Mayor Susan Osborne and Deputy Mayor Ken Wilson

Editor’s note: This debate between the Mayor and Deputy Mayor first appeared in a series of emails among University Hill neighbors, of which both are members, on their list serve. Emails, authored separately by the Mayor and Deputy Mayor, have been reformatted here to facilitate comparison. — Mary Young.

Introductory Remarks from the Mayor

In the past year we have gone as far as we can go in our studies of municipalization. The next step is to determine actual costs and economic feasibility.  There is a clear process to do this, although it will take time and money. Whether or not to go forward to determine feasibility is the question before our community this fall.

I strongly support taking this next step and will vote yes on 2B and 2C. No expert, no consultant can tell us today the actual cost to municipalize; the estimates of costs from the most experienced people in the country vary widely. Once the actual costs are known, unequivocal language in the ballot issue stops the sale of bonds if not economically feasible.

There is a world-wide movement going on as cities and countries innovate to reduce their carbon impact. We can look to Germany and Denmark, or to Austin and Marin County in the United States, for examples of approaches. Municipalization, I believe, is our surest way to be a leader in this movement. Below are my top ten reasons for a municipal utility.

Introductory Remarks from the Deputy Mayor

I would like to offer some counterpoint to Mayor Osborne’s well written points on municipalization. This is a debate (and vote) where good people have different opinions. We all have the same goals – more renewable energy and a smaller carbon footprint for Boulder and beyond. How we get there is the issue. As an electrical engineer with 35 years of experience in the utility industry, I am convinced that if we vote to form a municipal electric utility it will not bring about what people are dreaming.

Top Ten Reasons to Municipalize (or Not)

1. Boulder has the legal authority under the Colorado Constitution and the city charter to municipalize utility services in the city.

Mayor: Every twenty years Boulder voters get to decide whether or not to sign a new long-term franchise agreement with Xcel Energy, a regulated monopoly. That time is now and, after an intensive year of work, city studies and analysis show that creation of a municipal utility may be financially feasible.  The current ballot measure will allow us to get firm numbers on the cost to acquire the local distribution system, as well as a determination of other costs. At any time during the process, Boulder could decide not to proceed with creating a local utility if creating a utility turned out to be too costly.

Twenty-nine Colorado towns and cities, including neighbors Longmont, Lyons, Loveland, Fort Collins and Estes Park, run successful municipal utilities. Boulder certainly could, too.

Deputy Mayor: It is true that many cities in Colorado have municipal power utilities. However, none of them have municipalized in at least 40 years. Ft. Collins formed its municipal power utility 75 years ago. None of the 29 Colorado municipal power utilities has a debt load associated with acquiring their distribution grid. They make capital investments in modernizing their grids, as we would need to do. But if you overlay on Ft. Collins or the other municipal power utilities the kind of debt load we will take on, their utility would be way under water. A friend of mine is a council member in Ft. Collins. He said at a party last week: “Why do you want to form a muni? They aren’t that great.” He is also a professor in the engineering department at CSU.

2. Municipalization will allow decisions about Boulder’s fuel mix to be made here in Boulder based on the values of Boulder residents and businesses.

Mayor: Decisions are currently made by the Colorado Public Utilities Commission (PUC). This regulatory reality and the business reality of an investor-owned utility based in Minneapolis hamstring Boulder’s efforts to reduce our carbon footprint, localize our power supply and develop our own initiatives. A municipal utility, without the constraints of either the PUC or the driving need for investor profit, can operate as a service focused on providing direct benefit to its customers.

Deputy Mayor: It is quite true that if we were a muni we could make our own decisions on fuel mix. Xcel has a state mandated (and Xcel supported) 30% Renewable Energy Standard (RES). Ft. Collins is struggling to find a way to get to a 10% RES. It’s all about money. We would be a broke municipal power utility for the first ten years with a huge debt load for 30 years. We simply wouldn’t have the money to fund large renewable energy projects or to purchase more costly renewable energy.

3. Municipalization supports innovation and our home-grown energy businesses.

Mayor:In the past decade, Boulder has attracted an array of clean tech businesses. A local utility would have the opportunity to tap into the wealth of knowledge and cutting edge products and services that are now being developed in our town. The enthusiastic support from many clean tech Boulder businesses for municipalization has been important to our effort.

Deputy Mayor: I have evaluated many cities with municipal power utilities. None of them have any more innovation in green energy than Boulder. Ft. Collins for example. They have some great companies in smart grid and renewables, but so do we. Show me an example where a city with a muni is way ahead of Boulder. Another related issue: It is true that Xcel recently reduced rebates for Solar Rewards that caused rooftop solar companies to cut staff. Would the city be able to sustain higher rebates than Xcel when it is a muni? I proposed that instead of fighting Xcel with additional tax money (Ballot Issue 2B) we use the money to increase rebates. Unfortunately that option is not on the table now.

4. Municipalization will save money on some basic utility services.

Mayor: For example, Boulder is in the unenviable position of paying for the electricity costs for the city’s street lights, but can neither control the type of fixture used nor the maintenance of the lights. This profit center for the utility increases costs to the city. As another example, during the negotiations for the 1990 franchise Boulder pushed for the establishment of a fund to bury overhead power lines. Such a fund became part of our franchise and all other Xcel franchises in Colorado. While this was a step forward, Xcel retained the right to use its own contractors, creating another profit center at local government cost.

Deputy Mayor: The model that city consultants have created, which shows us paying less for electricity than we currently do is very optimistic and highly unlikely. It is grossly underestimating acquisition and separation costs and is optimistic on operations costs. Controlling our costs for street lighting would be good, but will have associated costs for a muni. Burying power lines is expensive. It is true that Xcel does it at high cost, but they were giving us $1 million per year for free when we were under franchise. A city muni would need to replace that money.

5. Municipalization will lead to a cleaner and more renewable energy mix.

Mayor: One fact is certain – Xcel, regardless of the renewables it adds to its system, is inextricably tied to coal for its base power. Xcel’s recent billion dollar investment in a new coal-fired plant in Pueblo indicates that Xcel will be burning coal for decades into the future.  As a municipal power utility, Boulder, taking cost and reliability as considerations, would be able to choose its fuel mix. By tapping the wholesale electricity market, Boulder will benefit from highly competitive energy prices, while choosing fuel sources that reduce carbon emissions.

Deputy Mayor: There is absolutely no guarantee that municipalization will lead to more renewable energy for the city. Again, it’s all about money. The models that advocacy groups have created that show high levels of renewables are experimental and have never been used to provide power to even a modest sized city. Ft. Collins, Longmont and other Colorado municipal power utilities are even heavier into cheap coal than Xcel. It is unfortunate, but true that while new wind generation is cheaper than new coal generation, new wind is more expensive than existing coal generation buy quite a bit. I am skeptical that a new municipal utility, with no transmission and no generation of its own, could buy a cleaner mix at anywhere near the same price. If we had formed one 75 years ago, this would be a great discussion and we could see if we could do that. I don’t think we could even attempt it for a decade with a start up municipal power utility.

6. Municipalization will eventually allow for the full development of local energy resources.

Mayor: As long as Boulder is an investor-owned utility customer, any local energy production is required to be sold to Xcel at wholesale rates that is then sold to others at retail rates by the company. Individuals and businesses can use energy produced on site, but any surplus energy is bought by the utility at wholesale rates. This sort of purchasing scheme makes sense for a profit-making business, but is a strong disincentive for local distributed energy production. A municipal utility, with a strong focus on local production, would be free to develop pricing incentives.

Deputy Mayor: I would love to see the city develop more local energy resources. We have good solar, indifferent wind and maybe other resources that could be considered. I work on smart grid projects because smart grids are the way we can integrate more local renewables in the future. Municipalization will not lead to more development of local resources in the short run. If we are paying off a huge debt to acquire Xcel’s grid, how can we invest in local renewables?

7. Municipalization could lead to the optimization of the smart grid.

Mayor:It remains to be seen whether Boulder would purchase the smart grid system installed by Xcel, or look for a more current technology. In any case, a local utility would be focused on serving its customers and supporting demand side management programs with customer monitoring devices – currently a missed opportunity with the existing system.

Deputy Mayor: Xcel’s SmartGrid City is providing increased reliability to Boulder. The IBM smart city analysis said this in detail. If we municipalize, SmartGrid City will be broken because it depends on Xcel’s back office systems – which we would not and could not acquire. It would take us many years to re-create the current smart grid or build another one. They are expensive and not easy to implement.

8. Municipalization plays to Boulder’s strength in innovation.

Mayor:While maintaining a AAA bond rating, Boulder has a history of bold and innovative actions. Whether it’s pioneering circulator shuttles, being the first in the state to use tax increment financing to redevelop an aging shopping center, building a clean, green, high- head hydroelectric system, imagining a new neighborhood on the site of a defunct drive-in theater, or figuring out how to build a remarkable and trend setting open space system, this community has had the creativity and will to shape its future. Each example has involved controversy, risk and a financial commitment. Each example has yielded positive community results.

Deputy Mayor: My fear is that if we vote to municipalize it will put a chill on innovative businesses in Boulder. There will be a period of 5 to 7 years where we are fighting Xcel in court over acquiring their assets. Uncertainty is bad for businesses. Will the rates go up? Will reliability go down? No one will know for 5 to 7 years.

9. Municipalization is the only path to meeting our Kyoto carbon reduction goal.

Mayor: While Boulder businesses and citizens are making heroic efforts to reduce energy use, it has become clear that we will only reach our Kyoto carbon reduction goal by fundamentally changing our energy supply mix – in addition to reducing consumption through efficiency and conservation. The path toward a more localized and clean energy supply can only be achieved through municipalization.

Deputy Mayor: Municipalization is not the only path to meet our Kyoto goals. Kyoto goals are pretty much old hat anyway. We have higher goals at the state level now. I want to see us work with Denver, Aurora and other cities to move the whole state forward. Municipalizing will take us out of the state discussion on renewable energy.

10. Municipalization is an investment in Boulder’s future, a legacy project.

Mayor: While there are unknowns about the costs to municipalize, there should be no doubt that if the effort proves feasible in the present, future generations will reap the benefit. There will come a point when the acquisition bonds are repaid and the city will be its own master in regard to our energy fuel mix and tailored programs to increase reliability, lower cost, promote renewables and support local green businesses.

Deputy Mayor: Investment in Boulder’s Future – a legacy project? As an engineer I feel obligated to tell people that I am convinced that going down the municipalization path is a train wreck. It would be a legacy of a very bad decision. If I thought otherwise, I would be an advocate rather than a skeptic.

Read the entire article at The Colorado Independent:  Dems blast bill that would make dramatic changes to Governor’s Energy Office.

Read the entire article at SustainableCityNetwork.com: Program Energy Retrofit Program Goes Statewide

Paper Bags, 2007 60x80" Depicts 1.14 million brown paper supermarket bags, the number used in the US every hour.

In Edward Tufte’s book, Envisioning Information, ideas are laid out about how to communicate information in “flatland” and escape the inherent two dimensional limitation of paper and computer screens. Tufte also warns against using “chartjunk” a term he himself coined to mean “data presentations that seek to attract and divert attention by means of display apparatus and ornament.” In other words, respect and do not manipulate the viewer.

The exhibit of works by Seattle artist Chris Jordan, currently at the University of Colorado Natural History Museum’s BioLounge, will stun you with statistics presented in what seems art founded in the concepts that Tufte outlines in his book. “Running the Numbers: Portraits of Mass Consumption” (Jan 10 – April 30, 2011) is important because we seldom think about, much less grasp the environmental effect of our collective quotidian habits.  How many brown paper bags does the US use in one hour? How much plastic cup waste is generated by airlines every six hours? How many aluminum cans does the US use every 30 seconds? These questions and more are answered in a way that, with any hope, will inspire self-reflection with another question: What can I do to stop the waste?

Boulder city ballot issue 2B is a key that opens the door for Boulder citizens to take control of our energy future.

Simply put, 2B replaces the franchise fee we all pay on our Xcel bills with a Utility Occupation Tax— same amount, different name, no increase.

The money that Xcel will collect – whether called a “franchise fee” or “occupation tax -protects funding for essential City services, such as fire, police, social services, libraries, parks, and rec centers.

What lies behind the door that 2B opens? 2B gives time for citizens and experts to negotiate with experienced energy companies and service providers, including Xcel, for a future of more renewable energy at reasonable rates and with high reliability.

This future almost certainly can include much more renewable energy than is being considered now. These independent energy companies mentioned above are already coming to Boulder and spending money to study our electricity system. These companies are helping us answer questions like:

• “Is 50% renewable energy by 2015 possible while protecting rates?”
• “Can we do more renewables by 2020?”

The City Council decided this summer not to support renewal of Xcel’s exclusive 20-year franchise/contract that expires in January. A 20 year franchise with Xcel is simply too long. The energy field is changing too fast to sign a 20-year commitment with a company whose energy comes mostly from fossil fuels. 2B protects city revenue in case Xcel chooses to stop collecting and paying the franchise fee.

2B will not require Boulder citizens to pay twice, because it does not take effect if Xcel continues to collect and remit the franchise fee to the City.

2B is limited to a five-year term. This allows enough time for the city to consider and implement all of our options.

Finally, Boulder voters will make a final decision about our energy future. In the interim, Xcel is required to continue delivering electricity and natural gas to its Boulder customers— same service, same rates, same rebates.

To summarize:

• 2B replaces an existing fee we all pay.
• 2B does not raise rates.
• 2B is the key that opens the door to a much more renewable energy future.

Supporting 2B will keep Boulder in the forefront of healthy communities and energy innovation.

Come to a fabulous party and support Boulder’s next step for a cleaner energy future!  RenewablesYes.org is hosting a 2B kickoff party this Friday, September 17th, from 5-7 p.m.  at the Rib House, 1801 13th Street in Boulder.  We’ll feature music by Terra Gatos,  a jazz quintet.  Light appetizers will be provided; a $20 donation is suggested.

We’re also looking for volunteers to help with yard signs and distributing literature.  Our beautiful signs are ready to go,  so let us know if you would like a sign for your yard or for a couple of your friends.  Just email me at rutheb at hotmail.com.

Feel free to forward this to friends.  Here’s the party flyer.

Hope to see you Friday!

California has always been ahead of the curve when it comes to renewable power, and the state’s clean energy business is flourishing. One of the first large-scale wind farms in the country was built just outside the Bay Area at the Altamont Pass, and this year, California regulators are reviewing twice as many renewable power contracts as last year.

More of those projects are coming online, including a 16-acre solar farm outside of Sacramento a few weeks ago.  The reason for this boom has to do with ambitious clean energy goals the state announced in 2002. But reaching those goals is proving to be a challenge.

Read the entire article at NPR:  Calif. Leads In Clean Energy, But Challenges Loom

On Tuesday, after much deliberation, City Council voted not to place the Xcel Energy franchise on November’s ballot. The council met to discuss both the franchise itself and the city’s options to put one of three types of utility taxes on the ballot. Though the question of the franchise was resolved, the issue of the “occupational tax” will be postponed to a second reading on Aug 17.

As an issue so integral to Boulder’s energy future, the public hearing was saturated with high tensions and aggressive opinions. Residents and demonstrators from a proceeding protest gathered in the audience decked with yellow shirts calling for council to keep Boulder’s options open. The council members later noted that the force of opposition encountered at the public hearing was “a well orchestrated message.”

Read the entire article in the New Era News:  Xcel Energy: City Council Rejects Franchise | New Era News.

photo courtesy Roger Wolvington

As Boulder considers the Xcel franchise agreement it is important to look at their past record and attitude. Consider Boulder’s Carbon Action Program. While Xcel offers a range of energy efficiency programs they are primarily concerned with the continued operation of their coal fired power plants. This is made clear by their policy regarding outdoor lighting. Xcel does not offer rebates for energy efficient outdoor lighting because these lights are on at night. While it is clear that we should be doing all we can to reduce carbon emissions at night as well as in the day time it is in the financial interests of the operator of a coal fired power plant to encourage wasteful energy practices especially at night, Coal power plants cannot be turned off when there is reduced energy use so utilities encourage wasteful energy habits especially at night. Xcel is not going to be a proactive partner in the effort to reform our energy use patterns.

Promises

When Boulder first began to examine the question of the municipalization of our electric energy system Xcel offered a very tempting prize. Xcel would make Boulder Smart Grid City. They were going to spend $100 million making Boulder the showcase of the nation in smart energy use and the development of infrastructure for the introduction of electric vehicles. The use of electric vehicles is crucial for the reduction of our carbon footprint. An electric vehicle can be up to 10 times as efficient as a gasoline powered vehicle and if it is recharged with wind power or solar energy it is a zero emission option for personal mobility. Smart grid allows for several improvements that will help with the transition to clean electric transportation including time of use charging, power tagging and vehicle-to-grid storage of renewable energy.

A Missed Opportunity

Recently representatives of the Chinese car manufacturer BYD were in Boulder. Warren Buffet is a partner in this cleantech company. BYD indicated that if Boulder had an aggressive smart grid program they would be proactive partners in showcasing the benefits of electric vehicles. Unfortunately Xcel’s Smart Grid program has been a bust. Not only have they failed to implement the technology, they spent only $40 million – not the $100 million they promised – and they are trying to get the PUC to let them pass those costs back to their customers in Boulder. Xcel has cost Boulder a key opportunity in reducing our carbon use.

Bad Attitude

Utilities encourage the growth of energy use over efficiency. In a recent article by the Rocky Mountain Institute it was pointed out that if all the utilities in the country were to simply adopt the efficiency standards of California it would reduce our nation’s coal fired power use, the major contributor to our carbon footprint, by 60%. A recent article in the Camera by Steve Pomerance shows that there is a level of corporate arrogance that is unacceptable in any business, much less a utility, that is granted a monopoly. Their inside joke is that since they get a guaranteed return on their investments and are given guaranteed long term contracts, such as the one with Boulder, they see all their new power plants as simply another “billion dollar block of concrete.”  They don’t care if the new power plant is a clean renewable technology or even if it is needed. They can always encourage more wasteful energy use by their customers. They simply are happy to burden people with more debt. Xcel is not the proactive partner that we need to move to an efficient and carbon free energy economy.

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.