Xcel, city break off talks on new wind-energy deal

Jefferson Dodge | Boulder Weekly

Xcel Energy
has announced that talks with City of Boulder officials about a new franchise
agreement have broken off because of a disagreement about what questions to put
on the ballot.

And city officials are recommending that City Council — and voters — give their blessing to a municipalization effort.

spokesperson Michelle Aguayo told Boulder Weekly that city officials did not
want to go along with the company’s approach of having one ballot question on a
traditional 20-year franchise agreement with Xcel, and another question on an
agreement including the wind-energy package proposed by the company last month.
A third question could have asked voters whether they prefer the
municipalization approach.

“We feel
strongly that it is important to provide Boulder citizens with all options
available and, pursuant to the city charter, let the voters decide,” Xcel
officials said in a prepared statement. “Unfortunately, the city does not want
to leave the decision to its citizens. It wants to limit the options available
to voters. That is why the wind proposal to provide 90 percent renewable energy
will, unfortunately, not be provided to voters. That is the source of our
disappointment. Xcel Energy wants voters to decide, not us or the city.”

In its own
statement, city officials said Xcel “refused to drop a condition that City
Council agree to put a 20-year franchise on the ballot in November, without a
corresponding wind agreement.”

They said city staff had been working with Xcel to develop a proposal for city
council that could have included the franchise — only if it were paired with
the increase in renewable energy associated with the possible wind agreement.

City staff said they advised Xcel “multiple times” that council support for a
standalone franchise was unlikely. During each conversation, Xcel
representatives indicated they wanted to keep negotiating and take that issue
“under advisement” later, according to the city’s release. On Tuesday, Xcel officials
said they would not agree to a wind deal at all if the standalone franchise was
not a part of the proposal to council, according to the release.

“The city’s energy future goals include stable rates, more local control and a
decreased carbon footprint,” the release says. “While the franchise paired with
significantly increased renewable wind energy would have moved toward some of
these goals, the franchise by itself does not.  

“The city spent
most of 2010 discussing the possibility of a standalone franchise with Xcel
Energy,” the release continues. “City Council weighed many factors, including
the rapidly changing energy industry, the emergence of innovative technology
and Boulder’s steadfast commitment to lowering greenhouse gas emissions. After
careful deliberations, council decided last summer that 20 years was simply too
long to commit to a coal-dependent, investor-owned utility and rejected this

City officials say they had concerns about the wind agreement as well,
including “the level of financial risk the city would assume in this venture. …
Many of the questions were addressed; however, Xcel’s insistence on a
standalone franchise ballot option has brought the discussions to an end.”

“The City of Boulder understands why Xcel Energy wants a 20-year franchise
agreement, and it is possible that council and voters might have approved that,
if such an agreement came with a well-negotiated wind purchase plan,” said City
Manager Jane Brautigam said in the release. “But we know that a franchise by
itself would tie the city to a long-term energy future that remains largely
dependent on investments in coal and a business model that prevents local
communities from making decisions about their own energy futures. This runs
contrary to the goals Boulder wants to achieve.”

“We spent many hours at the table, and it was clear that all the parties were
committed to trying to reach a mutually acceptable agreement,” City Attorney
Tom Carr said in the release. “I thank everyone for their participation, but
sometimes there are problems for which there are no solutions. This appears to
be an obstacle we could not overcome.”

Carr said he will provide a written update on the status of the wind
negotiations as part of a memo that council members will receive prior to their
July 19 meeting. He will also give a brief verbal presentation at that meeting,
but the wind proposal will not be a part of that hearing.

The full memo to council will be available at www.boulderenergyfuture.com.

“The city’s
original energy future goal was more renewable energy at an affordable cost,”
Xcel officials said in its news release. “Our wind proposal would have achieved
that, with 90 percent renewables in nine years at an estimated cost of less
than $4 more per month for the average residential customer.

Xcel Managing Attorney Paula Connelly told Boulder Weekly Thursday that it would have unfairly disadvantaged Xcel to have only the wind-energy proposal and the municipalization option on the ballot, because municipalization was being portrayed as a money-saver, which Xcel disputes. Connelly says the city’s municipalization study reflects lower rates because it does not take into account adding any more renewable energy, which is costlier than fossil fuels. Comparing the traditional franchise agreement to one that has the wind-energy package is apples to apples, she says, while comparing the wind-energy package to municipalization is apples to oranges. People voting with their pocketbooks would have chosen municipalization because it is being portrayed as providing lower rates.

“It unfairly stacks the decks against us,” Connelly says.

She says Xcel would have campaigned for the two Xcel options if they had ended up on the ballot. The company’s preferred option was the wind-energy package, Connelly says, even though “there was no profit in the wind-energy proposal for Xcel at all.”

Still, Xcel has not ruled out the possibility of returning to the table, depending on what happens at the council’s July 19 meeting.

“We remain hopeful that city council will change its mind,” Connelly says. “We’ll know Tuesday night.”

Boulder Mayor Susan Osborne told Boulder Weekly that city officials made it “crystal clear” to Xcel officials last month that putting a conventional 20-year franchise agreement without the wind energy was not an option.

“They knew that,” she says. “It feels to me that we’ve been on kind of a rat race. They knew this was a condition in early June. I don’t understand it. I’m just quite disgusted, actually, and I think it’s a shame.”

On Friday, the city issued a news release announcing that City Manager Jane Brautigam is recommending that City Council urge voters to approve a plan for municipalization. According to the release, there are several “off-ramps” in the process that would allow city officials to stop municipalization if costs prove too high or unacceptable rate increases would result.