Minneapolis Energy Options: Energy, Markets, and Democracy

Last November, I sat down with a couple of long-time Environmental Justice organizers in Minnesota and had a conversation about Minneapolis’s energy future. I had been notified by a environmental lawyer that the franchise agreements (20 year agreements that allow the major local utilities to use the public right of way to distribute electricity and natural gas to Minneapolis energy users in exchange for paying Minneapolis about $24 million annually) were expiring in 2014. In our conversation, we figured we should do something about it to ensure the next 20 years of energy development was founded on energy efficiency, clean energy, and community ownership of our energy system.

Fast forward six months and we have a coalition of a dozen groups leading the Minneapolis Energy Options campaign, support from many of our local elected officials, and insight into the many ways that state regulation partners with utilities to limit the options cities have taking steps towards more affordable, efficient, clean, and community-based energy development. We’ve learned of the work of dozens of other cities that have moved to take control of their energy purchasing, generation, and/or distribution, whether through innovative franchise agreements with cooperative utilities, community choice aggregation (which allows a local governments to choose what power they buy, distributed by the local utility), and forming new municipal energy utilities. We believe Minneapolis should keep its options open rather than locking in 20 more years of business as usual – we want to enable the city to explore the option of municipalizing while evaluating negotiations of the franchise with an eye towards enabling Minneapolis residents and businesses to take charge.

And recently, we opened that discussion in an Op Ed in the Star Tribune: http://www.startribune.com/opinion/commentaries/153296235.html

Read more about what we could achieve and what this means for energy action, democracy, and how movements relate to markets:

Some of these options could allow us to:

  • Lower energy rates while scaling clean energy rapidly (some cities have jumped to up to 60% renewables while lowering prices).
  • Replace providers of energy who have an inherent economic incentive to sell more dirty energy to pay off multi-billion dollar investments in coal plants and pipeline with providers who benefit from massive investments in energy efficiency and community ownership of clean energy.
  • Help Minneapolis residents drop their energy usage, and thus their costs, by 30-50%, a particular benefit to low-income households.
  • Create simple and straightforward mechanisms for individuals, businesses, and communities to own and operate solar and other clean energy sources cooperatively, keeping more of the $500 million we spend on energy each year in the local economy.
  • Increase reliability and reduce delays in fixing disruptions in energy supply caused by weather or shortages.

The most interesting thing about this to me is that it challenges many of the frequent assumptions I hear among activists about the relationship between democracy and markets. A fashionable argument sometimes made by liberals (and even more frequently ridiculed by conservatives) is that free market principles reward exploitative behavior by big corporations and thus are antithetical to democratic governance and the needs and goals of actual people. To me this indicates that someone has done a pretty Orwellian number on free market principles and that those who make the above argument have allowed themselves to be hoodwinked into throwing the baby out with the bathwater. To refresh our memory in the context of this energy campaign, here’s what free market principles say we should have:

  • Low or no barriers to market participation. For energy, this means that the barriers to  participating in producing, selling, and distributing energy should be low or non-existent. Everybody and their grandmother should be able to participate and build wealth individually or cooperatively by participating in energy markets.
  • Open access to information. This means that all energy users have information about how their actions generate energy cost, the real costs of energy at time-of use, and ability to use that information to make choices to change their behavior, impact their usage and expenses, and act as entrepreneurs by generation energy for personal use of market sale.
  • All values are internalized. This means the negative cost of giving an inner city kid asthma, filling someone’s valley in West Virginia, or desertifying a future generation’s home from climate change is incorporated in the cost of dirty energy. It also means that the value of creating a stronger local economy through local energy development, resilience in the face of disaster, and positive community self-esteem are also values rewarded in the energy market. How do you do that? That’s a topic for life-long study, my point is that’s what a free market says we should have.
  • No firms are large enough to have market power. A large number of small firms to make competition are central  – once any one has the market power to control pricing, services (and poilitics), it’s not a free market. This means hundreds of energy providers using a common asset like the grid. Energy distribution may be a natural monopoly like many utilities argue, but in the age of distributed generation, production and use of energy clearly isn’t.
  • Open and mutually agreeable gains from trade. This is the centerpiece – energy users have to be willing buyers who choose energy suppliers because they have options and because the energy supplier is best supplying their needs and delivering what they value.

It should be painfully clear that at least around energy, we do not live in a free market. We live in an autocracy split up into little fiefdoms called “energy service territories” where single energy providers channeling millions of energy dollars are the only game in town. There are some communities and states (and many other countries) where this is not how it works, but it’s dominant in the US.

Pushing for franchise agreements or creating a municipal utility to allow more choices in energy supply, lower barriers to participation by local residents in the energy sector, and internalize social and environmental values into our energy market is not big-government take-over. It is a democracy standing up for the right of its members to access a free (or at least freer) market. This splits the participatory (and I would argue democratic) values and power of local enterprise and free markets away from the dominating values and power of massive corporations that create dependency, monopolistic control, and exterminate other options. Instead of business versus governments, its participation and community versus exclusion and exploitation.

As organizers and change agents, we need to be saying this more. As agents of democracy, we are for market choice and the ability of all people to participate not just as dependent consumers but as creators and shapers of our economic markets. It’s the big corporations that build monopolies of vast wealth by shutting down this participation and these options that are both anti-democratic AND anti-market. Our message to them “please compete and collaborate to meet our values and needs, as we will do so ourselves; but you may not control.”

PS. For anyone that wants to talk about capitalism or corporations, please clarify what values, principles, and ideologies you are referring to. As I have tried to indicate above, it seems like the whole concept has been abstracted to the degree that it obscures what are actually contradictory ways of thinking into one overarching concept. The independent corner grocer is still a corporation that participates in at least some definitions of capitalism, but it seems to me that his/her goals are vastly different from a multi-billion dollar company that overshadows (possibly with two or three other vast multi-billion dollar corporations) all other options.

For the record, I believe in the power of people and the strength of communities, feel like free markets are really great when they are actually happening (which is rarer than policy-talk would lead us to believe), don’t like the power gigantic corporations have on our society (but don’t think corporations are inherently evil), and think community-based and people powered enterprise is absolutely central to solving the world’s problems. I also think that there’s a lot of gray area in-between the local community-enterprise and the transnational conglomerate and there’s also a lot of great, well-intentioned people who actually do good stuff in big companies too, so it’s complex and that’s cool.

This entry was posted in Grand Aspirations National by timothydenherderthomas. Bookmark the permalink.

About timothydenherderthomas

Timothy is the General Manager of Cooperative Energy Futures and a member of the Community Power Steering Committee. He's all about people power, and being the changes we actually want to see. Timothy has been heavily involved in community development and using climate solutions as incredible opportunities for local economic activity, collective empowerment, and self-determination. He does lots of network building with buddies in the youth movement as well as labor, faith, agricultural, small business, and neighborhood groups.

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