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The traditional relationship between cities and investor-owned utilities is broken. For decades, it was defined by the franchise agreement: a simple, long-term contract granting utilities access to public rights-of-way in exchange for a fee. This model is no longer sufficient. Today, cities are setting ambitious climate and energy goals that demand a deeper, more dynamic level of collaboration.
Utilities are not just service providers anymore. They are essential partners in decarbonization. Achieving targets for renewable energy, grid modernization, and social equity is impossible without their active participation. Forward-thinking municipalities are moving beyond transactional fee collection and forging strategic partnership agreements that align incentives, drive innovation, and accelerate progress toward a sustainable urban future.
The Strategic Value of Formal Partnership
While some cities and utilities collaborate effectively without a formal agreement, formalizing the relationship creates a framework for accountability and shared success. These partnerships move beyond vague commitments to establish a clear operational roadmap.
The benefits extend to both parties. For cities, these agreements unlock the utility’s deep technical expertise and resources. For utilities, they provide invaluable insight into community needs, improve customer service, and create pathways for innovative pilot programs that might otherwise stall in regulatory proceedings. A strong city partnership can also bolster a utility’s position in rate cases and innovation discussions with state commissions.
A well-structured agreement transforms the dynamic from adversarial to collaborative, focusing both organizations on tangible outcomes.
Blueprint for a Modern City-Utility Partnership
Partnership agreements are not one-size-fits-all. They take many forms, from a memorandum of understanding (MOU) to a formal cooperation agreement. While the details vary, successful agreements share common structural elements that provide a blueprint for others to follow.
Establish a Shared Vision
The foundation of any strong partnership is a clear, mutually agreed-upon vision. This preamble statement should outline the shared values and goals driving the collaboration. The MOU between the City of Denver and Xcel Energy, for example, framed a joint vision for the community’s energy future. This section should also acknowledge potential constraints, such as regulatory hurdles, to set realistic expectations from the outset.
To avoid stagnation, an agreement needs a clear engine for action. This often takes the form of a joint governing body with representatives from both the city and the utility.
Governing Body: The Minneapolis Clean Energy Partnership established a joint board with senior officials from the city and its electric and gas utilities. This body meets quarterly to review progress, providing the high-level engagement needed to overcome bureaucratic inertia.
Actionable Work Plans: The agreement itself is a starting point. An accompanying work plan translates broad goals into specific projects and timelines. Salt Lake City and Rocky Mountain Power created a detailed Clean Energy Implementation Plan to document the programs and tasks required to meet the city’s ambitious 100% renewable energy goal.
Regular Dialogue: Commitments for regular meetings are crucial. Specify the frequency and required attendees to ensure consistent communication and progress tracking.
Address Administrative Realities
The operational details of an agreement ensure its durability and resilience. Key administrative components include:
Duration and Enforceability: Agreements can be short-term or last for the duration of a franchise agreement. Most are not legally binding contracts, allowing for termination by either party. However, clarity on this point is essential to manage expectations.
Cost and Funding: Addressing costs upfront prevents future disagreements. The partnership should identify how costs will be shared and establish a process for pursuing external grant funding. With hundreds of local governments across the United States now committing to 100 % clean energy or clean electricity goals, there is a large and growing pool of communities seeking federal and private support to meet ambitious climate and energy targets.
Conflict Resolution: Plan for disagreements. The agreement between Salt Lake City and its utility stipulates that if a conflict arises, the mayor and the utility’s CEO will be directly involved in finding a resolution.
Finding the Right Moment to Build the Partnership
Timing is critical. Partnership discussions are most effective when they align with key strategic moments in the city-utility relationship. These opportunities create natural points of leverage and a clear impetus for dialogue.
During Franchise Agreement Renegotiations: This is the most powerful moment for a city. The renewal of a decades-long contract provides a rare opportunity to redefine the relationship. The partnership agreements in Minneapolis, Sarasota, and Salt Lake City were all initiated during franchise negotiations.
When Setting Climate Goals: As cities and utilities independently establish climate action plans, a natural platform for collaboration emerges. Aligning these goals early in the process creates significant momentum. In Colorado, Xcel Energy used its Denver MOU as a template to engage other communities in meeting their distinct sustainability targets.
In Response to Regulatory Proceedings: A contentious rate case or a new integrated resource plan can serve as a catalyst. Public and municipal feedback during these proceedings can highlight the need for a more cooperative approach, as was the case between the City of Madison and its utility.
A compelling case study is Salt Lake City. As its franchise agreement neared renewal, the city proactively completed a utility‑focused Communities Renewable Energy Study, which evaluated pathways for achieving net‑100 % renewable electricity while continuing service from its incumbent utility. This foundation helped Salt Lake City and Rocky Mountain Power formalize a Clean Energy Cooperation Statement as part of their negotiated partnership on energy goals, aligning both parties on collaborative implementation toward the city’s renewable targets.
Measuring Success: Beyond Process Metrics
To maintain momentum and demonstrate value, a partnership must be measured. While process metrics like meeting frequency are important, the focus should be on tangible outcomes that connect directly to climate and energy goals.
Initially, many partnerships track granular metrics, such as participation in specific utility programs. The City of Minneapolis, for example, found this approach administratively burdensome and shifted its focus to broader indicators, like the city-wide percentage of renewable energy consumption. Research indicates that cities that collaborate closely with utilities, through formal partnerships or structured collaboration, tend to see higher participation in utility-led energy efficiency programs. Local governments can reach broader audiences and align outreach with community goals. This partnership results in improved engagement compared to utilities working alone.
The key is to balance big-picture indicators with project-specific KPIs. This provides both a high-level view for leadership and the detailed data needed to manage implementation.
Forging a Modern City-Utility Partnership
Moving from concept to a signed agreement requires a clear, actionable plan. Use this checklist to guide the process.
Assemble a Cross-Functional Team: Include executive leadership, technical staff from sustainability and public works, and legal counsel from both the city and the utility. Designate internal champions in each organization to drive the process forward.
Define Non-Negotiable Outcomes: Before the first meeting, city leaders should clearly identify their primary goals. Is the priority electrifying the municipal fleet, increasing access to community solar, or improving energy efficiency in low-income neighborhoods?
Benchmark Against Peer Agreements: Review existing MOUs from cities like Denver, Minneapolis, and Charlotte. Identify structural elements and specific language that can serve as a starting point for your own document.
Map Timelines to a Key Catalyst: Align your negotiation timeline with a franchise renewal, climate plan launch, or major regulatory filing to create urgency and leverage.
Conclusion
The era of passive, fee-based relationships between cities and utilities is over. Today’s climate and energy challenges demand partnerships built on shared goals, transparent governance, and mutual accountability. By embracing strategic collaboration, cities and utilities can move beyond transactional interactions to achieve meaningful progress toward decarbonization, innovation, and community benefit. These partnerships create lasting value by aligning technical expertise with municipal priorities, fostering innovation, and accelerating the implementation of clean energy programs. Cities that engage utilities as true partners, rather than just service providers, position themselves to meet ambitious climate targets and build the resilient, sustainable urban environments of the future.
