The city of Minneapolis is poised to enter new, decade-long agreements with the state’s largest utility companies that will establish goals to reduce gas emissions.
A Minneapolis City Council committee on Thursday unanimously approved new franchise agreements and memorandums of understanding with CenterPoint Energy and Xcel Energy that set expectations for utility performance. The utilities agreed for the first time to set greenhouse gas emission reduction targets for the energy they provide to city customers.
“This is a significant step forward, but these goals do not entirely align with the city’s climate equity goals,” said Luke Hollenkamp, the city’s sustainability program coordinator.
Franchise agreements are contracts between cities and utility companies that grant providers access to the public right of way in a municipality and establish the municipalities’ expectations. State law allows for cities to charge franchise fees as part of the agreements. Minneapolis uses franchise fees, set percentages that all customers pay on their power bills, to help fund climate initiatives and clean energy projects.
Utility franchise fees are set in separate ordinances by the City Council. Current Minneapolis franchise fees are 5.25% for residential customers and 6.75% for commercial accounts.
The agreements are key to meeting Minneapolis’ goal to become carbon neutral by 2050. Electricity and natural gas consumption account for about 70% of all Minneapolis greenhouse gas emissions, according to the city’s 2023 Climate and Equity Plan. Reducing greenhouse gas emissions is key to mitigating climate change.
Under the agreements, Xcel is committing to lower electricity emissions in Minneapolis 91% by 2030, using 2006 as a baseline. CenterPoint committed to cut emissions between 20-30% by 2035.
The 23 residents who testified at Thursday’s public hearing urged the City Council to approve the agreements, but cautioned that more concrete commitments from utility providers will be needed to lower emissions in the city. The goals established in the agreements are non-binding.
“We are frustrated with utilities refusing to accept accountability measures to enforce those goals,” said Ulla Nilsen, a climate organizer with Unidos MN.
City Council Member Aurin Chowdhury said ensuring goals in the agreement are reached will be critical to address the climate crisis, adding that she worried that the measures don’t go far enough.
“This agreement, as it stands, will not be acceptable in 10 years,” she said.
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Timothy DenHerder-Thomas, a Minneapolis resident who works as the general manager of Cooperative Energy Futures, a local solar cooperative, said the agreements are a step forward, but still far short of where Minneapolis should be as a city aspiring to lead on climate change.
“Centerpoint’s commitment to 20 to 30 percent falls laughably short of where they need to be,” DenHerder-Thomas said.
CenterPoint local government affairs official Kat Knudson said the company is committed to meeting the needs of its customers, “including providing solutions that are increasingly lower carbon.”
The agreements include commitments from both utilities to ensure that their reliability rates in Minneapolis are equal to or better than the rest of their Minnesota territories, which Hollenkamp said is significant given the older infrastructure in much of the city compared to the rest of the state. There are also increased equity measures including promises from the utilities to pursue more weatherization and other programing benefiting low-income households in the city.
The last franchise fee agreements reached in 2014 established the Clean Energy Partnership between Xcel, CenterPoint and the city of Minneapolis. The partnership coordinates on climate goals, and establishes programs for work such as energy efficiency improvements. The body is governed by an 8-person board, with four representatives from the city and two each from Xcel and CenterPoint. The board also receives advice from a resident-compromised Energy Vision Advisory Committee.
Commitments to reduce greenhouse gas emissions and boost reliability measures are included in the updated memorandums of understanding for the Clean Energy Partnership.
The city tried to get Xcel and CenterPoint to agree to hire a third party administrator to coordinate the partnership and build its website, which has been offline the past three months, according to Hollenkamp. The city also requested that a member of the advisory committee be appointed to the board. The utilities rejected both efforts, Hollenkamp said.
Under the new agreements, utilities will be charged a $100,000 annual fee that will go toward Minneapolis’ utilities connection division, according to assistant city attorney Jocelyn Bremmer.
The agreement will go before the full City Council on Feb. 13.
