Association for Public Policy Analysis & Management

Sustainability policymaking presents numerous challenges to local governments. Municipal leaders, especially in smaller cities and towns, report that they lack the fiscal capacity and/or technical expertise to adopt many environmental protection policies. This paper investigates whether the more than 2,000 municipally-owned utilities have the potential to mitigate those challenges. Supporters of municipal utilities often tout their economic development benefits, which are related to lower energy costs, enhanced service, and the ability to keep utility income local. However, neither the scholarly literature nor professional publications examine in any depth the role of municipal utilities in sustainability. This is an important gap because most of the utilities are located in smaller communities; those places that the research tells us struggle with environmental protection efforts. Understanding their role can inform policymakers seeking to broaden local government climate change and energy conservation efforts beyond the world’s biggest cities.

This paper seeks to fill this gap in the literature with a mixed-methods approach. Data from two national surveys of local governments (n=861) conducted by the International City County Management Association are used in a pair of negative binomial regression models and reveal a positive correlation between those cities with municipal power companies and those with an increased number of community-wide sustainable energy policies. Follow-up interviews with officials indicate that the potential mechanisms by which publicly owned power companies drive municipal sustainability are the increased capacity that publicly owned utilities provide to local governments by virtue of income generated and access to grants as well as the local nature of their operations, which allows a better fit of sustainable energy measures to local circumstances. The policy implications of this paper do not necessarily point to advocacy of increased municipal ownership of power companies. Instead, the research indicates that local governments with a publicly owned power company may have important advantages that many may not be recognizing or utilizing.