Municipal Franchise Agreements and Clean Energy Objectives

NREL's research on municipal franchise agreements identifies which municipalities have the authority to enter franchise agreements, how many have pursued clean energy objectives through those agreements, and to what effect these objectives have been pursued.

Cities have many procurement options to achieve their energy goals. One emerging trend is for municipalities to incorporate energy objectives into their franchise agreements with an electric service provider or to use these agreements as an entry point to negotiate other clean energy-related agreements with the utility.

To understand this trend, NREL developed a national data set of municipal franchise agreements and is publishing case studies on cities that have incorporated clean energy objectives into their franchise agreements. NREL is also publishing a national assessment of the potential impact of widespread adoption of renewable energy objectives on deployment nationwide.

Impact of Franchise Agreements

A franchise agreement is a negotiated contract between a municipality and an electric service provider that grants the utility the right to serve customers in the city's jurisdiction. The contract often specifies the period of service and a fee remitted back to the municipality. These agreements commonly include stipulations regarding a utility's right of way to install and maintain electrical infrastructure.

Some cities have incorporated other energy objectives into franchise agreements—or have signed agreements in parallel—that commit the city and utility to work together to achieve joint energy goals. When franchise and related agreements are implemented, the city can deliver a wide variety of outcomes, including additional revenues for city services, new renewable energy projects, and more collaborative working relationships between parties.

Municipal Franchise Agreement Data

NREL collected franchise agreement information from 3,538 municipalities nationwide. The data set includes information on the municipality, its franchise authority, the electric service provider, the length of the agreement, the franchise fee, and whether the agreement includes references to specific clean energy objectives, including energy efficiency, renewable energy, street lighting, undergrounding infrastructure, and others (i.e., electric vehicles, reliability, and infrastructure strengthening).

This data is the foundation for an analysis published in Energy Policy that found that local governments across 30 states can negotiate franchise agreements, potentially resulting in the development of 164–911 terawatt hours of renewable energy by 2030. The article also presented illustrative case studies of three individual cities.

Resources

Municipal Franchise Agreements and Energy Objectives, NREL Data Set (2019)

Renewable Energy Procurement Options Data, Open Energy Data Initiative

Hand Me the Franchise Agreement: Municipalities Add Another Policy Tool to Their Clean Energy Toolbox, Solar Energy (2021)

Wait, Cities Can Do What? Achieving City Energy Goals through Franchise Agreements, Energy Policy (2020)

Utilizing City-Utility Partnership Agreements To Achieve Climate and Energy Goals, World Resources Institute working paper (2019)

Webinar Presentation on Municipal Franchise Agreements (presented by Jeff Cook of NREL, hosted by the National League of Cities)

Contact

If you have questions about NREL's work on municipal franchise agreements, contact Jeff Cook.