Can Boulder Keep the Lights On?

By Alan Boles

photo by Roger Wolvington

Dennis Eastman, chief executive officer of ENCO Utility Services, declared at a forum sponsored by Clean Energy Action on the evening of June 1 that a municipally-owned electrical utility in the City of Boulder “would be fundamentally better period” than an investor-owned one. He asserted that it would be more efficient, as or more reliable, and allow for infinitely more local control over subjects such as the mix of renewable energy and burying of transmission lines than would an investor-owned utility.

ENCO Utility Services manages the electrical distribution systems for five municipally-owned electrical utilities in California, Arizona, and Florida. Before working for ENCO’s immediate predecessor, Eastman had been vice president for electric distribution for Southern California Edison, which serves over 11 million people.

Several dozen people, including five Boulder City Council members, attended the forum, which was held at the First Presbyterian Church in downtown Boulder. The audience was generally very receptive to Eastman’s presentation.

Eastman recounted that he and some colleagues had spent a couple of days examining the electrical distribution system for the City of Boulder. He commented that its substations are well-located, the poles seemed relatively old but generally in good shape, and its overall condition is good. He declined to give an estimate of the value of the system, but asserted that well-established methods exist for appraising its fair price. He claimed that the trickiest issue if the city were to take over the electrical distribution system from Xcel would be how to apportion the electricity flowing into and out of the Niwot substation — one of six that are part of the Boulder system — which serves IBM, among other customers.

Eastman proclaimed that a municipally-owned utility in the City of Boulder would be “a great size,” large enough to generate ample revenue, but not so large as to be difficult to manage. He asserted that Xcel’s overall system does not benefit from economies of scale beyond what a local Boulder electrical distribution system would experience. In fact, he said that Xcel’s system may suffer from “diseconomies of scale.”

Eastman said that if Boulder created its own electrical utility, initially Boulder would have to agree with its new electricity supplier on how to feed the electricity generated by the city’s eight hydroelectric plants and the co-generation plant at the sewer treatment facility into the system. He claimed that such technical issues should be relatively easy to manage. He also predicted that the reliability of the electrical distribution system in Boulder would probably increase — although he did not claim that it is currently unsatisfactory — because the city would control a maintenance staff that was solely devoted to Boulder. He also commented that combining billing operations for the city’s existing water utility with the billing for an electrical utility would probably save on expenses.

Eastman spoke at length about the electrical utility of Winter Park, Florida, the electrical distribution part of which has been managed by ENCO since 2005. He said that Winter Park decided to start its own electrical utility because of dissatisfaction with the reliability of the service provided by the prior investor-owned utility and with the pace of its program for burying distribution lines. He reported that reliability has increased dramatically since Winter Park took over the system, as has the rate of burying the lines. The costs of undergrounding, he said, have been funded by part of the proceeds of a $17-18 million municipal bond issue. Prices for electrical service in Winter Park have stayed about the same as those charged by the local investor-owned utility, he reported. Such parity, he said, was one of Winter Park’s original goals for its utility. The utility is governed by a city board consisting of appointed citizens, Eastman noted.

Eastman remarked that he had not encountered other municipalities that had contemplated forming their own electrical utility primarily in order to increase the proportion of electricity generated by renewable sources. “You people are just cutting, bleeding edge here,” he proclaimed with more than a touch of admiration in his voice.