News, Analysis and Opinion for the Informed Boulder Resident
Saturday March 25th 2023

Support the Blue Line

Subscribe to the Blue Line

That's what she said

city council transportation energy municipalization xcel housing urban planning april fools bicycles climate action density election 2011 affordable housing boulder county open space election renewables agriculture CU local food climate change election 2013 development youth jefferson parkway pedestrian election 2015 preservation Rocky Flats election 2017 recreation BVSD mountain bikes immigration boards and commissions plan boulder farming fracking GMOs transit urban design decarbonization planning board fires colorado politics wildlife land use smart regs downtown architecture new era colorado transit village parking homeless journalism plutonium natural gas ghgs commuting radioactive waste rental coal height limits taxes april fools 2015 walkability historic preservation energy efficiency historic district Neighborhoods diversity zoning population growth growth students North Boulder flood arts gardens education University Hill water supply bus election 2010 solar election 2018 nutrition RTD sprawl water quality election 2012 groundwater bike lane electric utility safety library april fools 2016 renewable energy affairs of the heart organic flood plain wetlands planning reserve zero waste mayor blue line electric vehicle ballot right-sizing street design transportation master plan obama hazardous waste county commissioners politics hogan-pancost longmont colorado legislature climate smart loan diagonal plaza campaign finance flood mitigation bears Mapleton solar panels PV recycling comprehensive plan golden conservation easement epa boulder junction pesticide congestion food drought road diet oil bus rapid transit commercial development inequality election 2016 flooding planning daily camera public health community cycles BVCP ecocycle Newlands automobile PUC climate change deniers children david miller ken wilson sam weaver community league of women voters wind power public spaces boulder creek crime mlk civil rights west tsa marijuana technology arizona Orchard Grove EV green points al bartlett Whittier city attorney

The City Proceeds Carefully on a Municipal Electrical Utility


Heather Bailey, Executive Director of Energy Strategy and Electric Utility Development (photo from COB website)

At a talk on the evening of November 8 sponsored by PLAN-Boulder County, Clean Energy Action, and, Heather Bailey, Executive Director of Energy Strategy and Electric Utility Development for the City of Boulder, cautioned that a suit to condemn some or all of the local electrical distribution system of Xcel Energy would not be initiated until after the first quarter of 2013, if it is initiated at all.

Bailey reported that she and her colleagues have been engaged in intensive study and planning efforts in preparation for the potential creation of a municipal electrical utility. She said that she supervises a staff of only five to seven part-time city employees, but that she has assembled a team of outside experts, including volunteers, and has enlisted several stakeholder work groups.

She stated that a group of economists have been examining the “stranded costs,” for which the city would have to compensate Xcel, if the city establishes a municipal electrical utility. She defined “stranded costs” as electrical generation assets specifically built for Boulder and not yet amortized by Xcel. During the municipalization election in the fall of 2011, the company continually increased its assertions about the magnitude of its stranded costs, ultimately claiming that they would total hundreds of millions of dollars. Proponents of municipalization, on the other hand, contended that they would be relatively small in amount and quite possibly nothing at all. Bailey said that the city’s experts will present a range of “stranded costs” to the City Council.

Bailey said that another set of experts is studying the local distribution assets that Boulder would need to acquire from Xcel, if the city sets up its own electrical utility, and their cost. She indicated that she expected the estimates of stranded costs and the value of the necessary local distribution assets, as well as other vital information, to be publicly disclosed by January 21, 2013. Although Bailey did not expressly make this point, if the estimated capital costs of a municipal electrical utility, including the “stranded costs,” are too high, it would not be established, because its rates could not be the same as or lower than Xcel’s.

Bailey said that her immediate task was to propose a series of quantitative “metrics” to the City Council to help measure how the municipal electrical utility would meet the standards set forth in the ballot issues passed in 2011 (and subsequently codified in Article XIII of the City Charter). These standards include:  rates that are the same or lower than Xcel’s, revenues that would equal or exceed 125 percent of debt service, reliability comparable to Xcel’s, and reductions in greenhouse gas emissions and increases in the percentage of renewable energy used to generate electricity. As an example of the problem, she noted that Xcel charges 28 different rates to its customers. She said that she will propose that a municipal electrical utility match Xcel’s average rate. (These “metrics” were presented to and approved by the City Council later in November.)

Bailey pointed out that Fort Collins, which runs a municipal electrical utility, has the highest-rated reliability in the state, and Longmont, another “muni,” the second-rated. She said that Xcel is rated relatively low in reliability. Bailey also observed that across the country municipal utilities generally charge lower rates than investor-owned utilities. Part of the reason for the lower rates, she admitted, is that municipal utilities are not obligated to pay taxes.

Bailey acknowledged that a Boulder municipal utility might not use a much higher percentage of renewable energy than Xcel, when (and if) it starts operation. But she said that the city was planning for the first 20 years of operations and that the percentage of renewable energy would increase significantly over time. Bailey predicted that the cost of solar energy will at some point be competitive with electricity generated by burning natural gas.

Bailey repeatedly emphasized that the process by which the city has considered and will consider forming an electrical utility has been and will be fair, transparent and honest. She pointed out that the figures and recommendations to be presented to the City Council in the first quarter of 2013 will be evaluated by independent, third-party experts.

Bailey commented that the traditional business structure of the electrical utility industry will not last indefinitely. She observed that Colorado’s utility regulatory system is antiquated. She said that Texas de-regulated its electrical utility industry ten years ago and has experienced significant increases in efficiency since then.

Bailey announced that the City Council will be briefed in detail on the staff’s past and future work on municipalization at a study session on December 11.

Rate this article: 1 Star2 Stars3 Stars4 Stars5 Stars (3 votes, average: 3.67 out of 5)