Xcel, city of Boulder disagree on significance of PUC ruling


When it comes to its current plans to create a municipal electric utility, the City of Boulder would prefer that the new utility be allowed to provide electricity to approximately 7,000 Boulder County residents who do not live within city limits. In layman’s terms, this preference is based on the fact that it is more economical to the municipalization process to include all the current users on a particular part of the Xcel-owned system now serving Boulder than to try to break out those customers living outside arbitrary city limits lines on a map from the existing system’s actual electrical routes.

But as of this week, including those 7,000 customers will likely be more difficult.

On Tuesday, Oct. 29, the Public Utilities Commission ruled that for the City of Boulder to include current Xcel customers residing outside its city limits, it would have to show that Xcel is either unable or unwilling to serve those customers. And that’s a tall order.

It would be an understatement to say that Xcel still wants to serve these residents. The company sees the 7,000 outliers as another opportunity to try to thwart the city’s municipalization plans which, if successful, would take Boulder customers away from the publicly traded company, something that could be a blow to the utility giant’s shareholders and future stock price, because Boulder leaving the Xcel system could embolden other cities and towns to do the same.

It is likely that this fear of the slippery slope explains why Xcel has provided $300,000 and polling of specific language for Question 310, a citizens initiative on this year’s ballot that would basically kill Boulder’s current municipalization process. The tricky wording of 310, should it pass, would make it all but impossible for the city to move forward, due to the measure’s requirement for voter approval of specific amounts of debt prior to the city floating bonds. Chicken and egg, cart and horse, however you want to think of it, 310 would mess up the city’s timing on moving forward with its municipalization process, and its backers are well aware of this.

As for the PUC’s Tuesday ruling, Xcel views it as a victory for the company. According to an Oct. 30 report in the Daily Camera, Xcel’s managing attorney for regulatory matters, Paula Connelly, “said the ruling also called into question the city’s analysis of the feasibility of municipalization because all the city’s models assume the city will condemn substations and distribution equipment outside Boulder’s limits and serve those customers.”

But according to Heather Bailey, executive director of energy strategy and electric utility development for the City of Boulder, creating a city-owned electric utility that meets the requirements of the city charter is not dependent upon including those 7,000 people who live in the county. And she disputes that no modeling was ever done that didn’t include the city getting the 7,000.

“Including those 7,000 people was in the models that we presented to council,” says Bailey, “but we always said it was a very small part of the overall customer base.”

Bailey acknowledges that the main importance of the 7,000 has to do with the condemnation process, not their value as paying electric customers in the future. Bailey also says that any claims by Xcel that the PUC ruling somehow threatens the city’s ability to move forward on municipalization is just wrong.

“The PUC confirmed in its ruling that we have the right to create a municipal utility,” she says. “It made several rulings we agree with, and we have 20 days to look at the others and decide if we want to take any further action or get clarification on exactly what they mean.”

Bailey further says that the Tuesday rulings by the PUC don’t have any effect on the city’s ability and desire to move forward in the municipalization process.

An Oct. 29 statement released by City Attorney Tom Carr seems to confirm Bailey’s position. It reads, “Today, the PUC acknowledged that the City of Boulder has authority to condemn facilities outside of the city. The PUC also recognized that joint use of the system may be appropriate. The commission granted only the first three requests for declaratory orders — all of which were issues with which the city agreed. With respect to the final two orders sought by Xcel Energy, the commission directed that there needs to be further proceedings. The city is continuing to evaluate the ruling and explore its options. While the ruling may have some practical and legal implications in terms of the process the city would take to create its own electric utility, the decision affirms the city’s right to municipalize.”

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