new energy paradigm decentralization paper final

8/2/2019 New Energy Paradigm Decentralization Paper Final

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Making Energy a Local Affair

Implications of a New Energy Paradigm of Decentralization for

Local and City Planners

Dana Hoffman

December 2011Assignment 4 Final Paper; Foundations of Planning; Kelly Main

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Introduction

Among many challenges facing planned urban development to meet current environmental and

global problems, a new approach to energy production may be the most important for fighting climate

change, protecting human health and natural resources, and maintaining economic prosperity. The world

needs an energy production and distribution revolution, and increasingly it appears that much of the

uprising will have to take place at the municipal level. This paper provides a summary of historical trends

in todays energy paradigm, analyzes how various cities are attempting to integrate a new localized

paradigm, and above all, calls on city planners to put energy at the top of agenda items as they plan the

next steps of sustainable development.

The world is facing populations hungrier for energy than ever before. In the last 50 years, the

quantity of fossil fuel combustion for energy production has increased by nearly five times (Girardet

2008). This state of affairs poses numerous problems.

The continuing crises in the Middle East, our ongoing dependence on foreign oil, and the consequent volatility of

energy prices, are major reasons for reforming how we produce and use energy. New York Times columnist and

foreign affairs expert Thomas Friedman asserts that a new energy paradigm is the best way to shore up US national

security. He writes, Greater energy efficiency and independence is the most tough-minded, geo-strategic, pro-

growth and patriotic thing we can do (Friedman, 2005). Oil dependence concerns have led planners to look at

ways to reduce sprawl, encourage mixed use development and transit use in order to cut dependence on the

automobile. However, while this is one lens of planning for energy change, it does not solve the overall energy

problems that require a new approach.

The need for a new energy paradigm is also vital in the context of global climate change. Energy

production is second only to transportation as the largest source of important greenhouse gases like CO2

and SO2. The vast majority of that energy is produced by burning dirty coal, which remains the cheapest

form of fuel. A huge percentage of that energy, 58%, is wasted due to inefficiencies, such as waste heat

from power plants, transmission lines, and light bulbs (DOE 2009).

While the problems surrounding energy are global, and control of energy planning in the US has

typically been national and state level, it seems the solutions are going to have to be local. The first

reason for this is simply that most of the energy we use today is used in cities. Despite only representing

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two percent of the world's surface area, they are responsible for 75 percent of the world's energy

consumption (Olsen, CNNTech Energy 2007).

Municipalities also find themselves at the center of the changing energy paradigm because of the

inherent inefficiencies of centralized power and the resulting push toward distributed energy production,

which is necessarily local. Under the current centralized generation paradigm, electricity is mainly

produced far away from the point of consumption, at large generation facilities, and then transmitted

through high voltage wires to distribution grids and finally to the end consumers.

Technological, economic and political variables have long driven centralization. But as one US

energy expert, Peter Fox-Penner, points out, the centralized energy power paradigm is fundamentally

unsuited to the needs of energy in todays world, one bound by resource constraints and emissions

constraints, since it was designed to make and sell as much power as possible as cheaply as possible

(2010, p. 6).

An alternative energy paradigm is one based on distributed generationthat is, energy produced

locally, primarily through clean energy technologies, such as PV or small scale wind, on or around

structures where it will be used, and coupled with emerging smart grid technologies. The promise of this

new paradigm is drastically reduced inefficiencies in production, transmission and end use. This would

provide more power more efficiently to more people. It would cut pollution. It would open doors to

more dynamic innovation. And, it would return control of energy choices to consumers and simplify the

entire energy system (Lovins 2002, Randolph&Masters 2008).

In order to achieve a new energy paradigm based on distributed generation, cities face uncharted

territory: creating an entirely new relationship to power production. A new approach to energy

production may be the most important for fighting climate change, protecting human health and natural

resources, and maintaining economic prosperity. The world needs an energy production and distribution

revolution, and increasingly it appears that much of the uprising will have to take place at the municipal

level.

This paper provides a summary of historical trends leading to todays energy paradigm, analyzes

how various cities are attempting to integrate a new localized paradigm, and urges city planners to direct

their attention to issues of energy production as critical next t steps on the path to sustainable

development.

Historical Context: The path to a centralized energy paradigm

To understand why todays power system is so centralized and the regulatory and institutional

barriers that stand in the way of a new energy paradigm, we start with the historical forces that led to

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centralized energy development, and the role cities did--and importantly, did not play--in that evolution.

As mentioned, technological, economic and political forces have long driven centralization. Here we

examine those factors.

Early 1900s: Inventing the centralized energy paradigm

The history of the centralized energy paradigm begins in the early twentieth century with inventor

George Westinghouses discovery of the benefits of alternating current (AC). AC power, unlike standard

direct current of the time, could convert electricity to higher voltages and send it long distances with

resulting power losses that were far more economic than building another small power facility. He soon

acquired the patent and began to beat out his rival, Edison, in electrical market share (Munison 2010 p.

24) by selling power from the same generating plant to multiple customers in a larger area.

It was another man that truly set the industry on the path to centralization. His name was Samuel

Insull. Until Insull, most electricity in cities was produced by multiple small-scale generators very near

the paying customer. Insull applied the gospel of consumption to the electricity industry; the way to

make money, Insull proposed, was get more people to consume more energy (Munison 2010 p. 26).

Recognizing the new transmission capabilities provided by AC power, Insull believed that the utility

industry could go big if it achieved economies of scale, and envisioned the energy systems structure

much as it is today.

The businessman became the chief proponent of the electricity industry becoming a regulated

monopoly. After all, if many companies divided the market for electricity, none would have the demand

for power that could be met by the bigger turbine-generators. Insull wrote, I cannot see how we can

expect to obtain from the communities in which we operate, or from the state having control over those

communities, certain privileges so far as a monopoly is concerned, and at the same time contend against

regulation (Fox-Penner 2010 p.2). State sanctioned monopolization protected emerging utility

companies like Insulls from competition.

1920s: Economies of Scale

As a regulated monopoly, electric utilities became married to the state. These state regulatory bodies,

usually in the guise of independent agencies or appointed commissions, reviewed and approved all

decisions about the industry from siting and infrastructure development to pricing. Historian Richard

Munson (2005) writes that, state commissions essentially transformed the electricity industry from a

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hodgepodge of competitive businesses into centralized utility monopolies (p.56). Insulls expansion

strategies worked on an epic scale; ten utility systems controlled three-fourths of the United States

booming electric power business by the end of the 1920s (Schlesinger 1960 p.118).

1930s: State and Federal Regulation of Monopoly Utilities

Since so-called natural monopolies were creatures of state regulation, state and federal

government largely took on control of how the electricity infrastructure developed. A few municipalities

responded to the natural monopoly issue through acquiring ownership, that is by purchasing electricity

production firms and making them a truly public service. Most cities, however, ceded control over

electricity to private producers subject to state and federal regulation.

By 1920, Congress had enacted legislation that formed the Federal Power Commission (FPC), the

forerunner of todays federal oversight body, the Federal Energy Regulatory Commission (FERC)

(Smithsonian 2002). A decade later with the Depression and peoples rights on the political front burner,

centralization became the strong focus of the federal government. As part of his Depression era campaign

against monopolies and business tycoons, President Franklin Roosevelt vilified Insull and his now giant

Commonwealth Edison Company along with other now giant utility monopolies. FDR initiated a range

of public power projects from Tennesse Valley to lesser known but no smaller in scale projects like Los

Angeles Bureau of Light and Power, which was purchased from a private company to prevent private

Southern California Edison from monopolizing the region (Munson 72). In the effort to control the

power of the electrical monopolies, Congress deposited increasing power on FERC and State

Commissions to control the industry. Roosevelts administration also attempted to get more utilities

under direct municipal control. As one guest editorial in a 1933 business journal bemoans,

A steady pressure from official sources to induce cities to go into the power business for

themselves, coupled with an offer of the money necessary for their construction, is an

argument of no mean potencypeople in general have been educated to regard the

public utility when municipally owned and operated as a public servant, and, when

privately owned and operated, as a public enemy,as stated by Secretary Ickes

(Barrons 1933).

This push for local public power production proved largely unfruitful. Municipal utilities share

of the countrys power production never rose above its peak of just under 20% in the 1920s.

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Through the 1950s: The Golden Years

Generally between 1938 and 1955, the utility industry enjoyed a period often described as "the

Golden Years" (Smithsonian Post World War II Golden Years page 2002). Endemic to this time period

was the exercise of ever-larger power generation facilities and greater centralization as the way to supply

larger areas of population with staggeringly accelerating demand. During this period, City and regional

planning agencies had virtually no involvement in power planning except in siting process of new power

plants. Officially, most power plant and transmission line siting were, and still are, in the direct authority

of state commissions. However, in practice, most states included city and county planners to a small

extent in the process. In line with an overall inclination for the emerging Euclidean zoning model, and in

response to unwanted outputs (pollution, noise, stacks blocking views), planners pushed for the siting of

power plants along with other industrial facilities away from living and working areas of city populations

(Ducsik 1981).

1960s: Siting and Centralization

By the 1960s, the siting of power plants and transmission lines, as a result of rising

environmental and public participation movements, had become a contentious and problematic issue for

city planners. As one planner observed a decade later, the siting issue had become one of the most

intractable problems on the energy-environment sceneborn in the late 1960s at places like Storm King

Mountain, Turkey Point, Bodega Head, and Four Corners, the resistance movement has snowballed to the

point where it is now rare for a major project involving an electric generating facility to go unopposed

the most familiar cry to a utility executives ears is almost certainly Dont Put It Here (Ducsik 1981

p.1). In the face of NIMBY opposition from the public, and new air pollution regulations being

promulgated by the federal government implementing public laws such as the Clean Air Act (P.L. 88-206

passed in 1963) and the National Environmental Policy Act (NEPA, P.L. 91-190 passed in 1969), the

typical response of planners and utilities alike was to, wherever possible, site plants away from already

developed areas (Ducsik 1981). Americas cities were electrifying, demand continuing to grow, but

centralization meant that the power production infrastructure, aside from power lines and worsening air

quality, was hidden away.

1970s: Energy Crisis

The first pressures to decentralize the energy system, not surprisingly, emerged with the energy

crises of 1973 and 1979. Shocked by the realization of the US energy dependence, Americans for the

first time began to question the economic logic of bringing ever more power production online and

shipping ever more oil as the solution to growing demand. As a result, the country for the first time

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began turning to energy conservation and renewable energy as alternative solutions. Encouraged by

funds offered up by the President Carter administration, local governments began incentivizing in-city

power production and demand-side conservation. For the first time, cities came up against their own

development practices and regulations that, designed around a centralized energy system, inhibited

decentralized production. One such issue was buildings access to sunlight. Without a guarantee that

future development would not block access to direct sunlight, people and businesses were reluctant to

invest in solar technology. In response, many cities and states passed solar easement laws to assure

access. Some went a step further to incorporate solar access considerations such as the distance between

and heights of buildings in the process of formulatingzoningordinances and land use plans (Catalina

1980). In fact, the earliest energy elements in city and county comprehensive plans--a popular feature

added to many of todays plan updates--appeared during this time.

Energy conservation in buildings

began to enter state and local building codes. In 1978 California adopted Title 24, a set of high-

efficiency standards dictating energy-saving requirements for walls, roofs, windows, insulation,

heating, water heating, lighting, and ventilating and air conditioning systems (Baker 2011). One of

the most far-reaching planning changes passed was New Mexico's Solar Rights Law. The law made

access to light a property right analogous to water rights under western law (Catalina 1980 p.44).

Today, New Mexico remains one of a few state leaders in rooftop solar per capita.

Unfortunately, the end of the first energy crisis and a new presidential administration signaled

the demise of distributed renewable technology adoption on any significant level. Notably, this demise

caused a local planning backlash against the renewable technologies, which some residents perceived as

having had negative impacts on city aesthetics (Caffrey 2010). Cities were left with fossils of inoperable

and ugly rooftop units and other installations. By the mid-1980s, very little was left of the decentralized

energy movement, and many neighborhood covenants and zoning requirements had been reinforced

against residential energy production (Hemauer&Keller 2009).

Recent Decades: Fractures in the traditional energy paradigm

For a variety of reasons, including a poor economy and the need for reliable power for ever larger

and more power-hungry populations, large-scale utilities had by the 1980s built a large number of

additional centralized plants that were very expensive. Additionally, many plants were built and kept

running that were not needed except during very short periods of peak demand, generally during the day

The City of Pasadena became the first local government in California to include an energy element directly in itsGeneral Plan in 1976 (see California Planners Book of Lists 2010).

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in summer months. Running these peaker plants was extremely expensive. The result of this was

escalating prices that caught the attention and the discontent of consumers. As one US Department of

Energy report put it, the situation appeared to be out of control, with most utilities requesting routine,

often significant, rate increases and several utilities on the verge of bankruptcy (Warwick 2002).

As a result of this rapid building, regulators began to rethink utility planning. The solution that

gained momentum was deregulation. A number of states began a partial de-monopolization of energy,

attempting to create a market based distribution system. Deregulation proponents claimed that

competition could drive down rising energy prices, diversify the energy field, and even better promote

renewable energyall by allowing customers to choose between competing providers (Bast 2010).

Deregulation did not usually entirely de-monopolize production, but it did break up vertically-integrated

companies, and therefore allow multiple companies to fill the role of supplier, and compete to operate as

the interface between end-use customers and power producers. Likewise, producers had to be

independent and operating within the competitive market. By the late 1990s several states,

notably New York and California had instituted deregulation (VanDoren 2000). The

expected depression of prices did not reliably occur, with one EIA report showing that

deregulated states cost per kilowatt to be over 4 cents more expensive than

regulated states on average (George 2011).

Deregulation came under heavy fire as one after another of the deregulated markets experienced

massive energy crises (see Goodman 2003). In 2001, California experienced rolling blackouts,

skyrocketing market power prices, and utilities nearly collapsed under mounting debt. A giant blackout

in the Northeast US in 2003 cost an estimated $6 billion and several dozen lives (Minkel 2008). Shocked

by the crises many states pulled back from deregulation, and reinstituted regulated monopolistic systems.

Current: Beyond centralization and deregulation

Today, energy has become one of the largest, most complex, most ponderous and regulated

systems in the world. Dissatisfaction with that system and how we produce power began seeping into the

public and political consciousness throughout the 1990s. In response to the starting realization that the

current energy paradigm has dire environmental consequences and a moral imperative to address global

climate change, cities have become increasingly aware of the importance of a new energy paradigm and

the need for local planners to play a larger role in it.

Fortunately, over the last several decades, partly driven by the emerging realization of the current

paradigms failure and partly by independent technological breakthroughs, a number of breakthroughs in

sustainable energy technologies have emerged. The emergence of Smart Grid technology1, cheaper and

1 Smart Grid is label referring to a number of technologies that allow for a power system that is controlled less bymechanical and human adjustment at the central station, and more by computer sensors that can analyze and adjustsupply in real time and at truly micro-level. To learn more about the mechanics and economics of the Smart Grid,

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more efficient photovoltaics, small-scale wind, and geothermal have all made a vision of local energy

production more viable. But while these technologies provide an opportunity, they do not provide an

answer to implementation.

I recommend: Gellings, Clark. (2009) The Smart Grid: Enabling Energy Efficiency and Demand Response.Fairmont Press Inc; Lilburn, GA.

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Contemporary Analysis: Creating a new energy paradigm, with the city at center

Visualizing the new energy paradigm

A century of centralizing power production, has led to a system with transmission

inefficiencies that loses more than $19 billion for the US economy each year (ABB 2007).

Extremely variable demand throughout the day and the need for reliable power during peak hours,

means that centralized utilities, with little control or real-time communication with end-users, must

keep nearly double the number of generators online than the power that is needed on average (Fox-

Penner 2010 p.23-45).

Another, less quantifiable but no less important inefficiency created by todays centralized

system, is a highly complex and unwieldy institutional infrastructure. Because power production

is large-scale, with so many moving pieces from producers, to wholesalers, to distributors across

multiple state lines, it is regulated by many national and state level agencies, and is in constant

political tug of war between many power players. This complex arena of regulation and interests

hinders innovation, and ultimately separates consumers from control over their own electricity

supply. Consequently, any effort to change the current paradigm raises extremely difficult

financial, regulatory, and managerial questions (Fox-Penner 2010 p.6).

Municipalities have traditionally had little direct impact on electricity planning, limiting

their scope of influence to permit approvals of power lines, street lights, municipal building use,

and occasionally their own building efficiency requirements. The new energy paradigm will mean

cities will have to reverse more than seven decades of regulation favoring large, centralized,

supply-side solutions that separate power production from end-users and instead to remove barriers

to, and perhaps even promote localized production and city oversight (Munson 2005 p.153-173.)

This estimate is based on 2005 US energy prices.

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In his articleEnergy Conversion Goes Local: Implications for Planners, Andrew Clinton

codifies this new energy paradigm:

Rather than merely satisfying the demand for energy, I advocate using both demand

management and supply procurement tools to equilibrate demand and supply. Likewise,rather than merely pursuing scale economies, I encourage planners to consider how toobtain economies of mass production (reductions in cost per unit obtained by producingmany units) and economies of scope (per unit cost reductions achieved by co-producingmultiple products) at many small, decentralized facilities, as well as economies ofintegration (per unit cost reductions achieved by changing the supply chain) acrosspreviously distinct sectors (2008 p.232).

Figure 1 illustrates this concept, as it applies

to local planners, in more simple terms. Interestingly,

this formulation was first published in an energy

manual published during the 1979 energy crisis, but

with the end of oil crisis the transformation never

occurred.

Today, new technologies are providing great

opportunities to move forward toward the new energy

paradigm. In their bookEnergy and Sustainability,

an urban planner John Randolph and a civil engineer

Gilbert Masters, suggest that the only sustainable future scenario of energy is one in which these

new technologies (rather than business as usual or world crises) drive the market (p.84-86).

Amory Lovins, widely considered among the worlds leading authorities on energy

sustainability, calls for what he originally coined a soft energy path and which is defined by end-

use solutions such as distributed renewables, smaller-scale production, and energy efficiency

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Figure 1: Image from Smith 1979, p. 440


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technologies (1976, 2002). According to Lovins (2011), such a shift could affordably transform

the United States to almost total reliance on renewable energy in the near future.

It is clear that there is a strong linkage between energy and sustainability planning. It

is also clear that decentralized energy production, now more possible than ever because of

technology, can be a key step towards great sustainably powered cities. But the question

remains for many municipalities is how to most effectively adjust planning to accommodate

the local production paradigm.

Zoning, Regulation, and Policy Adjustments

In recent years, a number of cities have begun to experiment with ways to move towards

the new energy paradigm. In doing so, cities have used a range of planning and regulatory tools.

As expressed in his article title, Saving the World through Zoning, planning consultant

Chris Deurksen lays out a series of changes to zoning codes that alone can make a sizeable

difference towards a new energy paradigm. One such example is zoning in a way that ensures all

new development has prime access to the sun, by requiring solar access at the site level and/or

specifies buildings orientation for solar efficiency. Doing so promotes residents investing in

rooftop solar power by making localized power production more efficient and practical. This

approach has been taken in Denver, CO and number of other cities, as well become statewide

policy in a few cases (Duerksen 2008 p.3).

Another example of zoning solutions is to encourage developers to build energy efficient

buildings by providing code-based incentives; Portland, OR, for instance, gives developers a

height bonus for installing green roofs on commercial buildings (Duerksen 2008 p.5).

In 2002, the Commission for Environmental Cooperation (CEC), conducted a study on best

practices with respect to energy use and supply in North American cities. Among them were New

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York City NY, Eugene, OR, Boulder CO, Burlington VT, and Louisville KY. Together these

cases provide a snapshot of what the cities most aggressively pursuing energy planning are doing.

Nearly all of the cities concentrated much of their effort into improving the energy

efficiency of built infrastructure. In some cities, the focus was just on city-owned buildings, while

in other cities, the effort extended to all public and private buildings. Eugene, for instance,

instituted an Energy Management Program built on four basic pillars: (1) building design and

construction; (2) rigorous building operations and maintenance; (3) use of energy management

tools; and (4) modification of workplace practices (CEC 2010).

Most of the case study cities also are investing in new soft technologies; several cities are

committed to buying a certain amount of locally produced solar or wind, or providing incentives

for city residents to the do same. A few are working with their investor-owned utility to institute

smart grids (CEC 2010).

Of particular interest are ways in which cities are dealing with the cost of improving

infrastructure efficiency and renewables, since overcoming financial restraints is the number one

hurdle preventing many cities from further energy efficiency measures. In fact, a recent survey by

the national Conference of Mayors found that financial constraints, such as high-upfront costs of

technology and uncertainty about rate of return on such investments, is the most significant barrier

for 94% of cities (2011 p.9). Rather than pay for an expensive set of city-wide energy audits and

evaluations, Eugene from the outset implemented an extensive energy tracking and management

program for all public buildings (completed by the mid-1990s) allowing them to assess energy

savings as they went along.

Another notable element in CEC case cities energy practices is the creation of deliberate

institutional structures or organizations that bring together multiple players. The need for such

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structures is perhaps best illustrated by the New York City. New York suffers a common

municipal ailment of no single entity overseeing the citys complex energy systems: Con Edison

(the investor-owned utility) manages the electrical grid, National Grid and Con Edison share

natural gas distribution, New York State Public Service Commission (PSC) regulates other energy

distribution, and several state and federal regulators approve new energy infrastructure

development. To address this problem, PlaNYC, the citys comprehensive sustainability plan,

calls for the formation of an Energy Planning Board with a mandate to coordinate the activities of

all players in the energy sector and to devise energy policies (CEC 2011). The writers of PlaNYC

explain the value of the Board:

While the City is not in the energy business, we do have a compelling interest in ensuringthat New Yorkers can access clean, reliable, and affordable energy today and in thefuture...To achieve these goals, we need to think holistically about the energy spectrum,from the largest power plants and transmission lines down to the heating systems inindividual buildings. Clearly, this will require engagement, collaboration, and the sharingof information with the large number of public and private parties involved (PlaNYCChapter p.106).

How best to form such structures, and the level of input and power assigned to different

agencies and public utilities will be a major decision to consider as municipalities move more

aggressively towards a new energy paradigm.

Boulder: Case Study in Municipalization

Currently, most cities working towards the new energy paradigm are doing so by changing

practices already within the power of local jurisdictions like zoning laws and municipal building

codes, and coordinating between existing business and regulatory authorities. A few cities

however, are attempting radical changes to the traditional regulated monopoly utility structure.

These cities basic argument is that the best way to decentralize the power system is to remove

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centralized players from the system rather than attempt to work with them, namely to municipalize

and give the city complete control over electricity production and distribution.

Some proponents of municipalization assert that investor-owned utilities, the product of a

centralized power system, tend to be obstructionist to any decentralizing efforts. Richard Munson

writes current rules [are] designed to support the status quodominant power companies, for

instance, often block competitors from connecting to the grid or impose obsolete and prohibitively

expensive interconnection standards and metering requirements that have no relation to safety

(Munson 2006).

In the past 10 years, there have been 13 communities that have switched from investor-

owned to municipal utilities, while a number of othersas many as 100 according to some

sources, including San Francisco CA, and Portland OR--have seen significant attempts to do so

(Silverstein 2011).

Currently, the debate over municipalization is playing out in the city of Boulder, Colorado.

In November 2011, the residents of Boulder voted to condemn the citys contract with the states

investor-owned utility Xcel Energy. With about 96,000 residents, Boulder is by far the biggest city

to authorize a switch to a municipal utility in years. Nick Bradden, a spokesman for the American

Public Power Association, which represents the country's 2,000 municipal electric utilities, labels

the initiative as "the mother of all municipal utility battles" (Jaffe Nov 11, 2011). In this section, I

analyze that battle and, with the emerging outcome, its potential for building the new energy

paradigm.

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The City of Boulder already had a very strong plan working towards a new energy

paradigm in place prior to its municipalization effort. The citys Climate Action Plan is the only

one in the country that imposes a carbon tax on all utility customers. The city also has a previously

established goal of reducing emissions of greenhouses gases to 1990 levels by 2012 (CEC 2010).

The push to municipalize began in early 2010 when Boulder officials announced the city couldn't

meet that goal. The problem, city officials concluded, was that more than half the electricity

supplied to the city by Xcel Energy came from coal-fired power plants, and coal was one of the

citys major sources of greenhouse gases (Jaffe Nov 11, 2011).

The citys franchise agreement with Xcel was due to expire shortly, and so in July 2010

city planners made the decision that they would recommend against the City Council asking voters

to renew the expiring franchise. City Manager Jane Brautigam explained the decision: "we just felt

like a 20-year commitment was going to be too long -- especially as we, as a city, don't have all of

the information that we really need to know how far we can go toward decarbonization and how

fast we can get there (Urie 2010). The city management argued that being its own utility was the

best way for the Boulder to guarantee electricity sourcing and distribution enough to meet citizens

sustainability goals. Consequently, the city asked voters to separate from Xcel and invest in the

formation of city-owned utility in what became ballot measures 2B and 2C.

Xcel Energy and a number of other interest groups that arose were opposed to the

measures, and campaigned strongly to prevent the divorce (Carson 2011). However, after over a

year of intensive campaigning on both sides, Boulder voters narrowly passed the municipalization

measures with a margin of 933 votes (Farrell 2011).

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It is important here to analyze what exactly municipalization means for Boulder. In order

to form Boulder Power and Light, the fully municipal-owned utility, the city will have to go

through a condemnation process, and ultimately buy all the distribution infrastructure from Xcel

Energy at an agreed upon rate. City consultants have estimated that Boulder would need $121

million in order to complete the process. Xcel, however, claims that the real cost will be hundreds

of millions of dollars more (Snider 2011). In order to help pay for the process as well as expected

legal fees, Boulder will be issuing numerous bonds over the next few years as well as raising the

existing utility occupation tax on residents by $1.9 million annually (Snider 2011).

The most important question is if the decision to municipalize was the best route for the

city to achieve the new energy paradigm. What the City of Boulder will be able to achieve by

breaking with Xcel is in dispute. According to a citizen-led peer reviewed study, Boulder Power

and Light could increase renewable energy production by 40% from decentralized, local

technologies, and could do so without increasing rates above Xcels projections. Xcels staff and

other sources countermand this claim entirely (Farrell 2011).

Boulder does have some other cases to look to as grounds for success. In 2004, San

Francisco adopted Community Choice Aggregation (CCA), a similar policy to municipalization,

and was as a result able to build 360 Megawatts (MW) of solar

, green distributed generation, wind

generation, and energy efficiency. In 2007 the City adopted a detailed CCA Plan, which

established a 51% Renewable Portfolio Standard by 2017 for San Francisco. In Ohio, the nation's

largest CCA, called the Northeast Ohio Public Energy Council (NOPEC) was able to achieve a

70% air pollution reduction by switching its approximately 500,000 customers in territory

consisting of 100 mostly rural towns from a utility mix of coal and nuclear power to a mix of

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natural gas and renewably powered electricity (Local Government Commission 2009). Community

Choice Aggregation does differ in two primary ways from municipalization. First, it can be

instituted over multiple territories from a neighborhood to a county in addition to municipal

boundaries. Secondly, it does not require that the CCA buy the distribution system. While some

CCAs own poles, wires, etc., others only own or control the power sources themselves

The potential benefits of municipalization in achieving the new energy paradigm must also

be weighed against what the city could have achieved under franchise with Xcel Energy.

Somewhat paradoxically, the investor-owned utility is by many counts the most progressive in the

country in pursuing a new energy paradigm. Colorado State Policy requires Xcel to provide 30%

of its electricity from renewable energy by 2020, the second highest renewable energy requirement

among states in the country. In complying with state policy, Xcel paid out $38 million in Solar

Rewards Rebates in Boulderrebates given to homeowners or businesses who purchase rooftop

solar (boulder smart energy coalition 2011).

Moreover, in November of 2011, the same month that Boulder voters passed

municipalization measures, Xcel Energy set a world record for electricity from wind power, at one

point providing over 55% of the electricity needs of its Colorado customers (Jaffe Nov 11 2011).

The utility had also offered to help the City of Boulder gain more renewable sources--offering to

build a separate wind power plant to achieve 90% of electricity needs of the city from renewable

energy within nine years. To help the city improve energy decentralization, in 2008 Xcel began its

first Smart Grid program with the City of Boulder. While the SmartGrid project went massively

over budget, it remains one of only a handful of city-wide smart grid pilots in the country

(Silverstein 2011).

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Not surprisingly, considering the $10 million in revenue at stake, Xcel Energy spent a great

deal of resources, over $450,000 dollars, campaigning in opposition to the Boulder

municipalization measures. Nor is this level of expenditure unusual. In 2001, San Franciscos

municipalization effort prompted Pacific Gas and Electric Co. to spend $2 million to defeat the

ballot initiative; in 2005, MidAmerican Energy Co. spent $527,000 to defeat a ballot measure in

Iowa City, Iowa; in 2010, PG&E spent $46 million on supporting Proposition 16, in an

unsuccessful attempt to pass a constitutional amendment that would have made municipalization

harder in California (Jaffe Nov 11, 2011).

In Boulder, the condemnation, legal negotiation, and municipalization process itself, is by

most counts, likely to take at least five years and potentially several decades to be complete, by

which time a large number of changes could be made by a number of the industrys power players

as well as to technology (Snider 2011).

Cities considering municipalization or community choice aggregation of the electric utility

have a lot to weigh before making those choices in pursuit of the new energy paradigm. A city

will have to consider its current utility providers greenness and its own capacity to fund and

attain a decentralized and renewable power supply once municipalized. Additionally, any

municipality should also consider the cost and time of the battle to municipalize itself in light of

other potential options, like pressuring the investor-owned utility directly.

Conclusions: Best Path forward for Municipalities Today

With the country and the world facing a greater and growing demand for electricity than

ever before, the stakes for a more sustainable energy paradigm are high. The current method of

power production which has evolved over the last century to be large-scale, with enormous

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complexity in number of players and regulator structures has proven unsustainable from

environmental, security and economic perspectives. A new energy structure based on distributed

generation, efficiency technologies, and renewable energy sources may be the critical solution in

achieving that sustainable paradigm.

As shown here, local communities must be a central player in this new paradigm. While a

deliberate relationship to power production and distribution is still foreign to most municipalities, a

growing number are finding ways to shape their energy future through policy, planning, regulation,

and technology adoption. Simple inclusions and changes to city zoning and regulations can in

themselves provide substantive improvements. Creative financing and self-evaluation can

overcome budget woes and provide savings. Even more critical, creating comprehensive plans and

organizational structures that specifically address energy issues can overcome the difficulties of a

multitude of power players, and lay out strident goals.

Municipalization is a more radical approach to achieving a new energy paradigm. While

such an approach has definite promise, its benefits in relations to cost remain to be seen. This

approach requires upsetting traditional complex infrastructure of todays energy industry, and

consequently necessitates a time and resource intensive process, and generally a highly contentious

political battle as well.

As cities continue to experiment with new approaches to energy, they also are likely face

an additional set of challenges since even successful decentralization of energy and municipal

energy planning will require massive shifts in the infrastructure of energy planning. As

municipalities become more deeply involved in the energy field it will become increasing

important that there be regulatory and policy coordination not only within cities (as we have

discussed) but also across cities if soft technologies are to flourish. Lack of coordination and the

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confusing battle of national state and local authority, lifts an incredible hurdle for local renewable

energy providers. State level coordination may be required even as energy becomes the domain of

local government.

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