As the Boulder City Council considers the merits of municipalization and Boulder’s carbon reduction goals, it is essential to recognize that there are opportunities and risks with EITHER path going forward—establishing a muni or establishing a deal with Xcel.With all of Xcel’s major coal suppliers now in Chapter 11 bankruptcy, with Xcel’s failure to consider even the possibility that the US coal industry won’t rebound, and with the potential for utility grid defection and load defection as documented by The Rocky Mountain Institute, there is clearly a risk with the Xcel path of tying Boulder to a sinking ship. Grid defection occurs when consumers have other options for power that don’t make them dependent on the grid. Load defection occurs when consumers shift their energy load from utility-delivered electricity to their own self-generated and stored power.
The risks of grid and load defection are underscored by the recent report from Lawrence Berkeley National Laboratories showing the continuation of dramatic declines in the prices for wind and solar electricity.
For solar, the 2014 average contract price was 5¢ per kWh. For 2015, 4¢ per kWh, a 20% reduction.
For wind, the 2014 average contract price was 2.4¢ per kWh. For 2015, 2.0¢ per kWh, a 16% reduction.
Although Xcel has made some advances in acquiring wind and solar, it still has major commitments to coal, and may not be agile enough to keep up with changing market conditions. Xcel’s customers will be on the hook for costs from rising fossil prices and/or the collapse of the fuel supply. A municipal utility, owning no generation assets itself, and able to lock-in long term low prices with power purchase agreements of renewable energy, would be insulated from those risks.