hearing but has yet to be convinced that placing the public-ownership question on the ballot is a good idea. He said there needs to be a “strong” possibility that the takeover is a good idea before he votes yes on the ballot question.

“We can go down that slippery slope of being caught up in the romance of a movement, rather than what’s good for the people of Minneapolis,” said Samuels. “It has to be clearly a great investment.”

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If the City Council votes to place the referendum on the November ballot, it would have until Aug. 16 to approve the ballot language.