This post originally appeared on the Meyer Law Office blog on June 28, 2019.
Shakopee’s citizens are now learning more about the economic realities and fairness of the Shakopee Public Utilities’ water fees and charges.
But some are now shifting the debate to SPU’s electric rates, and claiming that “Xcel is cheaper than SPU.” Although the proposed petition to abolish SPU’s independence would not “privatize” the electric utilities, it is fair to say there would be a movement to shift it to Xcel if SPU is dissolved.
Rates are not the only issue to be discussed in this debate. There are other things to consider:
- Access to the clean sustainable energy sources of the Minnesota Municipal Power Association (MMPA);
- The reliable backup energy source of the MMPA’s Shakopee Energy Park;
- Our community-based employees and line workers who quickly and efficiently resolve power-outages (the “suicide squirrel” phenomenon); and
- Free electric services provided by SPU for city lighting (a value of $171,000 in 2018 alone), plus related service, maintenance, and expenditures.
But by far the issue fueling the discussion most is the cost of electric utilities in Shakopee. And many claim that Xcel has cheaper rates than SPU.
What factors go into a true comparison?
Let’s look at the facts for a change.
Perhaps the confusion stems from the fact that Xcel has two different rates, one from June to September and another rate for October to May. SPU has a single rate for the full year. So to compare the rates of SPU and Xcel in the summer, for example, you’d get a completely different picture than if you compared them in only the winter. To get at the truth, you must annualize the usage and fees in order to compare and see which is more affordable over the course of a year.
In fact, SPU did analyze the cost of electricity in Shakopee against the costs of electricity from Xcel Energy for an entire year. The results of SPU’s analysis? SPU’s rates are cheaper in all but the “Large Industrial” customer category. In the “Residential” category, which is what most of us are focused on, SPU’s effective rates are 15.86% LOWER than Xcel’s. The “Commercial Services” and “Large General Services” effective rates are 6.79% and 2.13% lower, respectively. The “Large Industrial” is the only category where Xcel has a lower effective rate. However, Xcel’s rate was only lower by a negligible 1.63%. Even comparing SPU’s rates to the local Minnesota Valley Electric Cooperative (MVEC), SPU has more favorable effective rates by 4.69% overall.
Given the results of this analysis, I think it’s fair to say that any move to hand over Shakopee electric utility service to Xcel (or another Investor Owned Utility (IOU)) would result in increased electric utility fees — perhaps around 15.86% higher from the current effective rates.
Surely some reading this will be so entrenched in their beliefs that SPU is “bad,” and private “free market” providers (although there’s no such thing when it comes to electric utilities) always provide more competitive rates, that they will not accept this analysis or conclusions.
So be it. But unless you have some evidence — let alone more convincing evidence — conclusions that can’t be defended are merely opinions.
Why are we just revealing this now?
We aren’t. This analysis was shared with the City staff in March .
Don’t let yourself be distracted by the “fake facts,” baseless statements, and outright misrepresentations. For all of the claims that Xcel is cheaper than SPU, I have yet to see any facts supporting those claims. Even when considering that Xcel’s base rate is cheaper for six months of the year, those months (October – May) are when electricity usage is seasonally low. Logic should compel the conclusion that your annual electric charges will be higher when the period with higher rates is also the period of higher usage. But you don’t have to rely upon speculation and conjecture in this debate. SPU’s analysis demonstrates that SPU is not only competitive with, but has lower rates than, Xcel in most customer categories.
Read the full SPU report.
Here is the full report; the charts from the report are below. The information from these charts was provided to the public and City staff and Council in connection with the March 12, 2019 joint meeting. See the City Council Packet dated March 12, 2019 LINK OUTDATED.