Making Energy a Local Affair

Implications of a New Energy Paradigm of Decentralization for Local and City Planners
Dana Hoffman December 2011 Assignment 4 Final Paper; Foundations of Planning; Kelly Main

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, progrowth 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

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

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

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.

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

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 formulating zoning ordinances 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 its General Plan in 1976 (see California Planners Book of Lists 2010).

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 by mechanical and human adjustment at the central station, and more by computer sensors that can analyze and adjust supply in real time and at truly micro-level. To learn more about the mechanics and economics of the Smart Grid,

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.

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 (FoxPenner 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 article Energy 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 to obtain economies of mass production (reductions in cost per unit obtained by producing many units) and economies of scope (per unit cost reductions achieved by co-producing multiple products) at many small, decentralized facilities, as well as economies of integration (per unit cost reductions achieved by changing the supply chain) across previously 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 book Energy and Sustainability, an urban planner John Randolph and a civil engineer
Figure 1: Image from Smith 1979, p. 440

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

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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 ensuring that New Yorkers can access clean, reliable, and affordable energy today and in the future...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 in individual buildings. Clearly, this will require engagement, collaboration, and the sharing of information with the large number of public and private parties involved (PlaNYC Chapter 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 investorowned 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 19

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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Citations
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Development. Retrieved October 3, 2011, from http://www.recycledenergy.com/newsroom/publication/yes_in_my_backyard/ Myths of Municipalization. Boulder Smart Energy Coalition. Retrieved Nov 21 2011 from http://bouldersec.com/myths-municipalization Schlesinger, Arthur. 1960. The Age of Roosevelt. Boston: Houghton Mifflin. Government Document City of New York, Mayor Michael R. Bloomberg. 2007. PlaNYC: A Greener Great New York. Department of Energy, Energy Information Administration. Energy Flow Chart, 2009. Solar Energy Technologies Program: Solar America Communities. Department of Energy Solar America Cities Project. Retrieved October 4, 2011, from http://www1.eere.energy.gov/solar/solar_america_communities.html United States Conference of Mayors. 2011. Clean Energy Solutions for Americas Cities. Prepared by GlobeScan. www.Usmayors.org/cleanenergy Warwick, W.M. 2002. A Primer on Electric Utilities, Deregulation, and Restructuring of U.S. Electricity Markets. U.S. Department of Energy Federal Energy Management Program under Contract DE-AC0676RLO 1830. News Browning, Dan. Jul 15, 2011. Xcel, Boulder cant agree on deal for green energy. Star Tribune (Minneapolis MN), Metro Edition; Business; 1D. Retrieved from LexisNexis Academic & Library Solutions. (n.d.). http://www.lexisnexis.com.ezproxy.lib.calpoly.edu/hottopics/lnacademic/? Carson, Phil. Oct 25 2011. Boulder seeks divorce from Xcel: Municipalization on next week's ballot. Intelligent Utility. Elkes, Neil. Sept 29 2011. Council to take on energy giants; Bid to slash rising gas and electric bills with new company. Birmingham Evening Mail, First Edition. Retrieved from LexisNexis Academic & Library Solutions. (n.d.). Farrell, John. Oct 12, 2011. Utility fights dirty in battle for clean local energy. Grist. Galbraith, Kate. September 30, 2011. Austin Studies Power Grid, Including Plug-in Cars. The New York Times, National Edition. Retrieved from LexisNexis Academic & Library Solutions. (n.d.). Retrieved from http://www.lexisnexis.com.ezproxy.lib.calpoly.edu/hottopics/lnacademic/? Goodman, Amy and Juan Gonzales. 2003. Did Deregulation of the Energy Sector Cause the Blackout of 2003? A Debate Between Greg Palast, the Competitive Enterprise Institute and a Former Utility Executive. Democracy Now! The War and Peace Report. Jaffe, Mark. Nov 11, 2011. Boulder, Xcel Energy square off over city's energy future. Denver Post. Jaffe, Mark. Nov 16, 2011. Xcel sets record for electricity from wind. Denver Post. Municipal Power Plants. Nov.13 1933. Barron's National Business and Financial Weekly. Retrieved October 19, 2011 from ABI/Inform Global. Olsen, Rachel. 2007. All About: Cities and energy consumption CNNTech. Retrieved October 10, 2011, from http://articles.cnn.com/2007-12-31/tech/eco.cities_1_cities-energy-rural-areas?_s=PM:TECH Silverstein, Ken. Aug 11, 2011. Boulders bold move to condemn Xcel. EnergyBiz. Snider, Laura. Jul 15, 2011. Boulder city manager recommends public utility, doubling carbon tax. Boulder Daily Camera. Thomas Friedman. Feb 13 2005. "Mullah Left Behind," New York Times. Urie, Heath. Jul 30, 2010. Boulder staff to council: Do not put Xcel franchise renewal on the ballot. Boulder Daily Camera. Wills. Rick. Oct 16th, 2011. Solar panel business confronts hodgepodge of regulations. McClatchy - Tribune Business News. Washington. From ProQuest November 19th 2011. Books Fox-Penner, Peter. 2010. Smart Power: Climate Change, the Smart Grid and the Future of Electric Utilities. Washington: Island Press. Gellings, Clark W. 2009. The Smart Grid: Enabling Energy Efficiency and Demand Response. Lillburn GA, Fairmont Press, Inc. Local Government Commission. 2009. Community Choice Aggregation: Factsheet. Retrieved Nov 2011 from http://www.lgc.org/cca/.

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