Celebrating public power in America series – Part 2: Celebrating the Modern Public Power Utility

The American Public Power Association is pleased to present the second in-depth, three-part Public Power Current newsletter series to celebrate public power’s past, present, and future.

Yesterday we described how local leaders began what would become the nation’s oldest continuously operated public power utility, in Butler, Missouri.  Today, the Butler Electric Department is a modern utility: it owns Missouri’s first utility-scale solar farm, has emergency-only generators, a fully remodeled and upgraded power plant, and is studying the addition of wind power to help meet the needs of a growing town.

Today we share how three public power utilities have adapted to changing times and local needs.

Memphis Light, Gas and Water (MLGW) – Memphis, Tennessee

Although MLGW has existed since 1939, its parent companies started over 100 years ago. Memphis was 26 years old when the Memphis Gas Light Company, the first of MLGW’s division companies, began in 1852. The City of Memphis was about three-square miles with approximately 10,000 residents. In 1887, a group of Memphians incorporated the Memphis Light and Power Company to supply electricity to the city and, on March 18, 1887, drillers tapped into the artesian water supply beneath the city. The Artesian Water Company was formed, and Memphians stopped using water from the Wolf River. After a series of purchases, mergers, and negotiations over the next half century, Memphis had a three-service utility company. On March 9, 1939, the governor of Tennessee signed an amendment to City’s charter creating the Memphis Light, Gas and Water Division and a board of Light, Gas and Water Commissioners, who were sworn in on March 22, 1939.

Memphis sits on the banks of the Mississippi River in the southwestern corner of Tennessee. It is now the second largest city in Tennessee with a population of 651,073. Memphis also sits within Shelby County, which has a population of nearly one million residents. Today, MLGW is the nation’s largest three-service municipal utility, serving over 436,000 customer locations throughout Shelby County’s municipalities and unincorporated areas. MLGW’s mission is to safely deliver services that create and sustain superior customer experiences. Their vision is to be the trusted provider of exceptional customer value in the communities they feel privileged to serve. Their values – also known as The MLGW Way – are safety, integrity, ownership, inclusion and compassionate service.

The future is bright. MLGW is in the midst a five-year service improvement plan to update city infrastructure. The Division will deploy and commission more than 1,100 distribution automation system devices during the planning period, over 2,500 wood poles will be replaced, 1,000 sites will receive 5G telecommunications equipment and we’re replacing 5,000 lead service lines. The MLGW cast iron replacement project will be completed in 2021. This is a 30-year project that began in 1992. The Division is also replacing 17 miles of underground cable and 1,000 water lead lines.

MLGW is supplied with electricity by the Tennessee Valley Authority (TVA), a federal agency that sells electricity on a non-profit basis. MLGW is TVA’s largest customer, representing 11% of TVA’s total load. MLGW’s natural gas distribution network, which measures more than 4,650 miles in length, delivers natural gas to homes and businesses in Shelby County— nearly 40 billion cubic feet annually. And Memphis water is derived from one of the largest artesian well systems in the world. The aquifer beneath Shelby County contains more than 100 trillion gallons of water that fell to earth more than 2,000 years ago.

Service to the community extends beyond utilities. MLGW employees donate more than $1 million annually in goods and services and countless corporate and personal volunteer hours to make a positive impact. MLGW’s Public Education Program also educates Memphians on the utility industry through a variety of forums such as newsletters, community presentations, Careers-on-Wheels participation, Water Pumping Station tours, and more.

Keys Energy Services (KEYS) – Key West, Florida

KEYS, headquartered in Key West, serves the Lower Florida Keys, providing electricity from Key West to the Seven-Mile Bridge, and serves over 28,000 customers.

The City of Key West purchased the utility in 1943.  The City Council created a Utility Board to oversee what is now known as KEYS.  In 1969, the Florida State Legislature passed a new enabling act for the governing of KEYS, which is still in effect today, and calls for the popular election of five Utility Board members serving four-year terms.  Through the Utility Board, KEYS’ customers have a say in their municipal electric utility.  

In 2017 the Utility Board successfully lobbied the Legislature to update its governance to ensure representation from both within and outside the City limits.  Initially, KEYS only provided electric service to the City of Key West.  In 1953, the utility expanded its service area to the Seven-Mile Bridge.

In those early years, electricity was produced via local diesel generation.  In the late 1970’s, the Utility Board studied alternative power supplies and decided to construct a transmission line (or TIELINE) to interconnect to the mainland power grid. On May 8, 1987, KEYS interconnected the TIELINE with the mainland power grid and KEYS’ operations changed dramatically.

KEYS currently imports nearly all of its power supply and uses local generation for emergency back-up only. The utility relies on power from the mainland because it is far less expensive than local generation and offers greater fuel diversity. As a member of the Florida Municipal Power Agency’s All Requirements Project, KEYS pools its power resources with other public power utilities in Florida.  Together, the public power utilities enjoy greater efficiencies and economies of scale.  Most recently, KEYS joined two Florida Municipal Solar Projects to offer utility-scale solar to its customers.

Today, KEYS is a nationally recognized Reliable Public Power Provider (RP3) by the American Public Power Association.  The Utility Board’s strategic plan focuses on reliability, customer service, reasonable rates, a highly effective workforce and reducing its reliance on fossil fuels through solar, electric vehicles and general customer education.  KEYS maintains a highly respected position within its local community and KEYS customers look forward to receiving the annual conservation calendar illustrated by local elementary school students and picking up a shade tree during the bi-annual Tree Giveaway.

Rochester Public Utilities (RPU) – Rochester, Minnesota  

RPU was formed in 1894 as Rochester’s first municipally owned utility, initially to provide street lighting.  Today, RPU serves a peak load of approximately 270 MW in a service territory of over 60 square miles.  In the late 1970’s, RPU along with 17 other Minnesota municipal utilities joined together and formed Southern Minnesota Municipal Power Agency (SMMPA) to provide low-cost, reliable energy to its members.

RPU’s 200 employees work to ensure the availability of safe, reliable and efficient electricity and potable water to Rochester’s 110,000 citizens.  RPU’s electric utility serves 52,000 residential and 5,000 commercial customers.  Businesses in Rochester constitute about 60% of RPU’s electric utility revenues. 

RPU owns a fleet of generation facilities which includes natural gas-fired peaking plants and a small hydroelectric facility.  In addition, RPU retired their coal-fired generation in 2015, and that facility now runs on natural gas and is used to serve steam to a commercial customer.  In the near future, RPU is planning to add additional solar to their energy portfolio.

RPU’s motto is “We Pledge, We Deliver” and their mission is to “set the standard for service.”  Providing exceptional service to their customers drives everything they do.  To ensure that they are meeting those expectations, RPU surveys customers on a quarterly basis.  RPU’s strategic plan, which is refreshed every three years, centers on what they call the “five R’s”:  Rates, Reliability, Reputation, Relationships, and Responsibility.  RPU consistently maintains over 99% system reliability, and rates that are competitive with other utilities in southeast Minnesota.

Because energy and water are so crucial to economic development, RPU maintains representation on a number of boards and commissions, including, the Rochester Energy Commission, the Rochester Area Economic Development Board, the Climate Smart Municipalities Initiative through the University of Minnesota, and the Rochester Sustainability and Resiliency Task Force.  They also encourage employees to participate in community organizations to maintain connections with the community and assist customers with achieving their goals.

For RPU, “Responsibility” means maintaining commitments to customers today, and generations yet to come.  For years, RPU has met and exceeded energy conservation targets, and every January RPU partners with neighboring utilities to provide the latest in efficiency rebate information to vendors and contractors.  In April, for their annual Arbor Day celebrations, RPU combined a tree giveaway with fun activities for Rochester’s fourth graders.  In 2011, RPU was the first Minnesota utility to install EV chargers across the RPU service territory to better provide access for those with EVs and to provide visibility for RPU customers interested in learning more about EVs.

As noted above, a majority of RPU’s power supply comes from SMMPA and that contract is set to expire in March of 2030.  This gives RPU a unique opportunity for self-determination in meeting their energy needs. After extensive customer engagement, the RPU Board voted to approve two future resource plan scenarios resulting in 100% renewable energy by 2030 through a combination of wind, solar, and other renewable resource options.  The main difference between the plans is how to meet RPU’s capacity obligations, through either a simple-cycle natural gas turbine or batteries. 

As with every other industry across the world, the utility industry was greatly affected by the pandemic over the last 15 months.  RPU’s dedication to its customers continued throughout the pandemic as they adjusted safety protocols, but the delivery of reliable electric and water services never waned.  RPU partnered with the City of Rochester, Olmsted County, and local non-profits to provide assistance for those Rochester residents and business owners in need of resources.  CARES Act funding totaling $749,856 to Rochester businesses and $123,701 to qualifying residential customers was distributed.  Aside from normal business calls received, RPU Customer Care representatives assisted over 5,000 additional callers between May and December 2020 interested in benefits and resources available.

RPU’s strategic planning and steadfast focus on safe, reliable delivery of services to its customers hasn’t gone unnoticed.  RPU is very proud to be included in the elite four percent of all public utilities in the country to receive the American Public Power Association’s Reliable Public Power Provider (RP3) Diamond Award, the industry’s highest honor for providing safe and reliable electricity for customers.

Even Better Together – Celebrating Joint Action Agencies

Public power utilities form “joint action agencies” to serve multiple public power utilities in a region or a state where economies of scale can be helpful to meet energy supply and other needs.  Today, there are nearly 60 of these organizations nationwide.  

Over 50 years ago, APPA, with federal encouragement and the steadfast support of public power leaders, embarked on an effort to promote the formation of joint action agencies.  These initial ventures were often intended to correct expensive and unreliable wholesale power rates being charged by private utilities.  They would allow individual municipal utilities to participate in power pools, to buy wholesale power as a group, and to jointly finance power plants and major transmission systems.  Later, services evolved to help individual utilities meet new electric reliability standards, evolving public policies, resource planning, power management, programmatic administration and regulatory compliance, contract negotiations, workforce development, and more.  Where all participants – especially smaller utility systems – can be helped with remaining competitive in an increasingly complex electricity market.

In Part 3, tomorrow, we will explore how municipalization efforts have touched local communities.  And how the public power business model continues to embrace innovation, local commitment, and power strong communities – even in the face of the most challenging of circumstances.