It’s easier said than done. The tiny city of Slayton, MN, wants to replace Xcel Energy as its electricity provider with a different utility. Walker Orenstein of the Minnesota Star Tribune reports,
This tiny town wants to be the first in Minnesota to evict Xcel Energy and start its own utility.
Slayton, MN, population just over 2,000, lies in Murray County, toward the southwest corner of the state. They aren’t happy with Xcel’s level of customer service.
…Slayton wants to kick Xcel out of its city and form a new government-run electric provider. It is an extraordinary step and one driven by frustration with Xcel’s everyday service and emergency response.
As you may have guessed, for a half-century, Minnesota has been officially divided up into exclusive, monopoly service territories among the electric utilities allowed to operate in the state. We’re told that it’s for the engineering and economic “benefits,” but it’s mostly on account of the economic and lobbying power of the incumbent utilities.
In very limited circumstances an invididual customer can switch providers, but basically you are stuck with whichever provider was granted your territory back in 1974. These include investor-owned (corporate) utilities like Xcel and Minnesota Power, municipal (city-government-owned) utilities like the one in Rochester, and the many consumer-owned rural electric cooperatives serving the rest of the state.
Utilities can, and do, trade territories among themselves, like color properties in a Monopoly game, but that’s between them.
The state Public Utilities Commission (MPUC) is a poor substitute for market competition in keeping prices low and service quality high for consumers. The Commissioners are more focused on the state pursuing climate change goals and other environmental initiatives. Prices and service are, at best, a tertiary concern of government regulators.
Slayton is trying to create its own competition. As the Star Tribune reports, there is a process for such things,
Minnesota law allows cities to start their own municipal utilities after a city-wide referendum.
Then, cities must buy all the infrastructure, like utility poles and power lines, of the provider they are removing. The PUC will also have to consider the cost of Xcel’s lost revenue.
If successful,
The city plans to contract with Nobles Cooperative Electric, a nonprofit serving the area outside of Slayton, to handle operations and maintenance.
The city prevailed in the May 2024 referendum in a lopsided vote. My personal experience in these matters was decidedly mixed. Decades ago, as a consultant, I worked with two Iowa cities in their efforts to buy out the local utility. I went 1-1 in the referenda.
In the one where the city prevailed in the citizen vote, the utility eventually persuaded the city council (with some inducements) to abandon the effort. Slayton has progressed further than most cities in their quest for independence.
I wish them luck.
