US cities pushing to take over electricity generation

Across the United States, cities are showing a renewed interest in taking over the electricity business from private utilities, reflecting intensifying concerns about climate change, responses to power disruptions and a desire to pump more renewable energy into the grid.

Boulder, Colorado, for instance, could take an important step towards creating its own municipal utility, among the nation's first in years, as soon as next month. A scheduled vote by the City Council comes after a study process that residents, impatient with the private electric company's pace in reaching the city's environmental goals, helped pay for by raising their own taxes.

While Boulder's level of activism may be unusual, the desire to take control of the electricity business is not. Officials in Minneapolis and Santa Fe are considering splitting from their private utilities, while lawmakers in Massachusetts are trying to make it easier for towns and counties to make the break.

Over the years, many localities have considered creating municipal utilities, usually about the time their franchise agreements with private electric companies are to expire. But they are now examining municipal utilities as concerns rise over carbon emissions and as the ability to use renewable energy sources increases.

"Right now, a lot of the communities are looking at it for climate reasons," said Ursula Schryver, director of education and customer programs at the American Public Power Association. "The biggest benefit about public power is the local control."

But private utilities often resist giving up control - and customers - to new, public competitors, arguing that it leaves them unable to recoup investments. In addition, the power industry cites its experience in keeping the lights on while meeting environmental goals.

"This is our business. It's what we do," said David Eves, chief executive of the Public Service Company of Colorado, the division of Xcel Energy operating in Boulder. And because its parent company operates in eight states, the utility can focus on being more efficient. "We don't run other parts of the city operation and deal with those kind of things. It's our specialty."

Roughly 70 per cent of the nation's homes are powered through private, investor-owned utilities, which are allowed to earn a set profit on their investments, usually through the rates they charge customers. But government-owned utilities are non-profit entities that do not answer to shareholders. They have access to tax-exempt financing for their projects, they do not pay federal income tax and they tend to pay their executives salaries that are on a par with government levels rather than higher corporate rates.

In addition, they can plough more of their revenue back into maintenance, which can result in more reliable service.

But supporters of investor-owned utilities say restoration speeds vary among government-owned and private utilities. The large electric companies, they say, are often in a better position to muster resources because they can call on extra staff from other companies and regions.

"Very few utilities can really maintain the full complement of crews and equipment that they may need - it's not economic," said James Fama, vice president of energy delivery at the Edison Electric Institute, which represents private utilities.

The road to a new utility is a long and expensive journey.