How Cities and Utilities Can Form Partnership Agreements to Accelerate Climate Action

September 26, 2019 | Jake Duncan, Celina Bonugli

Partnerships are powerful. From multinational climate change efforts down to neighborhood recycling and composting initiatives, combining skills and capacity makes any undertaking more manageable. For cities looking to take meaningful climate action, partnering with their utilities is a smart strategy.

Image: unsplash.com

Take the city of Denver, Colorado for example. Denver recently entered into a formal partnership with its local electric utility Xcel Energy to work together to achieve shared climate and energy goals. One of the many positive outcomes of this partnership was an ongoing collaboration for deep energy retrofits and renewable procurement for a local civic and community campus—the National Western Center—to help the center achieve net-zero energy. This collaborative effort is expected to result in $533,000 in annual savings for the center and a 92% reduction in carbon emissions, as well as several other business and health benefits.

More than 130 U.S. cities and counties have announced bold climate and energy goals in the face of the ongoing climate crisis. However, there are real challenges that need to be overcome to accelerate the transition to a cleaner, more efficient, and just energy future. Power supply and utility regulations are often out of a city’s jurisdiction to control, for example. 

City-utility partnership agreements like the one between Denver and Xcel provide an opportunity for city leaders to move closer to solving some of these challenges and achieving positive outcomes for governments, utilities, and surrounding communities. These agreements provide a formal avenue for both cities and utilities to lay out their priorities, identify where each party currently stands, and designate how they can help each other make progress on a number of goals ranging from energy reduction to resiliency.

 City-Utility Partnership Agreements in Action

A number of cities have pursued city-utility partnerships agreements across the U.S., including cities in Colorado, Florida, Minnesota, North Carolina, Utah, and Wisconsin. Through these types of agreements, both parties can expand or create a stronger, more collegial relationship, both at the staff and executive level, share and leverage each other’s expertise, and collaborate on projects and programs.

As I mentioned at the beginning, Denver and Xcel’s partnership is a great example of what’s possible. Working together and with other partners like the National Renewable Energy Laboratory, the city applied their on-the-ground knowledge to help identify energy-saving opportunities for Xcel, and Xcel leveraged their immense technical knowledge to model and evaluate cost-effective measures to ensure the successful implementation of the project. The carbon savings from this project will go a long way towards the city’s goal of reducing greenhouse gas emissions 80% below 2005 levels by 2050.

Cooperation Enables Action

To ensure city-utility partnership agreements are successfully delivered, both parties have used a range of implementation and governance tactics, including work plans and joint working groups or governing bodies that use the same reporting and metrics. These ensure each side remains involved and committed, and helps drive shared impacts and outcomes of their partnership.

One of the key avenues of cooperation—the working groups—also provide a platform for an ongoing dialogue that can be translated into action. With the help of a working group, a utility can create new and innovative pilots and programs. Informed by stakeholder input, these initiatives can be effective at reaching disadvantaged communities or other underserved groups such as landlords of Class B and C buildings that often rent to small businesses. For example, the Clean Energy Partnership, formed between the City of Minneapolis and the local electric and natural gas utilities, Xcel and CenterPoint respectively, is working to create an inclusive financing pilot that is specifically aimed at communities that traditionally lack access to capital for home efficiency improvements, and plan to roll this out in 2020.

The People Behind Partnership Agreements

In addition to these tactics, the partners to the agreement must also be committed to working together. Both the city staff and utilities must get on the same page and work closely together if a purposeful partnership is to be successful. That means that both executive- and staff-level personnel on both sides must engage with each other more frequently.

One example of an interpersonal relationship between staff contributing to actionable progress is found in Madison, Wisconsin. An unscheduled, informal conversation between city and utility staff led to the creation of a working group on solar development options. The two groups spent months discussing how the city could best host solar, and Madison Gas & Electric even paid for a feasibility study.

Consider Whether a City-Utility Partnership Agreement is the Right Path Forward

All action has an opportunity cost or put otherwise, there is a cost of not spending your time on something else. City-utility collaboration and partnership agreements are no different. While there may be substantial value in establishing a new or expanding an existing relationship with your utility through an agreement, there is a real cost to dedicating the time and effort necessary for success. Cities often have limited staff time and resources at their disposal, and should always consider the potential benefits and challenges of establishing a partnership agreement before pursuing the agreement.

Next Steps: Consider the Value of a City-Utility Partnership in Your Jurisdiction

To explore the opportunity and potential impact of city-utility partnership agreements, the Institute for Market Transformation (IMT) and the World Resources Institute (WRI) have jointly produced a new resource – Utilizing City-Utility Partnerships Agreements to Achieve Climate and Energy Goals. This research identifies common elements of partnership agreements, as well tips and considerations for developing and implementing a formal agreement, with the hopes of guiding the city-utility collaboration, which is proving essential to city climate action and achieving significant energy market transformation that benefits everyone.

Meet the Authors

Celina Bonugli
Specialist, Clean Energy Innovation, World Resources Institute

Want to get regular updates from IMT?

Related news:
Kelly Crandall
This post is the first in a three-part series that helps local governments understand why working with utility...