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Across the US, municipalization efforts take steps forward

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Across the US, municipalization efforts take steps forward

Every year, dozens of communities around the country reach out to a public power trade organization for information on how to form a municipal electric utility. Their reasons for doing so vary; some want more local control, while others have reliability or generation-sourcing concerns about their current power options.

In the past decade, however, only four communities — two in Alaska and one each in Ohio and Washington — have municipalized their electric systems, according to the American Public Power Association's vice president of education and customer programs, Ursula Schryver.

Municipalization is a lengthy process often dragged out by investor-owned utilities that fight the effort through the courts and public relations campaigns, Schryver said, adding that many communities do not end up crossing the finish line.

"I think it really comes down to the community and whether the community is supportive of the effort, whether it's going to be beneficial and whether they are committed to doing this," Schryver said in an interview.

Several initiatives to form consumer-owned utilities are in full swing in some parts of the U.S., while municipalization is just at the concept stage in others. Here is where some current efforts stand as 2019 comes to a close.

Boulder, Colo., intends to postpone ballot measure

Since 2015, the city of Boulder has sought to purchase Xcel Energy Inc.'s local electric lines and equipment. In October, the Colorado Public Utilities Commission delivered the city a win by approving Boulder's request for permission to condemn certain Xcel Energy assets.

In its effort to form a municipal utility, the city government has offered several increasingly larger bids for the assets. Most recently, it extended a $94 million offer to Xcel Energy, which does business locally through utility subsidiary Public Service Co. of Colorado. Boulder said at the time that its offer would stand through Dec. 6 and the city would file to condemn assets outside of substations sometime after that date if a price had not been agreed on. The city later intends to amend the condemnation petition to include assets within substations, according to Boulder communication specialist Emily Sandoval.

Outside of the bidding process, Boulder residents still have to head back to the ballot box and provide the city with a final municipalization mandate. City officials initially wanted to put the matter to a vote in November 2020, but Sandoval said Dec. 5 that the city's director of climate initiatives, Steve Catanach, will be recommending to the Boulder City Council that the final vote be pushed until November 2021.

The reasoning behind the recommendation is that officials still do not know, for example, exactly how much it will cost to buy the assets, acquire the power supply and complete any necessary construction projects.

"Xcel Energy has not been willing to sell the system to Boulder at a reasonable price, creating the need to go through legal processes where a major tactic has been to delay and incur additional cost," city officials said in a Dec. 10 analysis of outstanding issues related to forming a municipal utility. While Boulder said in that analysis that it has "good estimates for each variable," it also said it will not be able to further refine municipalization costs until after engineers with the city and the utility determine how the electric system will be split in order to serve customers of what would be Boulder's municipal utility and Xcel Energy's customers outside city limits.

Pueblo, Colo., plans its own ballot measure

Elsewhere in the Centennial State, Coloradans in the city of Pueblo are facing their own municipalization battle. Pueblo has been considering municipalization since at least 2017, when the city council set a goal of sourcing all of the community's electric supply from renewable energy sources by 2035.

In October, a city-commissioned report found that residential ratepayers could see retail electric rate savings of between 10% and 14% if Pueblo takes over the assets of local investor-owned utility Black Hills Energy, a subsidiary of Black Hills Corp., to form a municipal utility. Mayor Nick Gradisar said in an email that his team is "in the process of developing a ballot issue for next year to determine whether to terminate the franchise early" and is also "negotiating with the current provider with respect to rates, which might avoid an election."

Maine awaits results of cost-benefit analysis

Spurred by ratepayers' concerns that they were being overcharged for electricity, a Maine state lawmaker in January proposed legislation to create a consumer-owned utility to buy out Central Maine Power Co., a subsidiary of multinational Spanish electric utility Iberdrola SA's majority-owned Avangrid Inc., and Emera Maine, a subsidiary of Canadian energy and services company Emera Inc. In July, Maine Gov. Janet Mills authorized a cost-benefit analysis of forming a consumer-owned utility in the state, focusing on potential impacts on electricity rates, utility employees and customers.

According to Maine Public Utilities Commission Administrative Director Harry Lanphear, the state utility regulator has since held a solicitation process to find a consultant to conduct the study. The winning bidder was Boston-based London Economics International LLC, which Lanphear said is "well into their work" on the study. The report is due to the state legislature by Feb. 15, 2020, after which the lawmakers will determine subsequent steps.

"It's very unusual for a state to look at municipalizing, and they're really just looking at municipalizing the two investor-owned utilities there," Schryver said. "There are a number of other smaller public power utilities already in existence in Maine that will stay public power utilities."

According to a recent legislative document in the proceeding, 95% of Maine ratepayers are being served by an investor-owned transmission and distribution utility owned by a foreign entity.

Pittsburg, Kan., officials say 'municipalization is warranted'

After hiring a team of legal, financial and industry experts and conducting an initial feasibility study, city officials in Pittsburg, Kan., have determined that "municipalization is warranted," according to Jay Byers, deputy city manager. Byers said the city accordingly intends to separate from Evergy Inc., which formed in 2018 with the merger of Westar Energy and Great Plains Energy.

However, "from this point, there will not be inconsiderable costs incurred, so we will require city commission approval to move forward," Byers said in an email, adding that he anticipates a decision in January 2020. Byers explained that officials have identified funds that can be put toward anticipated costs without impacting city operations and that his team is approaching municipalization "as a long-term business decision."

Pittsburg officials will now formally initiate the requisite legal processes to separate from Evergy, Byers said, adding that the city will need to collect power purchase agreement bids and acquire necessary permissions from relevant federal and state agencies. The city also may need to undergo arbitration "or a more formal legal process" to "finalize the acquisition and separation configuration with Evergy," Byers said.

Those steps can be completed at the same time, Byers added.

New York City ponders 'a public approach'

After a five-hour power outage plunged the heart of Manhattan into darkness the evening of July 13, local and state-level public officials were displeased with the performance of Consolidated Edison Inc. subsidiary Consolidated Edison Co. of New York Inc. Multiple other blackouts and brownouts occurred in New York over the summer, impacting tens of thousands of customers.

When asked during a July 22 interview with cable news channel NY1 whether the problems deserved "radical solutions" such as license revocation or municipalization, New York City Mayor Bill de Blasio said the city needs to "think about other options" and bemoaned what he said felt like a "weird" public-private model.

"I think it's a bad mix right now because the accountability levels are obviously way off," de Blasio said. "So let's start with an investigation, but if that investigation does not yield better answers, I, for one, think we need to think about some kind of public approach."

When asked in early December about any efforts the city has made on that front since the mayor made his comments, Freddi Goldstein, de Blasio's press secretary, said she did not "have any update ... at this time."