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Minneapolis utility takeover: Unions and businesses join forces against energy activists

Unions and the business community joined forces Thursday to tell members of the Minneapolis City Council that they think it’s a bad idea for the city to take over the gas and electric utilities.

The energy activists, though, also were out in force to say that a public takeover is an idea worth more study.

After more than 50 speakers and three and a half hours of testimony, just about everyone at the public hearings had expressed an opinion except the folks who will vote to move ahead or drop the idea.

City Council members did not speak during the session and will not vote on the matter until Aug. 15.

With an overflow crowd spilling into three rooms, including the Council Chambers, there were even a few private citizens who came to speak up on behalf of their wallets.

“I’m opposed to this takeover,” said Peter Dvergsten. “Between taking over the gas and electric utilities and streetcars back downtown, I don’t know which idea is the worst.”

“My pocketbook is running pretty close to empty,” he said. “My options are running out, but one of my options is to sell the house and move out. Where? I don’t know, but North Dakota is looking pretty good.”

Jerry Wendt was there for his condominium association, which is about to spend $330,000 to install solar panels on its roof.

“The only way we can do this is with Xcel rebates,” said Wendt, who added that the panels are scheduled for installation this fall. “We don’t want this to blow up in our faces.”

“The city will be exempt from rate controls,” said Larry Lura. “That’s going to pull more money from my pockets, and people like myself, who are in an marginal economy, can barely pay our own bills.”

The hearings started with assurances from Deputy City Attorney Peter Ginder that even if the City Council were to place the utilities-takeover question on the ballot this fall and it passed, Minneapolis would not be required to move forward.

Ginder also said that a future ballot question would be required only if the takeover required the sale of general-obligation bonds.

The hearing started with Dave Sparby, president and CEO of Northern States Power, making the case for the utility to continue as the supplier of electrical power in Minneapolis. NSP is a subsidiary of Xcel Energy.

David Sparby
Xcel EnergyDavid Sparby

“If we look closely at the facts, our reliability has been higher than 99.9 percent, ranking us with some of the best utilities in the country,” said Sparby. “When a major storm hits, our team — together with other utilities in the country — works together to address the storm damage.”

Following the June 21 storm that left 600,000 regional customers without power, the company brought in workers from 14 states and had 1,000 people working to restore power, he said.

During the past nine years, Sparby noted, NSP has been the “nation’s leading distributor of wind energy.” 

CenterPoint Energy, the gas utility, and Minnesota Energy Options, which is pushing to place the takeover question on the ballot this fall, have agreed to work together to expand energy efficiency and conservation.

“We do spend quite a bit of money on conservation,” said Joe Vortherns, regional vice president for gas operations at CenterPoint. “In the last seven years, we have increased our spending every year, and at the same time we’ve increased the savings realized by our consumers each year.”

The 20-year franchise agreements with Minneapolis and the two utility companies expire at the end of 2014. Negotiations for possible new agreements are scheduled to begin early next year.

Opponents of renewing the agreement say this is the time for Minneapolis to explore its options.

“Business as usual will not give you good jobs, will not give you a clean environment, will not allow this city to grow and prosper,” said longtime energy activist George Crocker.

“Business as usual will put us on the scrapheap of history where it is littered with civilizations that eroded the ecological foundations they depended on for their survival,” Crocker continued. “And then they perished. That is the track we’re on. Deny it.”

The City Council has authorized a $250,000 study of the energy options that could be part of the discussion when negotiations begin next year. The complete study is not expected to be available until February.

“We respectfully ask the council to wait until the study has been introduced and properly analyzed before presenting [the ballot question] to the citizens,” said Kevin Lewis, speaking on behalf of the Building Owners and Managers Association.

“We don’t see a good outcome to putting this on the ballot,” said Dan McConnell of the Minneapolis Building Trades, which represents 26 trade unions and is opposed to a utilities takeovers. McConnell is also DFL chair for Minneapolis.

“If this passes, you’re stating your intentions to municipalize the utilities,” said McConnell. “If it fails, you just handicapped yourselves and tied a hand behind your back during negotiations.”

Some who came to talk had personal reasons for taking sides in the fight. Roxanne O’Brien was one of those speakers.

“My community faces a lot of disadvantages,” said the community organizer from North Minneapolis who supports the takeover. “I feel there is a lack of investment in my community which is already under-resourced. I feel there is a lack of local hiring.”

Twenty years ago, when the current franchise agreements were negotiated, Steve Cramer was a member of the Minneapolis City Council. Now he’s president and CEO of Project Pride in Living.

“I say this with complete respect, knowing all of you have a wonderful commitment to making city government as effective as possible,” said Cramer. “To me, this is a classic be-careful-what-you-wish-for scenario.”

Should the city take over the utilities, Cramer said, running those services could dominate city government to the detriment of other city business.

 After the hearing, Council Members did not share their thoughts about the fate of the proposed November ballot question.

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Comments (16)

  1. Submitted by Jay Willemssen on 08/02/2013 - 12:06 pm.

    Other situations with unions and big business joining forces

    Public subsidies for pro sports stadiums
    Stillwater bridge-to-nowhere
    Drilling ANWR

  2. Submitted by Dennis Tester on 08/02/2013 - 12:11 pm.

    Forgive them Father

    for they know not what they do.

    Roxanne O’Brien is delusional is she thinks higher energy costs and poorer service is going to help her community.

    • Submitted by Todd Hintz on 08/02/2013 - 02:43 pm.

      Costs

      And how will those costs be higher and services poorer? You bring a lot of emotion to the subject, but no real facts that we can use to make an informed decision.

  3. Submitted by Mike Downing on 08/02/2013 - 12:34 pm.

    A great example of naivete!

    It is shocking how naive some people are! It is incomprehensible to anyone in the energy field that Mpls city government could control costs and reduce the cost of energy to the residents of Mpls. This will actually increase energy costs for the poor and middle class in Mpls. These naive people either do not understand or ignore the fact that alternative energy costs 3-5X that of coal, nat gas or nuclear.

    ‘Jerry Wendt was there for his condominium association, which is about to spend $330,000 to install solar panels on its roof.

    “The only way we can do this is with Xcel rebates,” said Wendt, who added that the panels are scheduled for installation this fall. “We don’t want this to blow up in our faces.” ‘ Federal, State and utility rebates are the only way alternative energy makes any economic sense. Alternative energy cannot currently compete and are only driving energy costs up for individuals and businesses.

    This proposal is emotion based and certainly not fact based or data driven!

  4. Submitted by Mark Snyder on 08/02/2013 - 12:43 pm.

    Minnesota has many municipal utilities

    Has anyone thought to ask how Rochester Public Utilities, Shakopee Public Utilities, New Ulm Public Utilities or any of the other 50-some municipal utilities in Minnesota are doing? How do their rates compare to Xcel? How does their reliability compare to Xcel? Does running those services “dominate city government to the detriment of other city business?”

    It’s not like this would be completely uncharted territory if Minneapolis were to get into the power business. Plenty of other cities do it. Minneapolis has plenty of experience running other municipal services such as water and garbage/recycling collection and they do it well. Why is there so much hand-wringing over even exploring whether this *might* make sense for Minneapolis to pursue, which is all that is being done at this point?

  5. Submitted by Jay Willemssen on 08/02/2013 - 03:04 pm.

    Yes, very little of MN’s area serviced by IO utilities

    Take a look at all that white space.

    http://www.eei.org/about/members/uselectriccompanies/Documents/EEIMemCoTerrMap.pdf

  6. Submitted by Jay Willemssen on 08/02/2013 - 03:26 pm.

    Comparing Anoka Municipal Utility with Xcel

    Over the past winter, Xcel charged an average of 9.8 cents/kWh (energy charge + fuel cost charge) for residential service. With their latest bill, the summer rate was 11.4 cents/kWh.

    Anoka’s winter rate is 4% lower and its summer rate is 3% lower.

    http://www.anokaelectric.govoffice3.com/vertical/sites/%7BEE297CC6-2282-4A47-B4BA-550646AB0F76%7D/uploads/2013_Rates.pdf

  7. Submitted by rolf westgard on 08/02/2013 - 04:20 pm.

    Mpls utility would be a joke if the idea wasn’t so tragic

    From the EIA, subsidies for each fuel per same unit of energy produced:
    Oil and gas – $0.28; Nuclear – $1.79; Biofuels – $20.37; Wind – $32.59; and solar – $63.00.

    Xcel has a program called Windsource where you pay extra to support costly wind power. It will be interesting to see all those wind turbines in Minneapolis parks.

    • Submitted by Jay Willemssen on 08/02/2013 - 08:09 pm.

      Please link to the source of that data you post

      Thanks. Then we can see what’s actually being claimed.

      It seems you’re pulling subsidy data from high point years of recession-era stimulus spending and dividing it by the new generation from that year. That doesn’t really indicate something. What would be useful is long-tern, inflation-adjusted numbers for all fuel sources, along with an explanation of the methodology to determine what a “subsidy” is.

      Also, is anyone proposing putting giant wind generators in Minneapolis parks as part of this proposal? If so, could you please point us to an authoritative document indicating this?

      Windsource costs me 4 pennies a day. I have yet to suffer bankruptcy as a result. Regardless, wind is cheaper than nuclear or coal. So sayeth the EIA. And solar PV is $3.37 per watt for the average US system. In Minneapolis, that’s a NPV positive investment with an ROI of 45% over 30 years.

    • Submitted by Mike Downing on 08/03/2013 - 09:07 am.

      Thanks!

      Thanks for the specific info on the energy gov’t subsidies. It is important to inform the public on why our true energy costs are increasing with the 25-30% alternative energy targets. J WILLEMSSEN and his ilk want to drive businesses out of MN or at least out of Mpls by driving energy costs up in MN and Mpls.

  8. Submitted by rolf westgard on 08/03/2013 - 06:38 pm.

    On a quiet night

    solar and wind energy are very cheap because there isn’t any. I would say more, but I am still rolling over in hysterical laughter at the idea of Minneapolis running its own energy utility.

  9. Submitted by Jay Willemssen on 08/06/2013 - 08:14 pm.

    Is this policy applied at Minnpost?

    “MinnPost does not permit the use of foul language, personal attacks, snideness, gratuitous insult of the intelligence or character of fellow commenters”

    http://www.minnpost.com/commenting-policy

    Seems not to be.

    I guess the value of letting ad hominem comments through demonstrates the vacuity of certain positions, as strong positions don’t require such tactics.

  10. Submitted by Jay Willemssen on 08/07/2013 - 09:35 am.

    Investor-owned utilities and nuclear energy – recent news

    “Duke Kills Florida Nuclear Project, Keeps Customers’ Money

    The decision by Duke Energy (DUK) to scuttle a proposed nuclear reactor project in central Florida leaves utility customers in the state with a tab of more than $1 billion—most of it already paid to Duke—for unbuilt plants that may never produce a single kilowatt of energy.”

    http://www.businessweek.com/articles/2013-08-05/duke-kills-florida-nuclear-project-keeps-customers-money

    “Japan says Fukushima leak worse than thought, government joins clean-up

    Highly radioactive water from Japan’s crippled Fukushima nuclear plant is pouring out at a rate of 300 tonnes a day, officials said on Wednesday, as Prime Minister Shinzo Abe ordered the government to step in and help in the clean-up….

    The escalation of the crisis raises the risk of an even longer and more expensive clean-up, already forecast to take more than 40 years and cost $11 billion.”

    http://www.reuters.com/article/2013/08/07/us-japan-fukushima-pm-idUSBRE97601K20130807

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