The Boulder City Council will decide the fate of Boulder’s relationship with energy provider Xcel Energy on Tuesday, August 3. That’s when the City Council will choose whether to a) put the Xcel franchise on the November ballot, possibly ensuring another 20-year, exclusive commitment to the investor-owned utility, or b) not put it on the ballot, and either negotiating a more satisfactory deal with Xcel or pursuing municipalization, which would result in complete independence from Xcel. City staff have recommended the latter course. According to the City’s website:
The current franchise agreement was set to expire Aug. 3, and has been extended by Xcel through Dec. 31, 2010. The agreement gives the utility access to the city’s streets, alleys and other rights-of-way for the purpose of providing gas and electricity to Boulder consumers. In exchange for the rights-of-way, Xcel pays $3.9 million to the city.
Whether the city enters into a new franchise or not, Xcel Energy is required to continue to provide gas and electricity to Boulder customers. The city manager’s recommendation to go out of franchise will have no impact on the energy services provided by Xcel. However, the decision may result in a loss of $3.9 million to the city’s General Fund.
Without a franchise agreement, the utility will no longer be required to collect a 3 percent franchise fee from its customers. The money is used to help pay for core services, including police, fire, libraries, parks, human services and public works.
Brautigam said the franchise revenue could be replaced with a utility occupation tax on Xcel if council supports this option and voters approve it in November.
Brautigam is recommending that council place a five-year occupation tax on Xcel on the ballot for voter consideration on Nov. 2. The revenue measure is not a new tax on voters. The tax is on Xcel and replaces the franchise fee. The utility will likely pass the cost onto ratepayers as it does with the current franchise fee.
The council will debate whether to put the 20-year franchise agreement on the ballot at their August 3 meeting. Though a City survey showed that voters are lukewarm to the franchise agreement, experience in other communities (e.g. Winter Park, Florida and Marin County, California) has shown that utilities can spend millions of rate-payer dollars and use questionable tactics fighting to protect their turf. Not putting the franchise on the ballot means, among many other things, that Boulder voters will not be subjected to that kind of campaign.
Indications are that the vote could go 6-2 against putting the franchise on the ballot, with Council members Ken Wilson and Suzy Ageton expected to support putting the item on the ballot. Council member George Karakehian is scheduled to be absent. Of course, all bets are off if Xcel comes up with a last minute, irresistible offer. Several years ago, when the City was contemplating municipalization, Xcel held out the SmartGrid carrot and the City bit. Municipalization was dropped. Since that time, SmartGrid has been something of a disappointment, costing more than expected and delivering less.
What might it be this time? Tune in on Tuesday to see.
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