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City Power Play: 8 Practical Local Energy Policies to Boost the Economy

| Written by John Farrell | 5 Comments | Updated on Oct 7, 2013 The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/city-power-play/

placeholderThe economy has stalled and so has the war on climate change. But dozens of cities are creating jobs and cleaner energy using their own power.

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Keeping Energy Dollars Localsunshine means local dollars

  • Chattanooga, TN, is adding over $1 billion to its local economy in the next decade by implementing one of the most advanced smart grids and delivering the fastest internet service in the country with its municipal utility.
  • Sonoma County, CA, has created nearly 800 local jobs retrofitting over 2,000 properties for energy savings with city-based financing.
  • Babylon, NY, has re-purposed a solid waste fund to finance retrofits for 2% of the city’s homes, saving residents an average of $1,300 a year on their energy bills at minimal cost to the city.

Eight Powerful, Practical Policies

This report details eight practical energy policies cities can and have used to their economic advantage:energy efficiency means local dollars

  1. Municipal utilities
  2. Community choice aggregation
  3. Building energy codes
  4. Building energy use disclosure
  5. Local tax authority
  6. Solar mandates
  7. Permitting
  8. Local energy financing

Case studies of each policy vividly illustrate their impact with specific examples, right down to the text of the relevant ordinances.

The policies aren’t tied to a political ideology, but a practical and local one.  Cities have identified where they have untapped resources and deployed them to generate jobs and keep more of their energy dollars in the economy.

Every City Could Do Something

Some cities are more limited than others. While the federal constitution typically reserves all powers not expressly given the federal government to the states, states typically do not similarly reserve powers for cities. In fact, an opinion issued by Justice Dillon of the Iowa Supreme Court in the mid-1800s (Clark v. City of Des Moines) set a precedent for local authority that extends to this day in most states: many cities have only those powers expressly granted them by the state or that are indispensable in being a city. Issues like energy codes or property assessed clean energy programs don’t fit under “Dillon’s Rule.”

On the other hand, many states have instituted a form of “home rule,” that grants (at least some) powers of self-governance to cities. The following map illustrates the complex landscape of local authority.limits-of-local-authority-map-v2

No city, no matter how committed to boosting its economy, could adopt all eight policies (heck, the first two are incompatible). Forming a municipal utility means a tough fight with the incumbent utility.  Few states allow community choice aggregation.

But nearly every city has a local budget and borrowing power, can issue permits for buildings, and can set local policy. And likely no city has explored the full potential of their power to boost the local economy with local energy policies. This report shows how dozens have done so, in the hopes it inspires many more to act.

Download the report

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About John Farrell

John Farrell directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. More

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  • Gerry Wootton

    John, doesn’t this sometimes put cities at odds with their local utilities (excepting the case where utilities are city owned)? Obviously, anything that improves efficiency or displaces centralized power distribution directly affects revenues and, with enough market penetration, price setting.

    • http://www.ilsr.org/ John Farrell

      Yes, but that’s an opportunity for a city to tell their utility to do a better job of serving the local interest.

      • rtdrury

        The utility gets its greatest support from its peers in the cabal of profit-seekers in coalition to control local, state & federal governments, so it knows which relationship is most valuable. Not its relationship with the local citizens. I’m still seeing a lot of trust given by locals to that cabal, the “wizard of oz”, as we’ve been indoctrinated. But it now seems obvious that locals must shift our trust back to ourselves and the people we live among in our local communities. And treat the profit-seekers accordingly. It applies whether we are looking at energy or any other industry or anything else for that matter.

  • Gerry Wootton

    Interesting. There’s a kink in ‘value of solar’ propositions: given the low run-rate cost of solar as well as wind, hydro and geothermal as wells the zero run rate for efficiency, all of these means tend to depress demand for conventional power which lowers its market value (not that that’s a bad thing). Since all of these means mostly carry a capital financing cost as their main expense, high penetratation in the market will drive the LCOE down merely by economy of scale; this even applies to regulatory charges: ‘familiarity breeds contempt’ which in regulatory circles means that regulatory cost declines with experience.
    Another map that would be interesting is the one showing per household energy consumption. For the US, this is a pretty random number. While everyone focuses on the cost of electricity, typically the raw input cost, the per household annual expenditure is a better number: some places where consumers think they’re paying a low rate compared to others, their annual expenditure is quite high thanks to low efficiency – some of these places have an even higher ratio of houshold expenditure to household income. One take is that only rich people can afford to do smart things; another is that poor people have less political clout. One could say that the state could continue to subsidize low/no income families at a high rate ad infinitum or they could give them insulation and good windows one time.
    The map of commercial energy use is somewhat different: the energy intensity of commercial real estate is considerably more uniform. My hunch is that larger commercial enterprises are sensitive to energy costs and that a degree of continental standardization is created by large distributed enterprises.
    Industrial electricity use is another cat: there is a fair correlation between high energy intensity in industry and low per capita income. I don’t know what to make of this except a hunch that industries with low energy efficiency must pay low labor rates in order to make a profit.

  • rtdrury

    I consider taking control of energy a key way for cities to boost their economic power and hence wellbeing of their citizens. Energy will always be fundamental to local economies. Just think it through. Energy and finance are secondary only to basic infrastructure. So all city managers should solidify citizen control of that first, then extend it to energy and finance. That will include non-profit versions of both, which have plenty of precedents such as credit unions. Corporate shareholder, and similar profiteers, are the middlemen we are removing systematically from involvement in our local communities. Join the coalition of independent non-profit local communities worldwide and start enjoying the benefits.