Today's local governments seeking involvement in the electricity sector have several options.¹⁴ One is outright municipalization of electric service. More than 1,000 cities and towns in 30 states still hold franchise contracts with an existing monopoly service provider.15 Eleven states allow local governments substantial franchising powers for electricity service even though contracts are not currently in use.16 (The remaining nine states have rescinded local franchising powers and granted them to state governments.) Local governments in the first, and perhaps the second, group of states might attempt to award the franchise for electricity service to themselves. However, no such effort has yet succeeded. Intense opposition from incumbent private power suppliers has helped stall municipalization movements in Chicago, Albuquerque, Las Cruces and Toledo.17 On the other hand, local governments may find - as Barnstable Country, Massachusetts found (see below) - that their dormant franchise rights provide a solid legal basis and strategic lever with which to pursue aggregation.

A second option is formation of a municipal utility that owns little physical equipment, perhaps only the household meters. Such a utility is often called a "muni-lite." Most notoriously, the City of Palm Springs, California argued that a muni-lite utility would be eligible to purchase wholesale power from distant providers, and could use the open transmission rules of the Federal Energy Regulatory Commission (FERC) to force the incumbent utility to deliver the power over its own lines. Subsequently, however, the FERC ruled that Palm Springs did not own enough of the distribution facilities to qualify as a wholesale customer, perhaps blocking the muni-lite option for the foreseeable future.18

However, to get the most out of the emerging competitive environment, municipalities need not own any physical equipment. In fact, they need not even aspire to become utilities themselves - rather, they can become aggregators on behalf of their citizens. If local governments operate in states where they maintain significant franchise rights, aggregation becomes an attractive alternative to full-scale municipalization. Significantly, after Palm Springs failed in its attempt to win FERC approval of its muni-lite strategy, it switched gears and entered into a voluntary arrangement with a subsidiary of Portland General Electric to be Palm Springs' incumbent utility - in effect, becoming an aggregated municipal load.

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