Opportunities & Challenges in Municipal Utilities
By Nick Arnold, Electric Utilities Program Manager
Climate Cabinet is focused on the need for climate action at every level of government. In fact, the vast majority of the over 500,000 elected officials in the United States are elected at the state and local level – and each of them has an important role to play in shaping an equitable clean energy future.
Among those half a million local offices, my research is focused on a subset of elected offices that have a particularly important role in our energy future, and a direct channel for democratic participation: Municipal electric utilities.
What are Municipal Utilities?
In over 2,000 communities across the country, local elected officials are in charge of Municipal electric utilities and have the power to transition their communities to clean, renewable energy. If this is the first you’re learning about municipal utilities, don’t worry! You’re not alone. Energy governance is complex, and municipal utilities are especially decentralized. That’s why Climate Cabinet set out to build a first national dataset of these Municipal utilities, their role in energy transition, and what needs to be done to bring clean energy to every part of the country.
But before we dive into Municipal utilities, let’s zoom out for a minute. Most people know something about their electric utility, even if it’s just how much they pay in bills per month. For a lot of U.S. customers, their energy comes from a private company, known in the industry as an investor-owned utility (IOU), which is also usually a regulated monopoly. That means customers can’t choose to buy energy from a different company, so instead of market competition there is regulation. In many cases, state regulators (usually called commissioners, in the Public Utilities Commission or Public Service Commission, although the names vary) make the decision on how much IOUs can charge their customers. Since these regulators are usually appointed by the governor, the closest political link voters have to those decision-makers are Gubernatorial elections or, in a handful of states, voting directly for those regulators.
But for municipal utilities, those regulatory and rate decisions are made by Mayors, City Councils, or directly elected utility boards — leaders elected by and from the communities they govern. However, since most local elected officials aren’t energy wonks or utility management experts, they tend to defer to whatever the city manager, utility staff, or advisory board recommends. That means if you live in a community with a municipal utility, your bills are on the ballot in every local election. Local elections could mean the difference between electing a consumer advocate and climate champion who will fight for just and equitable rates or a Council member who will defer to business as usual.
Now take that same dynamic and apply it to every other decision made about energy. Should the city retire it’s 50+ year old coal plant and replace it with cheaper renewables? Should the utility offer financial incentives to electrify appliances or add rooftop solar and residential storage? Should the health impacts from pollution be considered when deciding rates and making economic decisions about the grid? These questions and many more like them are all features of running a utility. With Municipal utilities, the public has the opportunity to make their voice heard in all these critical decisions and that’s why they’re so important to pay attention to.
According to the American Public Power Association, municipal utilities serve around 15% of U.S. energy customers and are responsible for 10% of energy generated in the U.S. Nationally, municipal utilities are responsible for 9.7% of natural gas capacity and 11.5% of coal capacity. They are also responsible for an impressive 21.9% of hydroelectric capacity, but only a dismal 1.7% of wind, solar, and other renewable capacity. There’s a lot of nuance beneath these top line numbers — regional potential for renewable energy, grid management, variance in energy needs — but they tell two chapters of the same story: if the U.S. is going to reach a zero carbon grid, municipal utilities need to retire their fossil fuel plants and ramp up renewable assets.
Municipal Clean Energy Leadership has Co-benefits for Communities
Municipally-owned clean energy offers so many benefits on top of the climate impact, from jobs and economic growth to community pride and climate resilience.
When it comes to local economics, year after year we’re seeing the same thing in job reports: clean energy and especially energy efficiency are the lion’s share of new energy jobs added to the national economy. These are climate-friendly, good-paying industries that boost the economy both through job creation and by making the community cleaner, more efficient, and more resilient to climate change. Whether a City Council and its municipal utility support energy efficiency programs and renewable energy or not has a big impact on whether the benefits from these industries and job opportunities reach the community.
As extreme weather and other impacts of climate change become more tangible, municipally-owned renewable projects can be both a source of community pride and a protection from some of the worst grid failures that can happen. Take the Murray Hydroelectric plant in North Little Rock, AR for example. This hydro plant came online in 1989 and has been a big source of community pride ever since. The Murray plant was even credited by local utility officials with limiting risk from the polar vortex that critically threatened the grid across the gulf region, a crisis that highlights the importance of energy decision-making and especially local resilience to extreme weather.
For some municipal utilities, revenue from power plants they own supplement the city budget, enabling better city services and more opportunities to grow. The ability to own and operate the whole energy system, from generation to transmission to customer-facing services, can offer great economic benefits and keep utility bill dollars local. Of course sometimes this extra revenue is a function of too-high rates, but that offers a big opportunity for accountability in the next local election and making fairer utility decisions a local issue.
As with all things climate change, equity and justice are critically important factors to consider. Municipal utilities have some of the best opportunities to serve their communities equitably because the decision-makers are community members themselves. Equity decisions made by municipal utilities can range from direct bill assistance to retrofitting low-income housing with more efficient appliances, windows, etc. and more. But so often the community members in most need of assistance are the last to hear about programs offering it. Funding for these programs and investing in outreach to raise awareness are decisions made by local elected officials — even when funding comes from state and federal legislation.
Your Voice Matters for Our Climate & Clean Energy Future
As we look to the future of climate change and the energy systems that power our society, every decision matters and accountability for decision-makers is more important than ever. If your community has a municipal utility, embrace your power and hold your leaders accountable to their responsibility! Make your voice heard for clean energy, for equitable rates, and for leadership that understands and prioritizes climate action in each and every decision. If you need help doing that work, reach out to Climate Cabinet and we will happily connect you with amazing local advocates already leading the charge.
Even if you don’t live in a community with a municipal utility, every local elected official you vote for has a role to play in the clean energy transition – so get involved! This is a climate emergency and we need all hands on deck, in each and every community.
Climate Cabinet is working to identify the climate nexus of every elected office in the US – we’re so glad you’re with us!