A high-powered mom

Bailey brings municipalization experience to Boulder

Jefferson Dodge | Boulder Weekly

Heather Bailey is Boulder’s new czar of municipalization, and she knows a thing or two about regulatory agencies and cities running their own electric utilities.

Much has been made about Bailey being paid $250,000 annually during a two-year contract, which will make her the city’s highest-paid employee.

But she says she is not angling for the more permanent utility manager job if Boulder decides to power itself.

Bailey insists that localizing the city’s electrical utility is the question, not the agenda. She says she has not been given marching orders to find in favor of severing Boulder’s ties to Xcel, the company that has been in a bitter feud with the city over the future of Boulder’s electric utility since before last year’s election season. It was November when, despite opposition heavily funded by Xcel, voters approved a measure allowing the city to spend $1.9 million in a utility occupation tax over two years to explore becoming independent from the energy giant.

But the proposition may be costly, considering that Boulder wants more renewable energy, which generally costs more than traditional sources like Xcel’s coal-fired plants.

Bailey has been brought in to take an impartial look at the prospect, and she has extensive experience with municipal and state utilities in Texas.

Bailey, who was born in Japan because her father was in the military, moved to Austin, Texas, when she was 12. She has an MBA from the University of Texas at Austin, and a bachelor’s degree in marketing from Sam Houston State University in Huntsville, Texas.

She worked for the Public Utilities Commission of Texas, setting up its compliance program beginning in 1980, only a few years after that PUC was formed. Then Bailey worked for the city of San Antonio,where electricity was municipalized. She says that city’s utilities department was distinctive because it was overseen by a largely independent board that oversaw the utilities director.

But when Bailey took a job with the city of Austin’s internal audit department, she gained experience with a new model, one in which the city council had more oversight, since the utilities director reported to the city manager.

Bailey says the municipalization approach that Boulder should adopt — if it adopts one at all — depends on the

character of the city’s population and its government.

“You just have to get a feel for the city and how it operates,” she says.

Bailey also gained experience at the state level, working for the Lower Colorado River Authority (LCRA) of Texas, one of the largest power utilities in the country. This is where she spent the majority of her career, working for an entity that former President Lyndon B. Johnson helped found with a dam project built to power rural Texas.

She started as accounting manager and worked her way up to executive manager of corporate services and deputy chief financial officer.

Bailey continued working for the LCRA even after Texas deregulated its wholesale power market and the LCRA became a transmission system, where she held the title of executive manager of transmission services business management and asset development.

She retired in 2006, and decided to take some time off to be with her two sons, who are now in high school. But after about 10 months, she says, she decided that she was “not a good stay-at-home mom,” so she went back to work, for Navigant Consulting, as director of energy practice.

Bailey says she is passionate about preserving the integrity of the community, and when she starts working for the city on June 7, she will initially spend time learning about Boulder’s citizens and government, as well as Colorado’s rules and regulations when it comes to public utilities.

One question, she says, is to what extent the state’s PUC requires equal services to all, and to what extent utilities can discriminate. (Xcel has threatened to begin curtailing solar and wind incentive programs in anticipation of Boulder’s potential municipalization.)

Regardless of the answer to that question, she says the city has taken the correct tack by creating an independent, objective procedure by which to assess whether municipalization is the desired course.

“Y’all have set this up absolutely right,” she says, citing the city’s two-year process for evaluating the situation.

Bailey emphasizes that her goals include “making sure everybody’s voice gets heard” and adhering to the objectives set by the community.

“You have the opportunity to create the utility of the future, if that is the right answer,” she says.

Bailey acknowledges that while it may be tempting for the city, after spending so much money on the inquiry itself, to move forward with municipalization, Boulder must stick to the goals it sets. And the “off-ramps” that

the city has created will force pauses for self-reflection.

“It helps you stop yourself and do a gut-check,” she says.

Bailey adds that while her options are open, she does not have her sights set on being Boulder’s municipal utility manager, because that would introduce an agenda that compromises the independent and objective nature of the municipalization inquiry.

“I don’t want to come in thinking about that possibility,” she says. “I want to get to the right answer. … I’m not going in with any future intention of anything other than the task at hand.”

The $1.9 million in taxpayer money is being spent primarily on her services and the attorneys who will assess the costs of acquiring Xcel’s infrastructure as well as the company’s investments in the Boulder market, and they are expected to perform a due-diligence evaluation.

“That’s why you bring in someone who’s independent,” Bailey says. “That money will be well-spent if you get to a conclusion that is right for the community.”

One of the main issues is whether it is realistic for the city to expect to pay the same electricity rates as it currently pays Xcel — a prerequisite for it to move forward with municipalization — while significantly increasing its renewable energy sources, which generally cost more. On the one hand, Xcel has economies of scale. On the other, Boulder could have lower overhead.

“That is a very good question,” Bailey says when asked about it.

Finding the answer is why she is getting paid the big bucks.

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