As 10-year utility deals expire, Minneapolis residents seek more climate action from CenterPoint, Xcel

Minneapolis residents formed a semicircle in front of Xcel Energy’s office on Nicollet Mall to tell company representatives that they want to see major clean energy and efficiency investments included in a new agreement with the city, and they want utility companies to help lead the effort.

“We’re here because we want clean energy and to address global warming, and we expect the utilities to do their part,” Yusuf Omar, director of the East African Community Coalition, told Xcel’s Minneapolis community relations manager Suzanne Murphy.

Yusuf, who lives in Ward 6, joined residents from all 13 city wards Wednesday to deliver their message about utility franchise agreements to Xcel Energy and CenterPoint Energy, the companies that supply electric and gas to Minneapolis residents.

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.  Minneapolis is currently negotiating new franchise agreements with Xcel Energy and CenterPoint, and environmental activists across the city want the new deals to include more benefits for residents and commitments to clean energy investments.

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.

The city’s 10-year agreements with Xcel and CenterPoint expire at the end of the year.

Minneapolis aims to reduce its emissions from natural gas by 35% and generate 100% of electricity used in the city by renewable sources by 2030. Minnesota law calls for utility companies to source all electricity from carbon-free resources by 2040, but Minneapolis’ own climate goals call for a faster transition.

Yusuf and other residents who campaigned at Xcel and CenterPoint this week want to see utilities commit to city-specific climate goals, and be clear about the cost of generation at different times of the day and year. Usually utilities charge a flat per-hour rate. They also want larger greenhouse gas emitters to pay higher franchise fees, and the city to set shorter, five-year terms for franchise agreements. The coalition includes the statewide multi-faith religious group Isaiah Minnesota, immigrant advocacy organization Unidos MN and the Sierra Club North Star Chapter.

“We all want climate action in our own homes but we can’t do it alone,” Ward 7 resident Leila Lopez told Xcel representatives in Spanish.

‘A once-in-a-decade opportunity’

The Minneapolis City Council unanimously approved a new climate equity plan in 2023 and approved funding for it by allocating $10 million annually toward programs like weatherization through Mayor Jacob Frey’s Climate Legacy Initiative. The money is taken from utility franchise fees, which were raised in 2023 to 5.25% for residential customers and 6.75% for commercial users. The increase costs the average household $12 per year. The city is free to raise or lower franchise fees at any time.

Greenhouse gas emissions from electricity and natural gas consumption are 70% of all Minneapolis emissions, according to the city’s climate plan. Most of the city’s 30% reduction in greenhouse gas emissions since 2006 comes from switching to electricity generated by clean sources like solar and wind power. The plan includes a directive to negotiate new utility franchise agreements that support climate goals.

Minneapolis raised $37.1 million in franchise fees from Xcel and CenterPoint in 2023, and has raised about $19.4 million so far this year, according to a city spokeswoman.

“It is my understanding that the city doesn’t intend to raise franchise fees at this time,” Jocelyn Bremer, an assistant city attorney, told members of the City Council’s climate and infrastructure committee on July 11

A city spokeswoman declined to comment on specific goals for the new franchise agreements citing the ongoing negotiations. But activists and some City Council members see this as a moment to get more ambitious.

“This is a once-in-a-decade opportunity to address the climate crisis,” said Ward 7 Council Member Katie Cashman, who chairs the climate and infrastructure committee.

Murphy, Xcel’s community relations manager for Minneapolis, politely listened to the group’s requests and pointed to the work the company is doing to decarbonize its electricity and expand energy efficiency programs for residents. She encouraged the group to discuss the issue with city leaders, who are the public’s representatives in the negotiations.

“We are always collaborating with the city,” Murphy said.

Xcel encouraged residents to participate in public hearings that will occur this fall as part of the franchise agreement approval process. Those dates are not set.

CenterPoint did not meet with the group, and activists read their lines outside the utility’s offices as a thunderstorm began Wednesday evening.

Tool for climate investment

Minneapolis began using franchise fees to pay for clean energy projects in 2014, when agreements were last negotiated. At the time, there was a push to have the city take over gas and electric service, Bremer said. Instead, the city established the Minneapolis Clean Energy Partnership with Xcel and CenterPoint. The partnership funded city initiatives such as zero interest loans for efficiency improvements for households paying a large share of their income on power bills, and energy disclosure policies for properties sold and rented in the city.

The $10 million annual allocation of franchise fees for dedicated climate project funding approved in 2023 is a great step, according to Ulla Nilsen, a climate organizer with Unidos MN. That money is mostly going to programs that support electrification and weatherization of homes and buildings in Minneapolis.

Minneapolis is using that money to pay for energy efficiency improvements in the city’s two green zones, areas with histories of industrial pollution, diverse residents and lower incomes associated with the history of racist zoning policies known as redlining. Current plans call for the city to pay for improvements on roughly 30,000 homes in green zones by 2030 but more is needed to reach climate goals, Nilsen said.

“We need to get up to 10,000 homes per year,” Nilsen said.

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