Utility breakaway efforts pick up steam

Peter Key | Dec 06, 2015

Boulder, Colorado's high-profile push to form its own utility has been under way for years, but is now among a small yet growing number of similar breakaway efforts to have cropped up around the country.

Campaigns to form community-owned or nonprofit electric utilities were under way in at least five areas of the country this year. Along with Boulder, such efforts remain active in Hawaii and California, and had been under way in Washington, D.C., and Santa Fe, N.M., earlier in the year.

Of the active efforts, Boulder's began several years ago, is the furthest along and seems most likely to succeed, although Minneapolis-based Xcel Energy Inc., which provides power to Boulder, has opposed it.

Hawaii's efforts have some support, too, but are still in the exploratory stages. Like Boulder's effort, they are opposed by the local utility, Honolulu-based Hawaiian Electric Industries Inc.

The California effort would be a ballot initiative to form a statewide utility, but the man behind it said he doesn't have the financial backing necessary to gather enough signatures to get the initiative on the ballot next November.

The nonprofit behind a rejected effort to buy Washington's grid is looking into other ways to restructure the city's electrical-distribution system, and the effort in Santa Fe is dormant, if not dead.

If these efforts do, indeed, represent a trend, it would be a new one.

The number of utilities owned and run by local governments has remained constant over the past decade, according to Ursula Schryver, the VP of education and customer programs for the American Public Power Association, which represents them.

Schryver said the number of groups contacting the APPA about forming publicly owned utilities also has remained constant, at about 20 a year.

The number of electric cooperatives also has stayed about the same, according to Tracy Warren, a spokeswoman for the National Rural Electric Cooperative Association.

Warren said she has seen increased interest in forming electric co-ops, "but it's in places like blogs," and hasn't manifested itself in an increased number of calls to her organization.

Publicly owned utilities make up the majority of the nation's electric utilities, but investor-owned utilities, or IOUs, serve the majority of the country's power customers.

According to the American Public Power Association's 2015-2016 Annual Directory & Statistical Report, there are 2,013 publicly owned utilities, which amount to 60.9 percent of all electric utilities in the country. There are 877 cooperatives (26.5 percent); 218 power marketers, (6.6 percent); and 189 IOUs, (5.7 percent). (The National Rural Electric Cooperative Association says it has 905 members, 28 more than the APPA's figure for the number of co-ops in the country.) 

IOUs have 101.2 million customers, or 68.4 percent of the total, followed by publicly owned utilities with 21.4 million customers (14.5 percent), and co-ops with 18.9 million (12.8 percent), according to the APPA.

Forming a public utility or co-op is a long, complicated effort that requires a plan, the willingness to stick to it but also adjust it as necessary, and the financial wherewithal to build an electric infrastructure or buy one from its owner, which is often an IOU that doesn't want to sell it.

The effort that's farthest along is in Boulder, where voters have agreed to pay a tax on their electric bills to pursue the idea.

"With the money, we have done a detailed analysis of whether it's feasible to create our own utility," said Sarah Huntley, the city's communications manager.

The city has concluded that it is, in fact, feasible and has been battling Xcel in court and before the Colorado Public Utilities Commission over the effort.

"We're currently operating under a timetable where we'd like to have control of Xcel Energy's assets by the end of 2017," Huntley said.

A big driver of Boulder's effort is the desire on the part of the city's residents to embrace rooftop solar generation much more rapidly than Xcel wants to, Huntley said.

Rooftop solar generation is also a factor in Hawaii, which has so much of it that the state's Public Utility Commission recently approved a proposal supported by Hawaiian Electric Industries to end net metering in the state.

That was another thorn in the side of HEI customers and Hawaii officials, who have long been upset that they pay the highest electric rates in the nation and are less than thrilled with HEI's agreement to sell itself to Juno Beach, Fla.-based NextEra Energy Inc.

The island of Kauai is served by a co-op, the Kauai Island Utility Cooperative. Its success, Warren said, "is a reason that people are looking at co-ops for other parts of Hawaii."

Elected officials and groups led by the solar industry and environmentalists are looking into forming alternatives to the HEI subsidiaries that serve the islands of Oahu, Hawaii, Maui, Molokai and Lanai.

A proposed acquisition also was a factor in a nonprofit's effort to take over the local distribution grid in Washington.

Pepco Holdings Inc., which is based in and serves the nation's capital, is seeking to be bought by Chicago-based Exelon Corp. for $6.8 billion.

A nonprofit called DC Public Power offered to buy Pepco's grid in Washington so Exelon's acquisition of Pepco wouldn't have to be approved by the Public Service Commission of the District of Columbia. The offer would have removed a big obstacle to the deal, which regulators in the four states with Pepco operations - Virginia, Maryland, Delaware and New Jersey - have approved, but Exelon turned it down, said Michael Overturf, DC Public Power's president.

DC Public Power last month released a report in which it proposed chopping Pepco's D.C. grid into microgrids, each with 5,000 to 20,000 customers, and seeking operators for each microgrid on a competitive basis.

In California, the secretary of state has given an activist named Ben Davis Jr. permission to begin collecting signatures for a ballot initiative that, if approved, would establish a statewide utility that would replace most of the state's IOUs, including the San Francisco-based Pacific Gas & Electric Co., Rosemead, Calif.-based Southern California Edison and San Diego Gas & Electric.

Davis must gather 365,880 signatures by April 26, 2016 to get the initiative on the November ballot. He said last month he hasn't begun gathering signatures and is hoping to attract some big donors to finance that effort, as he doesn't have the infrastructure to fund it with small donations or crowd funding.

Santa Fe's effort to create a municipal utility could be on its last legs. The Public Service Co. of New Mexico has said it has no intention of selling its grid in Santa Fe and the city attorney earlier this year advised city councilors that trying to take over the grid through eminent domain would be a long and difficult effort that might not succeed.