Introduction to Municipalization

About

Municipalization is when a city or county takes control of its electric or gas system from an Investor Owned Utility (IOU) or Rural Electric Cooperative (Co-op). The website Muni101 gives a good basic introduction to municipalization and you can subscribe to an email list that provides updates on municipalization efforts.

The American Public Power Association (APPA), based in Washington, D.C., is the service organization for the nation's more than 2,000 community-owned electric utilities. Collectively, these utilities serve more than 46 million Americans. APPA was created in 1940 as a nonprofit, non-partisan organization to advance the public policy interests of its members and their consumers, and provide member services to ensure adequate, reliable electricity at a reasonable price with the proper protection of the environment. The APPA has published a resource guide that outlines the benefits of community-owned utilities. The guide also details how communities can form a public utility. This article gives a good overview of various municipalization efforts.

Why Municipalize?

There are generally four reasons cities and counties choose to municipalize:

  • Lower rates: Data from the U.S. Department of Energy demonstrate that IOUs, on average, charge more for electricity than public power systems. In 2002, residential customers of IOUs paid average rates that were 13 percent above those paid by customers of publicly owned systems.[1]
  • More renewables: Public utilities can respond to consumer demand and provide more energy from renewable sources.
  • Greater responsibility/control over how the utility is run: While IOUs measure success by profits that are distributed to shareholders, public power utilities can measure success by how much money stays in the community. [2]
  • Improved reliability: With greater control over their city’s utility system, public utilities can sometimes be more reliable and effective than IOUs.

 


Examples of Successful (and Unsuccessful) Municipalization Efforts 

Boulder, CO

  • In November, 2011, Boulder, Colorado voters narrowly approved two ballot measures that allowed the city to sever its ties with Xcel Energy and strike out on its own to start a municipal electric utility. Ballot measure 2B funded the legal, financial and technical analysis necessary to determine the feasibility of Boulder controlling its own utility. These funds were raised via an approximately $1/month per residence tax, which can only be spent on Boulder’s municipal utility.
    • Ballot measure 2C authorizes through the City Charter to establish language for operating and governing a Boulder “Light and Power” Municipal Utility. Safeguards include: rates must not exceed Xcel’s rates at time of start up, and the process will move forward only if rates and reliability requirements can be met. In addition, this measure includes plans for increased renewable energy sources and further reduction in greenhouse gas emissions.
    • The group Boulder Energy Futures provides some good background on the city’s decision to municipalize and they have an excellent guide to the ballot initiatives and the arguments for and against approving the measure. The guide is a good resource for anyone interested in municipalization because it provides answers to an extensive list of questions regarding the pros and cons of municipalization.
    • Boulder Energy Futures also provides a detailed list of additional resources related to municipalization, as well as all of the consultant reports that were developed as the city explored municipalization. There is also a compilation of videos that include a great introduction to the question of municipalization.
    • A grassroots group called Renewables Yes led the campaign for municipalization. Their site includes information about the process and describes the tactics they used to be successful. They also have a Facebook page with additional information.
    • There was an article about the process in the New York Times that gives a good overview.
    • Former Boulder, Colorado mayor Susan Osborne explains why Boulder decided to pursue forming a municipal electric utility to take control of its energy future.

Thurston County, Washington

  • In November 2012, Thurston County, Washington voters rejected by 61-38 percent an initiative that would have given the Thurston Public Utility District, a water utility, the authority to provide electric service.
  • Thurston Public Power Initiative ran a campaign in support of the initiative.
  • An Op Ed on the pros and cons of switching to municipally owned power in Thurston County.



South Daytona, Florida

  • In November 2012, South Daytona, Florida citizens voted 62-38 percent against establishing a municipal electric utility. In 2011 the City Council voted to form a municipal utility and negotiated a deal to buy Florida Power and Light’s distribution system for $12.1 million. The city also completed a feasibility study on the process.

 


Minneapolis, Minnesota

  • Minneapolis is beginning to explore municipalization, since the city’s current contract with Xcel Energy is up for renewal. Because the contract is only renewed every 20 years, many in the city believe this is a unique opportunity to explore other utility options. John Farrell from the Institute of Local Self Reliance gave a talk with background on the process and why they are exploring municipalization: More Clean Energy by Municipalizing.
  • Minneapolis Energy Options is a coalition of organizations and ordinary citizens interested in expanding energy options for the City of Lakes.  They support more conservation and energy efficiency, local renewable energy and democratic control of our energy system. The site includes a basic presentation on why Minneapolis residents are exploring municipalization.
  • An article about the Minneapolis effort also provides some good background.