Boulder Municipalization: A History
Boulder’s electric utility municipalization effort to pursue cleaner energy generation sources for the purpose of reducing green house gas (GHG) emissions did not spring up overnight. Driven by sustained and ever-expanding citizen involvement and leadership, and rapidly accelerating climate change, Boulder’s municipalization effort is the culmination of several decades of consideration, research, outreach and educational efforts to build support among elected city leadership and Boulder voters, numerous hard-fought elections, and exceptional city staff work, in the increasingly climate change-sensitive state of Colorado.
2017 On July 24, the hearing at the Colorado Public Utilities Commission (PUC) began. This hearing (Docket 15A-0589E) is expected to finish in early August. Then the parties will submit final Statements of Position in mid-August 2017 with an oral PUC decision followed by a written decision in the weeks following that.
On May 12, the City of Boulder filed its Third Supplemental Verified Application at the Colorado Public Utilities Commission. The application would allow Boulder to separate its electrical system from Xcel and proceed with forming its own electric utility that could be free to accelerate our adoption of renewable energy.
On April 19 at its hearing the Public Utilities Commission asked to the city to file an amended application in order to facilitate intelligent evaluation of the application through the use of one document, instead of having to flip back and forth between various pieces of testimony. Chairman Ackermann had watched the whole Boulder City Council meeting on April 17. He called it “democracy in action.” Commissioner Koncilja also emphasized democracy when she said that the commission’s job was “to expedite what Boulder’s citizens want.” She also expressed gratitude to Boulder and the Energy Future staff for making changes in Boulder’s proposed acquisition process to accommodate the concerns of the commission and other parties.
April 17. After hearing testimony from over 90 citizens and a huge outpouring of support from citizens – in letters, in a rally, and in the public testimony – the City Council voted 6-3 against moving forward with any settlement with Xcel Energy, and in favor of continuing the municipalization exploration process.
On March 31, Boulder announced it had received a pair of “best and final” “settlement” proposals from Xcel Energy following more than a year of negotiations with the utility.
(1) A “partnership” similar to any standard 20-year franchise in which practically everything would have to go through review by the Public Utilities Commission, and so could easily be stopped, and with renewable energy programs offered that were either already available or overpriced. Xcel’s “partnership” offer would have obligated future generations to pay Xcel a premium for clean energy even though, at the time of this proposal, wind energy was cheaper than Xcel’s cost of coal-generated electricity and solar was getting cheaper every year. The offer also made no commitments to the attainment of Boulder’s goals.
(2) A “buyout” in which Boulder would pay 80 percent more than what Xcel still had in its Boulder facilities. This would be almost $100 million more than Xcel would ever get if Boulder remained a captive customer. Xcel also wanted 25 percent of its then current revenues from Boulder to continue for 10 years after Boulder took over. By 2023, this would start at almost $40 million a year, and would be for doing nothing, since Boulder would be running its own system.
On Feb. 2, the University of Colorado Boulder and the City of Boulder finalized an electric service agreement should the city begin operation of a municipal electric utility.
2016 On November 7, the city released its Financial Forecast Tool and analysis, confirming that local electric utility would be cost effective and could quickly incorporate clean energy.
As of October – a recap of trying to work with Xcel: (http://www.dailycamera.com/guest-opinions/ci_30446663/macon-cowles-settle-xcel-not-so-fast):
Over the last five years, the city had asked Xcel in writing to partner with it in many ways, including:
- Create a flexible and responsive Boulder utility that is a subsidiary of Xcel, but one that could respond to innovation, and permit energy entrepreneurs and startups to offer products to Boulder customers;
- Enhance the “SmartGridCity” that Xcel started, then abandoned, in 2010;
- Remove the cap on wind generated at the NREL Wind Technology Center south of Boulder;
- Bundle the buying power of Boulder customers to obtain renewable energy without the 20 percent premium that Xcel now charges for Windsource;
- Expand energy efficiency and other demand-side management programs;
- Expand the opportunities for distributed generation;
- Form an energy services incubator, to drive innovation;
- Form an energy efficiency/distributed energy utility, with on-bill financing.
To date, Xcel had rejected all of these.
On June 8, the city of Boulder and Xcel announced that they were discussing a possible settlement to litigation regarding a city-owned electric utility. Mayor Suzanne Jones explained: “This kind of dual path is common in litigation and represents the city’s good-faith efforts to explore all options — as we promised we would do….The municipalization project, specifically, has given us important insights into how our electric system operates and helped us identify the infrastructure improvements required for the solar, storage and resilience technologies we envision for our future. No matter which path we take, this work will help us make that vision a reality.”
2015 On December 30 the Public Utilities Commission denied Xcel’s request to dismiss the city’s application in its entirety and granted the city’s request to get discovery and file a more detailed supplemental application that did not include assets used exclusively to serve out-of-city Xcel customers. As of this date the city hoped to receive from Xcel the information necessary to file a detailed supplemental application in early 2016. Boulder gaining the right to discovery was important, because Xcel had failed to provide engineering information to the city about the very equipment that is needed to serve Boulder customers both inside and outside of the city limits. http://www.dailycamera.com/guest-opinions/ci_29335346/macon-cowles-puc-ends-stalemate-between-xcel-and
2014 Ballot Measure 2B was passed by voters, allowing city council to hold private executive sessions to discuss legal advice for creation of a local electric utility.
In July 2014, the city filed a condemnation petition in Boulder District Court seeking to acquire portions of the electric system owned by Xcel Energy. These portions of the system are necessary to create a local electric utility that would serve customers within city limits. Under the Colorado Constitution, cities have the authority to condemn real and personal property inside and outside city limits in order to provide public power to residents and businesses. Property owners have the right to due process and just compensation for the taking of their property. In cases where the parties do not reach a negotiated settlement, a city may file a condemnation case in court.
Boulder has reached out to Xcel energy at least 50 times in public meetings.
In April 2014, Boulder City Council passed an ordinance creating a local electric utility. Although the city has not yet made a final decision about whether to municipalize, if the city does decide to proceed and issue bonds, it will need to have an entity established that can do so. In June 2014, Xcel filed a lawsuit against the city, alleging that City Council’s formation of a utility was “premature” and that Boulder failed to meet requirements laid out in the City Charter. The city is contesting this in court.
On December 18, 2014, the Federal Energy Regulatory Commission (FERC) issued a ruling that defines the role it will play in the city’s efforts to acquire a 115KV transmission loop from Xcel Energy as a part of the creation of a local electric utility. In the ruling, FERC said that it must evaluate whether a transfer of the assets from Xcel to Boulder is in the public interest and this review must occur before any actual transfer of assets. The regulators disagreed, however, with the position taken by state regulators and Xcel Energy that the city cannot proceed with condemnation case until that time.
2013 In the Fall of 2013, the PUC issued two rulings that might negatively impact the city’s ability to acquire Xcel’s assets. The city contested those rulings in order to protect several constitutional authorities that belong to local governments. On Jan. 14, 2015, Boulder District Court Judge Judith LaBuda affirmed a Colorado Public Utilities Commission (PUC) ruling that would require the city to seek permission from the PUC before exercising its constitutional right to acquire portions of the electric system currently owned by Xcel Energy.
2013 In light of Xcel’s renewed “promise” to bring forward electric utility options that would meet Boulder’s energy climate goals by June 2014, City Council voted to proceed along a dual path: continue municipalization exploration and keep the doors open, should Xcel offer a replicable, concrete, verifiable and legally implementable clean energy plan that would meet community goals and not be encumbered by Colorado Public Utilities Commission restrictions. Xcel stated that it would present a proposal to the City of Boulder in mid-2014.
2013 Once again, a greatly expanded citizen coalition, under the new banner of Empower Our Future.org, including former partners and new supporters such as the national Sierra Club “Beyond Coal Campaign”, organized to defeat the Xcel-linked Ballot Initiative 310 effort to block municipalizaton. Community opposition grew from concern about spending by Xcel and its proxies to stop the 2011 voter-approved municipalization and the attempt by a large corporation to rewrite the city Charter.
Boulder voters issued a resounding rejection of 310, turning down the Xcel-backed measure with over 68% of the vote in the November 2013 election. In addition to traditional voter education and outreach, New Era Colorado used innovative social medial and digital tools. New Era Colorado continued its vigorous voter registration campaign and recorded over 100,000 voter contacts in the months before the election, mostly by volunteers. New Era’s Indiegogo video went viral and was seen more than one million times world-wide. “No on 310” groups were outspent 3 to 1 by IOU supporters; however, citizens voted the measure down 2 to 1.
2012 Xcel declined the partnership offer, but continued to participate in the Xcel-City of Boulder Working Group.
2011-2013 Working with industry consultants and nearly 200 volunteer citizens and industry experts who self-organized by expertise into Working Groups, the City of Boulder “Energy Future” (BEF) staff modeled and vetted options to meet city clean energy goals, incorporating quantitative and qualitative risk and opportunity analysis into models and stress-testing to identify issues that could impact the city’s ability to meet city Charter requirements.
Rigorous City of Boulder modeling confirmed earlier citizen modeling conclusions regarding the strong probability that 2B/2C city Charter requirements could be achieved as well as an increased Debt Service Coverage Ratio of 1.65. As required, city models were then vetted by an Independent Third Party Reviewer (Power Service Inc, Raleigh NC) for (i) completeness of data, assumptions and analysis, as well as (ii) an assessment of whether the city could form an electric utility while meeting the conditions set by voters. The Third Party analysis was very favorable. Model results and the Power Services Inc. review are available at the City of Boulder, Energy Future website: https://bouldercolorado.gov/energy-future
Simultaneously Boulder continued to explore potential partnership or other working relationship with Xcel Energy
2012 Boulder’s Climate Action Plan “Carbon Tax” was re-approved at the ballot box, with 82% voters in favor.
2011 Boulder voters approved ballot measures 2B/2C which authorized City Council to (i) provide $1.9 million annually to fund exploration of a municipal electric utility, and (ii) authorize City Council to approve municipal purchase of the local electric utility ─ if it could meet strict city Charter electric utility municipalization criteria (e.g.i.e. reliability and rates equal or better than Xcel, 1.25 Debt Service Coverage Ratio, carbon reduction and a path to increased renewable energy).
RenewablesYes.org was joined by campaign partners New Era Colorado, the local Sierra Club chapter, Boulder Clean Energy Business Coalition, Ecocycle ─ the local public-private recycle and resource partnership, non-profit organizations, individuals and local businesses. Again, Boulder citizens voted to continue to explore municipalization. “Yes on 2B/2C” groups were outspent 10 to 1 by Xcel Energy and other IOU-connected groups.
2011 Responding to citizen frustration with lack of Climate Change leadership at national and state levels, and motivated by desire for local action to move away from Xcel’s long-term commitments to coal, the most carbon intensive form of electric generation, the Boulder City Council proposed ballot measures 2B/2C to explore lower-carbon energy generation options that could be replicated by other communities.
Coal-based energy generation actions at the State level:
— 2004 Xcel proposed a new 750 MW coal plant in Pueblo ─ Comanche 3, with Xcel owning 2/3 or 500 MW of the plant
— 2005 PUC approved Comanche 3, the last large coal plant constructed in the western US
— 2010 Comanche 3 went on line extending Xcel’s coal commitment for 60 years ─ until 2069
─ despite strong opposition and court challenges led by citizens from Boulder and Denver
—2010 Xcel negotiated an agreement to spend $250 million on pollution controls to keep the 500 MW Pawnee coal plant operating until 2041 and $90 million on the Hayden coal plants to keep them operating into the 2030s
2011 A volunteer technical team, made up of concerned citizens who called themselves “RenewablesYES” and local technical experts, used the modeling tool developed by the National Renewable Energy Lab known as HOMER as well as group member-created software modeling tools, and demonstrated the strong likelihood that Boulder could double its renewable energy (to 40-50% or more), halve its carbon intensity and greatly reduce other forms of fossil fuel-related pollution at rates that would meet or beat Xcel’s. (The team model is available for free for communities to use on EnergyShouldBe.org – Delve tab, as well as on RenewablesYES.org and EmpowerOurFuture.org websites.)
2005-2011 Independent of city efforts, a local Boulder non-profit, Clean Energy Action.org, with a mission of decarbonizing Colorado’s energy supply, hosted monthly public education speaker events featuring local and nationally-recognized experts on Climate Change, clean energy and carbon reduction technologies, as well as innovative and diverse community local self- determination frameworks, providing Boulder elected leaders and the public with inspiring models and opportunities for exchange of ideas regarding possible paths to achieving a community clean energy model.
2010 Ballot Measure 2B passed at the ballot box through campaign efforts by RenewablesYES.org, a committed group of BCAN and other concerned citizens who organized on a shoestring budget to engage and educate voters.
2010 Boulder City Council created ballot measure 2B, a legal device to replace the Franchise Fee with a 5-year Occupation Tax to be collected by the IOU, in order to maintain the city budget.
2010 Boulder City Council decided NOT to renew the Xcel Franchise Agreement. Their considerations included:
— Strong citizen support
— Recognition of increased immediacy of the climate change crisis
— Probability of not meeting Boulder’s Kyoto Protocol commitment
— Failed negotiations with Xcel Energy to meet Boulder’s climate goals
— Many frustrating years intervening at the Colorado Public Utilities Commission (PUC) where rulings typically favored the IOU over Boulder rate payers
2008 Given Boulder city staff’s concerns about municipalization as they understood the process at that time, as well as state level political dynamics, Boulder’s City Council shelved consideration of municipalization, and instead agreed to support Xcel’s proposed Smart Grid City pilot project. Due to poor project management, out-of-date design, huge cost -over- runs, and technical problems, the SmartGridCity™ project never produced any significant benefit to the Boulder community.
2007 BCAN (Boulder Climate Action Network), formed from a subset of Municipal Working Group members, piloted a community working group process to provide City Council with a set of recommendations for revitalizing the city ’s Climate Action Plan, which included reconsidering the municipalization option.
2006 Boulder voters approved the Climate Action Plan Tax (CAP Tax), the nation’s first “carbon tax.” The funds were to be used to reduce energy use and GHG emissions. The city also reconvened the BREEE as the Municipal Working Group to review the RW Beck Study. This resulted in the city exploring many innovative ideas to help the community reduce energy use and GHG emissions.
2005 City of Boulder contracted with RW Beck to complete the “Preliminary Municipalization Feasibility Study” to investigate the logistics, costs, and benefits of creating and operating a municipally-owned electric utility.
2004 Colorado’s Amendment 37 established the nation’s first voter-approved renewable energy requirement with strong support and leadership from Boulder, resulting in a gradually-increasing renewable energy standard that would apply to large-scale energy producers including Xcel Energy, which had acquired PSCo and which put up strong opposition to the amendment.
2003-04 Boulder Renewable Energy and Energy Efficiency (BREEE) Working Group developed and presented a Climate Action Plan to City Council. This first GHG Emissions Assessment outlined an emissions-reductions path, including municipalizing the electric utility and adoption of the recommendation to establish the City of Boulder Office of Sustainability.
2002 Inspired by BREEE’s first community-wide, climate education effort, “Boulder City Council passed Resolution 906, committing the community to reducing its greenhouse gas emissions to the target established by the Kyoto Protocol, an international agreement adopted in 1997 to combat global Climate Change.” https://bouldercolorado.gov/climate
2002 Boulder Renewable Energy and Energy Efficiency (BREEE ) Working Group formed as a result of a Community Energy and Climate Workshop held in connection with Boulder’s Annual Conference on World Affairs. BREEE was comprised of a loosely-connected group of citizens dedicated to doing more to respond to Climate Change and ramping-up city GHG reduction efforts.
1990 At the time of the 20-year Franchise Agreement (FA) renewal between Boulder and its investor-owned, regulated monopoly utility (IOU), Public Service Company of Colorado (PSCo), Boulder City Council and citizen leaders began to discuss municipalizing the city’s electric utility; however, the FA was renewed in 1993.
1987 Boulder City Council adopted its first Raw Water Master Plan with the intent of protecting and enhancing Boulder’s water supply given the expected impacts of global warming on the Colorado River basin. This was Boulder’s first attempt to mitigate the effects of Climate Change.
1982 Boulder adopted the Solar Access Ordinance to protect homeowners and apartment building’s access to solar energy by preventing neighboring properties from blocking the sun. This was Boulder’s first significant effort to directly address energy-related Climate Change issues.