July 2, 2020
As the City of Boulder enters negotiations with Xcel, City leaders should look south to see what is happening in Fountain, Colorado. They have a municipal electric utility, the fifth largest in Colorado. They have been purchasing power from Xcel, but now Xcel has been outbid by Guzman Energy, a wholesale power provider. But what is stunning is that Guzman will not only provide electric power to Fountain at a lower cost than Xcel, they will be paying Fountain $12 million beginning this summer for the right to do so beginning in 2027. Paying!
There is much to be learned from this event. First, this deal is only available to Fountain because they have a muni; Boulder could not get this deal because it is prevented by the Xcel monopoly. Second, in a competitive bidding environment, Xcel loses. Third, the difference in cost between Xcel and Guzman is so large, that Guzman can afford to pay Fountain cash in advance to get the contract. And, fourth, because Fountain has a muni, in 2033, it can go back to the marketplace and seek bids for renewable electric power from other sources.
Fountain will get lower-cost electricity than it currently gets from Xcel while maintaining its flexibility to go to the marketplace in the future to get even better deals. Why would we want to continue to be restricted by the Xcel monopoly when we can form our own municipal electric utility and get deals like Fountain?
Published in the Boulder Weekly July 2, 2020