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Xcel’s Municipalization Offer: Heads They Win, Tails We Lose


By

Two weeks ago, Xcel made a set of 11th hour electricity provision offers to Boulder, a so-called “partnership,” and a buy-out option. Readers should understand that Xcel’s offers are not what the city asked for; they are only what Xcel is willing to proffer.  These offers are lousy deals for Boulder and future generations (see the Sierra Club letter to City Council http://www.sierraclub.org/rocky-mountain-chapter/indian-peaks/Politics-and-Issues).

Here’s why:

  • Xcel is committed to coal: Almost 70% of Xcel’s electricity generation is from fossil fuels and they don’t plan to phase out large coal-fired generation for over another half century (2070).  In the face of climate change and for the sake of future generations, it is inexcusable to continue delaying action against climate change and conversion of our electricity generation to renewable energy sources.
  • Premium for renewables: The “partnership” offers no commitments to achieve Boulder’s goals for decarbonizing our electricity supply. It does, however, guarantee that we will pay a premium for renewable energy even though the cost of renewables is less than Xcel’s cost of coal-generated electricity and continues to drop every year.
  • Deja vu all over again:  Xcel’s offer looks effectively like the franchise Boulder chose not to renew in 2010 because Xcel was not interested in working with Boulder to decarbonize its electricity supply. And Xcel’s offer handcuffs us to them for another 20 years. A generation is a long time to be precluded from availing ourselves of innovations in state and federal legislation and in the energy market.
  • It literally sucks:  Xcel sucks approximately $34 million dollars of profit from Boulder each year, money better spent on modernizing the grid, converting generation to renewable energy and money better kept here at home circulating through our local economy.
  • Inflated buyout: The buyout option obligates Boulder to pay 180% of value of the distribution system, inflated separation costs, and an illegal requirement to compensate for lost revenues. With its incredibly high cost, it is not a credible option.

Photo credit: http://s382.photobucket.com/user/Billyeadon/library/

So why is Xcel proposing this 11th hour franchise? It has the smell of fear. Xcel demands that City Council suspend the Public Utilities Commission (PUC) process by April 19th if Council decides to pursue Xcel’s offers. But the PUC has already affirmed Boulder’s constitutional right to form a city owned utility. The only remaining questions are how we separate from Xcel, the cost, and the timeline.  And the PUC will begin considering Boulder’s case to separate from Xcel on April 26th. If the PUC accepts Boulder’s separation plan, it starts a chain of events that Xcel mortally fears. Many other communities with similar goals to decarbonize in the face of climate change are watching Boulder’s case and if we are successful, that begins the unraveling of Xcel’s investor owned monopoly and renders their business model obsolete. Xcel will also lose that annual $34 million of profit from Boulder.

City Council should reject Xcel’s offers and continue with the PUC process. Whereas Xcel has everything to lose, Boulder has nothing has nothing to lose. Even if the PUC renders an unfavorable decision for Boulder, there is no reason, or rush, to enter into a “partnership” with Xcel. Boulder can continue in its current state with Xcel (out of franchise) indefinitely and reserve the flexibility to take advantage of innovations and evolutions in the electricity world.  The legislature may put in place the rules needed to create a true path for municipalization.  Colorado may shift to being in a Regional Transmission Organization or “RTO.” We may end up with a competitive utility situation like in Texas, with opportunities for customer choice.  Suspending the PUC process limits our options for an entire generation.

Citizens of Boulder, City Council needs to hear that you support Boulder continuing with our efforts to ensure a clean energy future for future generations. Come to the Council meeting on Monday, April 17th at 6 PM and express your support.  And write City Council at council@bouldercolorado.gov .

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