Clash of Titans: Boulder vs. Xcel Energy

Former partners head to showdown over 'municipalization'

Phil Carson | Aug 04, 2011

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Here's a sequence of events for readers—and large, investor-owned utilities—to consider. I've placed them in reverse chronological order, for a fresh perspective. I'd like to know how readers add this up. (I acknowledge up-front that the picture here, though it attempts to strike a balance, is far from comprehensive, due to space constraints.) 

Aug. 2, 2011:

Boulder City Council approves language for two Nov. 1 ballot questions regarding the Colorado city's energy future. One asks voters' permission to initiate a municipal utility, breaking away from Xcel Energy. Approval would imbue city council with authority over the new entity. The second ballot question, if approved, would provide the city with bonding powers to raise money to cover the expense of purchasing the local distribution system and meet legal and engineering start-up costs.

Councilman Macon Cowles presses David Miller, the chairman of Boulder Smart Energy Coalition—which claims to be a coalition of residents concerned about the risks of municipalization—on where the group's funds come from and whether it is affiliated with or controlled by Xcel Energy. Miller denies affiliation with Xcel but refuses to disclose the group's source of funds, which have purchased newspaper ads that emphasize the risks.

July 30, 2011:

A consultant hired by Xcel Energy has been making the rounds among city officials and business groups, asserting that Boulder isn't accounting for hundreds of millions of dollars in costs associated with municipalization, according to The Boulder Daily Camera.

Bob Bellemare, of UtiliPoint International, claims that possible costs for municipalization could reach $1.2 billion.

The city says that such calculations are misleading and may not be "genuine," because under state law Xcel does not have to provide details of its systems to Boulder until the latter's voters approve municipalization.

Two areas of contention: Xcel puts "stranded costs" at $335 million; Boulder says that number is zero, because it has publicly explored municipalization since at least 2005 and because the city no longer has a franchise agreement with Xcel. The giant utility said that "separation costs" will cost Boulder $100 million; Boulder's estimate is $15 million.

Boulder has estimated total initial costs at $286 million.

July 29, 2011:

Colorado contributes the biggest slice of Xcel's multi-state earnings base, accounting for 42 percent of profits, according to The Denver Post. New Xcel CEO Ben Fowke tells shareholders that "municipalization would be a bad thing for the citizens," that "they won't vote for municipalization" but if they do "be assured that we will make sure that we will get a fair price" for Xcel assets." "We'll make sure we get the price we are entitled to," Fowkes vows.

July 20, 2011:

Xcel issues a statement to Boulder residents on the cusp of a city council vote on the topic. The first five sentences read: "This evening you will make a decision about Boulder's energy future. The path appears headed towards forming an electric utility through condemnation. We believe this is an expensive and risky path, will take years to complete and will not provide any more renewable energy than what we have offered. We are not interested in selling the system. And we wish to be clear that we disagree with many of the city's assumptions in its feasibility report."

June 14, 2011:

Karl Gerken, manager of facilities engineering for Ball Aerospace & Technologies Corp., a major local employer and manufacturer, says that hard data is needed to determine the merits of municipalization, according to the Boulder County Business Report, which sponsored a panel on the issue.

Jonathan Koehn, Boulder's regional sustainability coordinator, says that city staff and consultant Robertson-Bryan, Inc. have found municipalization legally, technically and financially feasible and can provide local, reliable power at attractive rates.

Craig Eicher, Xcel's local manager for community and local government affairs, says that Boulder will be "hundreds and hundreds of millions of dollars in debt and you don't have a single kilowatt of clean energy."

June 8, 2011:

Boulder's consultant, Robertson-Bryan, Inc., submit its draft feasibility study that finds that creating a municipal utility is "legally, physically and financially feasible and . would be capable of meeting the city's core objectives related to rate stability, reliability and decarbonization."

Nov. 2010:

Boulder residents approve a $4 million stopgap tax to replace lost franchise fees while Boulder explores municipalization. Part of that exploration over the winter of 2010-2011, includes "off ramp" provisions in the event that Boulder finds hurdles to technical, legal or financial feasibility.

Aug. 3, 2010:

Boulder allows Xcel's franchise agreement to lapse.

2010:

Xcel Energy attempts to recover costs of $45 million it sank into SmartGridCity in Boulder from Colorado's 1.4 million ratepayers, citing triple cost overruns on the utility's initial $15 million projection.

2008:

Xcel Energy selects Boulder as the site of a large-scale smart grid project known as SmartGridCity.

Oct. 2005:

Boulder receives a final version of a "Preliminary Municipalization Feasibility Study" from consultant R.W. Beck.

Readers: The theme here may be elusive. Self-determination vs. Big Business? The potentially oxymoronic myth of the community-minded, investor-owned utility? Naïve greens vs. Hard-nosed old hands? Us vs. Them? (Which could well apply to Boulder citizens and Boulder City Council.)

To my mind, the real fallout isn't over the Boulder City Council's tug-of-war with Xcel Energy—it's where does the outcome leave Boulderites and the balance of Xcel's Colorado customer base? What's in it—or not in it—for the ordinary ratepayer who provides demand and revenue in this region?  

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757

 

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Comments

So far we've got...

One vote for municipalization for efficiency's sake and one vote for municipalization for ... entertainment's sake, apparently.

I'm sure there are other takers out there.

Regards, Phil Carson

Self-Deternination?

I'd like to see Bolder bolt from Xcel....for the entertainment value. Bolder is known, arguably, as one of the most "progressive" minded cities in America. I say, go ahead....be your own experiment. Move from "Big Utilty" control to "Local government control" and enjoy the rewards of "self-determination". THEN Boulder can import all the "renewable" electrons it wants....and enjoy the consequences of that as well.

"reverse chronological order"?

It appears they are listed in chronological order. I would call most recent to oldest chronological order not reverse chronological order. I would call oldest to most recent reverse chronological order. Maybe that's just me, I'm just an engineer, but maybe you might want to ask another editor.

About 8 years ago, I left PSCo/Xcel after working for them for 27 years. I worked in Boulder for Public Service Company of Colorado for 2 years and 8 months as a gas and electric distribution engineer about 12 years ago. I can tell you this, based on the corporate attitude when I worked in Boulder for Xcel/PSCo, Boulder would be better served going municipal. There were times when the Boulder Service Center had to make do with rationed electric and gas meters because of stupid accounting and cost cutting measures. They had used up the year's budgeted allocation of meters and it was mid year. So you had to either wait for a meter or trade with another engineer or planner. Ask any of the engineers still there to verify. How much sense does it make to ration your "cash registers' in a business? That's how stupid management became during my tenure with them. From what I here from friends still there, 2011 is not much different than it was then. You probably won't publish this, but that's OK. Better to not confuse people with facts. Have a great day.

Cost control = bad?

I have no idea what happened 12 years ago in Boulder but the notion that costs were under tight control just to annoy engineers and customers seems a bit light on balance. Just sayin....

Cost control = bad?

There is good cost control and then there is stupid cost control. Twelve years ago you could not connect up a customer because you did not have a meter. That is my point that you missed. Maybe you believe not being able to connect new customers because you don't have a meter is good cost control, but I don't. Meters (the cash register in the utility business) were not the only thing needed, but not available, to connect new customers. You might buy one of the engineers or planners from the Boulder Service Center a beer sometime if you want to learn about it; and educate yourself on today's attitudes to see how much has changed. Just sayin back...