Why is Boulder pursuing a partnership with Xcel when residents have repeatedly voted in support of the muni?

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Over the last decade, Boulder residents voted to pursue a municipal electric utility six times: First, in 2011, to authorize a municipal utility and to fund planning for it and to acquire assets; then in 2013 to put a cap on how much debt it could take on to acquire Xcel’s — Boulder’s primary energy provider — assets; in 2014 to allow City Council to meet in executive session to discuss the municipalization effort (known, colloquially, as the muni); in 2015, to extend the tax Boulder assesses on Xcel (which it then passes on to consumers) for its general fund; and in 2017, to again extend and increase the utility tax.

Each vote had a wider margin of victory in support of the muni than those first ballot questions in 2011 (though the last vote was close), even as the City became mired in a long legal battle with Xcel and as the prospect of creating a public utility became murkier.

So the announcement this week that Boulder is entering settlement negotiations with Xcel, which could result in a partnership with the energy company and not a public utility, was surprising.

The potential partnership is particularly curious given Xcel claims it can reach an 80% reduction in carbon emissions by 2030. But Boulder’s climate goals call for 100% renewable energy by 2030. How do those two numbers square?

“They don’t,” says Boulder Mayor Sam Weaver. “If Xcel got 80% emissions reductions, and they continued to be our main supplier, we will miss that goal.”

However, Weaver says a partnership with Xcel, instead of a muni, could allow Boulder to reach its 100% renewable goals, if (and that’s a big if) the company allows Boulder to pursue other clean energy options, like community choice aggregation. That is, the City could procure power from other companies to supplement Xcel’s offerings to meet its goals.

Finding out if Xcel is willing to allow that is part of the discussion, Weaver says — early conversations with Xcel indicate the company may be willing to shift its position on other issues that were nonstarters in years prior, he says — things like allowing microgrids and letting the City have a say in planning the electric grid. Though, to be clear, nothing is guaranteed.

“We are optimistic that we can work with Boulder officials to help the City achieve its unique energy goals, just as we’re successfully helping other communities across Colorado to achieve their own energy goals,” said Alice Jackson, president of Xcel Energy – Colorado, in a statement announcing the discussions.

But where did this conversation even begin?

“It started with Council members,” says Emily Sandoval, communications specialist in the City’s Climate Initiatives Department. Sandoval adds, “This will be the fourth time we’ve gone to the table with Xcel.” 

The conversation started in January, Weaver says, during a lunch meeting and phone call between Jackson, himself and Councilman Bob Yates, wherein the two sides “checked in” due to leadership changes at both Xcel and on the Boulder City Council. That led to five more discussions, in April, and at the end of one of them, Weaver says Jackson asked if Xcel could assure that it would reach its 80% carbon reduction goal by 2030: “Would that be the basis for settlement negotiations?”

Michelle Aguayo, Xcel media relations representative, writes in an email that the company can’t confirm the exact wording of the exchange but that it “can confirm the conversation and scenarios discussed are accurate.”

Yates and Weaver were both “surprised” by the offer, Weaver says, and the mayor relayed this information to City Council, which has since discussed the partnership publicly, and the City has issued a press release announcing the negotiations. The settlement refers to litigation, currently in the appeals process, brought by the City to condemn Xcel’s assets in order to determine how much it would cost to purchase them.

Still, Weaver has concerns about how Xcel will reach an 80% reduction in carbon emissions by 2030. Looking at the company’s resource plan, the City estimates Xcel can get to 55% renewables by 2026.

“That’s the easy part of the transition,” Weaver says.

The hard part is that last 25%, particularly if coal is still in Xcel’s resource plan. Xcel’s Colorado Energy Plan calls for retiring two coal plants by 2026, while adding more wind and solar plants and battery storage.

“Our focus is on Xcel Energy’s commitment to deliver 80% carbon-free electricity to customers by 2030. To achieve this goal, we need to explore all options. That includes the potential for closing coal plants or operating them differently,” Aguayo writes.

And, an 80% reduction in emissions does not necessarily equal Boulder’s climate goal of using only renewables to power the city — for instance, Xcel’s Carbon Reduction Plan calls for natural gas to comprise 21% of its energy portfolio in 2027 (and 19% coal).

In short, the bottom line is Xcel’s goals do not meet Boulder’s goals, and do not abide Boulder voters’ repeated wish to pursue the muni. Weaver says that while both a partnership and the muni “have a chance” to meet Boulder’s emissions goals by 2030, “the muni would have a higher likelihood.”

Any uncertainty in the muni path reaching the 2030 goals lies in the question of how, when and if the City could assume Xcel’s assets. It may take five years, Weaver says. 

“If in 2023 or 2024 we kicked that off, it would be quite clear we could get to 100% renewables by 2030,” Weaver says, adding that there are several companies lined up, who have already responded to the City’s request for pricing, that can promise 100% renewables by 2030. 

However, Weaver adds, “even if we went with Xcel, because there’s a decade [between then and now], we might be able to augment their process through some sort of community aggregation. That way would have the possibility of getting us to 100% renewables.”

Boulder will continue working on the muni even as settlement discussions continue. The work includes finalizing the separation plan from Xcel, getting approvals from federal energy regulators, figuring out acquisition costs and more. And ultimately, any agreement would have to be approved by voters — that is, if City Council and Xcel can agree on a plan that gets Boulder to 80% renewables, residents will decide if all that negotiating was worth anything to them.

“We’d be offering a choice to voters,” Weaver says. “They’ve been consistently behind the muni and this is a chance to check in. It’s a very clear choice that voters will be offered, if we even get there.”

That vote would be in addition to a go/no-go vote to further pursue the muni scheduled for at least 2021.

We’ll see what the voters decide then.