Advocates say financial analysis shows Boulder muni would reap benefitsPublished on: Saturday, October 31, 2020
DEBORAH SWEARINGEN | email@example.com | Boulder Daily Camera
October 31, 2020
A report released earlier this month argues that moving forward with municipalization would bring in more than $100 million for Boulder over the span of a decade and allow the city to convert to 100% renewable energy.
Empower Our Future, a local coalition with a stated commitment to clean energy that conducted and released the report, is hopeful it will dissuade people from voting for ballot initiative 2C, which pauses the city’s years-long effort to form its own local electric utility in favor of a 20-year franchise agreement with Xcel Energy. Should that happen, Empower Our Future believes its financial analysis could guide Boulder’s path forward, particularly if it continues its municipalization effort or chooses to get its electricity from a source other than Xcel.
Proponents of the measure, such as those involved with Boulder’s Great Green Deal, believe municipalization is no longer the best means of fighting climate change and instead view the Xcel franchise agreement as the cheapest and most effective way to do so.
When Boulder first embarked on the quest to form its own electric utility, the city viewed the idea as a means of maintaining the system’s reliability, controlling rates and deploying renewable energy. Supporters say that’s still the case, while opponents believe it’s time to move on.
Alison Burchell, a geologist and member of Empower Our Future, said the recently released financial report and the city’s municipalization efforts in general can be a guide for other communities looking to impact meaningful change.
“We are not just doing this for Boulder,” Burchell said. “The purpose of doing the muni is to demonstrate that munis are successful, have lower rates and can actually deliver on the goals we have.”
Volunteers with Empower Our Future said they spent hundreds of hours and many late nights on the report. In an Oct. 20 news conference, the group explained how they arrived at their conclusions using Boulder’s 2018 financial forecasting tool and updating it with 2020 data and assumptions.
Group members said there have been significant changes since the city last conducted a financial forecast in 2018, including lower renewable energy prices and bond rates. It prompted them to take another look.
“We think this is probably a better deal than ever but nobody’s really updated it or looked at the figures so we’re going to do that for them,” Empower Our Future member Susan Peterson said of the group’s decision to proceed with the financial analysis.
The group used data, much of it pulled from city documents, including the city’s 2018 financial forecast and its 2020 request for proposals that Boulder issued for utility- and community-scale electric power supply and innovative financing options. Empower Our Future said it was hopeful the city would review the report and provide feedback, but that has not happened.
Emily Sandoval, spokesperson for the city, acknowledged Empower Our Future’s use of city documents as source material, but she said the city was not involved in the process and hasn’t reviewed the analysis.
“We appreciate the community’s exploration of our financial forecast tool, but we can’t confirm the validity of individual analyses conducted by the community,” Sandoval said.
The local power financial analysis indicates that, by Empower Our Future’s estimate, Boulder would in 10 years have a $182.4 million cumulative cash flow in its “break-even” forecast, which used the most conservative data. The group estimates that the number could be as high as $492.7 million in its “even better” category.
In the report, Empower Our Future said it got to the cumulative cash flow by calculating the revenue brought in minus the expenditures after working capital and capital improvements have been funded. It uses sample rates from the Public Service Company of Colorado and customer totals compiled in 2019 by Xcel Energy. The report also factors in the debt service coverage ratio, inflation and numerous other factors.
The report also states that local power would have a substantial climate impact. By 2030, Empower Our Future believes local power would bring the city to 100% renewably sourced electricity and 100% greenhouse gas reductions, and it would produce 215,000 fewer megatons of greenhouse gas relative to Xcel.
Peterson said she often thinks about how far technology has come in the past decade or so.
“In the next 20 years, our electric system and our energy system in general is going to enjoy a similar renaissance, a similar paradigm shift in new technologies, in energy sourcing, in energy storage and in energy distribution,” Peterson said.
The Xcel question
Members of Empower Our Future recognize that Xcel is making improvements in the fight against climate change, but they fear the company is not moving fast enough.
“Our challenge now is that Xcel’s moving in the right direction, but they’re also what I call slow walking,” group member Leslie Glustrom said.
Mayor Pro Tem Bob Yates, on the other hand, said Xcel has made great strides, and he believes the settlement will offer Boulder an opportunity to “get green,” which has been the goal all along. Yates knew of the local power financial analysis but said he hadn’t reviewed it.
“We didn’t start this process 10 years ago so we could operate a utility profitably,” he said.
Yates, who is a proponent of the Xcel franchise agreement and helped lead settlement talks with the power company, often references the $25 million the city has spent thus far in its effort to form its own utility. The city in July announced that without additional funding, it couldn’t afford to hold a vote on establishing a municipal utility this year.
“We’re spending a lot of time, and we’re spending a lot of money, and we’re really not getting anything to show for it,” he said. “Municipalization may have served its purpose, but now it’s time to move on and undertake meaningful and immediate climate action.”
The local power financial analysis does not specifically address this in its report, though it did send an email citing a city update that indicates there is some funding available for the effort through 2022.
Other supporters of the ballot measure agree with Yates’ assertion that time is of the essence.
“The climate crisis is time sensitive. Winning slowly is the same as losing,” Boulder’s Great Green Deal supporter Elizabeth Hartman said in a statement on the organization’s website.
Still, while Empower Our Future agrees that Boulder has spent a lot of money on municipalization over the years, its report found that moving forward with the effort or another local power option would offer a substantial return on investment.
“In a very short period of time this investment pays back to the community big time,” Peterson said.
Ballot measure 2C
If the Xcel franchise agreement passes on Tuesday, Boulder will still have opportunities to opt out and continue on the path to municipalization or explore other energy options. The city can opt out for any reason at any time in the fifth, 10th and 15th year of the agreement. It also can opt out in several other years if Xcel is not meeting its commitments, including one wherein Xcel agreed to reduce its 2005 carbon emission levels by 80% by 2023.
Though these provisions are provided, Sandoval said a favorable vote on Tuesday would pause work on a local electric utility for the time being.
“It gets a little muddled, but the key is that if it passes, municipalization work would stop for at least the next few years,” Sandoval said.