The municipalization initiative added to the ballot by City Council vote on Aug. 16 puts in the hands of the people what Xcel and the city of Boulder haven’t been able to settle with gloves on or off. Voters won’t exactly resolve the question of whether Boulder drops Xcel Energy and creates its own utility company — the initiative will simply let Boulder begin negotiations with Xcel and the Federal Energy Regulatory Commission about feasibility and costs, a process likely to include litigation.
Voters will decide if the city should move forward, but based on what criteria? The fact is, neither side, City of Boulder or Xcel, can agree on much — not what the Xcel system actually costs or even what the disagreement is about.
Before Xcel’s 20-year franchise agreement with Boulder came to an end in August 2010, the two parties were at the negotiating table.
“We asked the utility to work with us as a partner,” says Jonathan Koehn, regional sustainability coordinator for the City of Boulder. “That was a brand new way for an investor-owned utility and community to work together. We continued to work toward a partnership, but at the end of the day, Xcel did not put forth a proposal last year, so the city council said, ‘Let’s look at other options.’” Koehn says that in the end, the city wanted more local control over rates, decisions and, yes, renewable programs.
Boulder and Xcel can agree on one thing: Neither has the right figures.
“There will be a lot of wrangling over price,” says Michelle Aguayo, a spokesperson for Xcel Energy. “We know what we feel our system is valued at and that there will be a lot of litigation that will go into it because Boulder will have an idea of what they think the system is worth.”
And there are cost models floating around out there.
Boulder, for one, did an analysis of its own, and concluded that the cost of taking over Xcel’s transmission lines would be, essentially, paid for from revenue the city would generate from the utility without any tax hikes.
One price of the takeover floating around is $622 million, which includes Xcel’s figure of $335.7 million in stranded costs (i.e. investments the utility has made and lost revenue), a number that the city doesn’t think is applicable due to the termination of Xcel’s franchise agreement with Boulder.
If Xcel’s stranded costs are included in the final bill, Boulder will likely have to issue bonds.
Another cost model was done by UtiliPoint, an independent research firm, on behalf of the Boulder Smart Energy Coalition, which is, according to its website, a group of citizens who are concerned about the risks and costs associated with municipalization.
The report not only corroborates Xcel’s stranded cost figure, but values SmartGridCity at $44.5 million.
That’s a price tag $44.5 million above what the Boulder report says it’s worth.
UtiliPoint is an independent third party, but the company’s U.S. client list, posted on its website, is exclusively made up of major utilities, and the Boulder Smart Energy Coalition’s concerned citizens will receive financial support from Xcel in order to communicate to voters, according to an Aug.19 press release from Xcel.
The city doesn’t have as much ammo for the communication fight.
“We’re not actually allowed to promote the measure,” says Koehn. “We can only give basic information or it’s considered campaigning for an issue.”
Because the vote in November could benefit the city, employees can’t be public advocates for the measure.
So the question is, what can voters base their decisions on?
According to Colorado Solar Energy Industry Association’s Executive Director Neal Lurie, voters should simply assess how they feel about Xcel’s services in the past.
His organization, while it hasn’t taken an official stance, represents solar installers in the state and will undoubtedly be affected by a new utility and new renewable energy incentive programs replacing old, established ones.
“If organizations aren’t meeting customers’ needs, then those customers have the right to look at other options,” he says.
Theo Romeo is the editor of Cleanenergyauthority.com.