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Boulder officials say municipalization is not a done deal

The latest skirmish in the municipalization battle between Xcel and the city of Boulder revolves around solar and wind energy programs.

Currently, Xcel offers initiatives like Solar Rebates and Windsource as incentives for customers to use alternative energy sources, partly because Xcel has a state-mandated clean-energy quota to meet over time. Officials say Boulder is one of the biggest users of such programs, but in a recent filing with the Public Utilities Commission (PUC), Xcel is seeking to pull back some of those offerings from Boulder customers, in anticipation of the city municipalizing its electric utility.

Boulder voters approved two measures last fall authorizing an occupation utility tax generating $1.9 million a year for five years so that the city can hire the attorneys, engineers, appraisers and other professionals needed to ascertain the cost of acquiring Xcel’s infrastructure and running a municipal utility. The city plans to spend up to $800,000 a year on law firms alone to determine the cost of condemning the Xcel system and whether the city owes the company any “stranded costs” — infrastructure investments that Xcel has made that would have benefited Boulder customers if the city had renewed its franchise agreement with the utility.

City officials are challenging Xcel’s PUC filing to begin withdrawing alternative energy programs, calling the move premature, even punitive, because the city has not yet decided whether to municipalize. Xcel officials, on the other hand, say they must plan ahead for municipalization and can’t have the rest of their customers subsidize a benefit for Boulder.

“We’re not discriminating against them, we’re ensuring we don’t discriminate against our other customers on their behalf,” says Xcel Regional Vice President Jerome Davis. “We’ve had to make a business decision to move forward.”

Xcel spokesperson Michelle Aguayo says that the company needs to limit those programs now so Xcel doesn’t have to try to recoup its invest ment later, after the city municipalizes. She adds that the city can’t expect the company to not plan ahead for a life without Boulder, especially after the city declined to renew its franchise agreement.

“They can’t have it both ways,” Aguayo says.

Davis adds, “It’s funny how they want their cake and everyone else’s cake too.”

But Jonathan Koehn, the city’s regional sustainability coordinator, argues that Boulder customers are still paying Xcel — and still paying fees to subsidize those clean energy programs — and should only be cut off only if and when Boulder municipalizes. Municipalization is far from a done deal, he says.

“Our position is and continues to be that we are customers of the company until we are no longer customers,” Koehn says, adding that if Xcel reduces its services to the city, “we expect those charges to come off of Boulder customers’ bills.”

He describes Xcel’s move as a bit of a scare tactic intended to make Boulder citizens fear losing benefits if the city municipalizes. Koehn also challenges the suggestion that a municipal utility would not be able to provide the same amount of rebates and incentives for clean energy. The cost model the city ran last year included a good amount of those programs, he says. Koehn adds that a Boulder municipal utility would be more nimble and flexible in how it targets programs to meet the city’s needs and purchases cheaper, cleaner energy like surplus wind-generated power.

Wind farms, Koehn explains, can eventually generate power more inexpensively than coal-fired plants, for example, because once the debt for the construction of the farms is paid off, you don’t pay for operating costs and fuel, just distribution, shaving off the majority of expenses in the long run.

“This is not a five-year planning horizon,” he says. “This is a 100-year planning horizon.”

The city’s energy goals are often at odds with Xcel’s business model, Koehn says, because while the city wants to decrease energy use, the company is in the business of increasing (or at least maintaining) customers’ energy use, because Xcel has to pay off debts on its power plants and pay its stockholders.

“We want to look at this as more of a service rather than a commodity,” he says. “This is a shift in the business model. We’ve been contacted by other cities in Colorado and outside Colorado.”

But the city won’t know whether a municipal utility is sustainable economically until it shells out the millions for the experts to crunch the numbers and jump through the regulatory hoops.

If it’s not financially feasible, and can’t deliver rates that are the same as or lower than Xcel’s, Koehn says, “by the ballot language itself, we can’t move forward.”

Xcel officials say the city was way off on its cost estimates, and that municipalizing will prove to be more expensive than Boulder officials claim.

“We’re going to find out in advance,” Koehn says.


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