Answers to Your Questions About Boulder’s Muni

For people who have moved to Boulder in the past few years and for people who may be occasionally confused by the claims and counter-claims on municipalization, here is a brief recap.

The story in a nutshell

Many Boulder citizens are concerned about climate change. Climate change is driven by human activities that produce greenhouse gasses, primarily carbon dioxide (CO2). The biggest single source of carbon dioxide that Boulder is responsible for comes from the generation of Boulder’s electricity.

After many fruitless years of Boulder trying to work with the provider of Boulder’s electricity (Xcel Energy) to reduce carbon dioxide emissions, some citizens of Boulder began investigating the possibility of having the city take over Boulder’s electric system from Xcel and running it in a way that reduces these polluting emissions. In the process of studying that possibility, Boulder citizens learned that by taking over the electric system Boulder could not only reduce emissions but also save money, increase reliability, improve local control, and stimulate clean tech entrepreneurship, and perhaps even model a way for other communities to reduce their carbon dioxide pollution.

Xcel has opposed all attempts by Boulder to take over (“municipalize”) Boulder’s electric system and has used its considerable financial and political resources to try to quash the effort.

The big question is whether a large powerful monopoly can override the will of the people.

What municipalization is

• Municipalization is the acquisition and subsequent operation by the city of the electric distribution system that serves Boulder and is currently owned and operated by Xcel Energy. The municipal electric utility would be operated by professionals just as Boulder’s award-winning water utility is operated by professionals. Xcel would be paid for the assets acquired by the city.
• Boulder, as a “home-rule” city in Colorado has the right under the Colorado constitution to municipalize, that is, to create a municipal electric utility (a “muni”). This right was upheld in a court decision in June 2015, and has been repeatedly asserted by the Colorado Public Utilities Commission.
• There are already 29 municipally owned electrical systems successfully operating in Colorado, plus many rural electric co-ops.
• Nationwide, there are more than 2,000 community-owned electric utilities, serving more than 48 million people or about 14 percent of the nation’s electricity consumers. Typically these municipal utilities have lower rates and higher reliability than investor-owned utiliteis such as Xcel. Some of the nation’s largest cities – for example Los Angeles, Seattle, San Antonio, and Orlando – operate publicly owned electric utilities, but many public power communities are small, with their utilities serving 3,000 or fewer customers. (http://www.publicpower.org)

Why we want to municipalize

• Reduce greenhouse gas pollution from electricity generated by fossil fuels
• Meet or beat Xcel’s reliability
• Over time, enjoy lower rates than we do now. Xcel’s fuel charges currently make up 70% of our electricity costs, and renewables present no fuel costs whatsoever. Now wind and solar are as cheap as fossil fuels, in many circumstances.
• Gain local control so we can address Boulder’s priorities, not Xcel’s
• Stimulate Boulder business and entrepreneurship in clean energy

How we know we can benefit

• The initial financial modeling for the municipal utility published in 2013 showed that Boulder’s Municipal Utility could incorporate a high percentage of renewables while still meeting or beating Xcel’s rates, at a high level of probability.
• This modeling was affirmed by an independent third party reviewer with 45 years of utility experience. He said, “I’ve seen billions of dollars of acquisitions and I’ve never seen any acquiring entity come anywhere near the level of detail and sophistication that Boulder has done.” (https://empowerourfuture.org/why-local-power/)
• Costs for renewable energy have fallen much more rapidly than anticipated in this original modeling, so the financial benefits are looking better all the time.
• This latest round of analysis concludes that over 20 years, a Boulder Muni can:
  • Provide large reductions in fossil fuel use, using no more natural gas than the Xcel option.
  • Eliminate the use of coal
  • Increase renewable energy from sun and wind to over 70% of Boulder’s energy needs
  • Vastly reduce CO₂ emissions driving climate change (5.6 – 8.4 Mt emissions vs Xcel’s 18.5 Mt emissions)
  • Have lower costs and less risk for customers compared to the projected Xcel option
  • Have more than a $100 million positive impact on Boulder’s economy (90%+ confidence)
  • Only a muni, not Xcel, limits Boulder’s 20-year electricity carbon emissions sufficiently to meet a 2°C global warming limit
  • For details: empowerourfuture.org/wp-content/uploads/2015/07/EOF-White-Paper-Comparing-Boulder-Utility-Options.pdf

Here are some of the things we can do with a muni

• Have more rooftop solar
• Use batteries with our solar
• Be more resilient as a community
• Bring our decision-making home. You can get in touch with the people who run our utility.
• Buy/sell electricity into the community
• Buy as much renewable energy as I want at the cheapest price
• Get wind power and not pay for fossil fuels
• Not pay for coal or natural gas
• Use real wind power, not REC’s
• Have neighborhood electricity sharing, more community solar gardens
• Electrify our transportation
• Have competition for generation
• City could offer opportunities and possibly help finance
• Change the current situation where if the distribution grid goes down, you don’t get power even if you have solar on your rooftop
• Charge electric vehicles when there is extra energy at cheap rates
• Buy renewable energy directly and negotiate the best deal for Boulder

Efforts to work with Xcel thus far have been fruitless

• Because 53% of Boulder’s greenhouse gas emissions come from electricity generation, Boulder has made working with Xcel a priority. (https://bouldercolorado.gov/climate/
  boulders-community-greenhouse-gas-inventory)
• From the 1990’s onward Boulder has been in discussions with Xcel about the possibility of lowering the carbon footprint of the electricity Boulder gets from Xcel. Yet, despite opposition from citizens around Colorado, Xcel built a new coal-fired unit, Comanche 3, that came online in 2010 and is planned to run until 2069.
• Spurred on by citizen activism Boulder has been researching and pursuing municipalization since 2010. Yet it has also actively pursued, a renewed partnership with Xcel. (PDF).
• Xcel and Boulder actually formed a working group that met for more than a year around 2013; but Xcel stonewalled the group on information about its system, raised red herrings about modeling, and actually tried to walk out at one point. (http://www.dailycamera.com/opinion/
  ci_29149603/timothy–schoechle:
  -minneapolis-muni-offramp:-a-dead-end)
• Xcel has yet to come forward with a proposal that meets Boulder’s community goals for renewables, carbon reduction, local control, and economic development.
• More details at: https://empowerourfuture.org/boulder-municipalization-a-history/

Why we need to own the poles and wires

• The poles and wires allow us to: distribute inexpensive wind energy from the plains of Colorado and Wyoming, share electricity storage, use solar energy generated at local solar farms, support load management through demand reduction, and generally allow sharing of resources in ways that that can dramatically increase reliability and resiliency in emergencies as well as reduce costs, even for individuals who can generate their own power.
• We have to own the poles and wires to acquire the right to govern our own local electricity grid and to buy our freedom from an antiquated regulatory structure that limits innovation and community-based decision making. (See also Solar Today, May/June 2015, pp. 19-21).
• Through our electric bills we are already paying Xcel for the poles and wires, but when we’ve finally paid them off, Xcel will still own them. So why not get something for our money? And if we are allowed to pay Xcel the fair value of what it still has in them, the price should be very reasonable.

Why “just buying Windsource” doesn’t cut it

• You would think that Xcel customers purchasing 100% wind power would not be on the hook for fuel costs, and would not need to worry about wildly fluctuating fuel prices. But that’s not how Windsource works.
• Instead, Xcel’s Windsource customers pay a higher price for wind power that is now some of the cheapest electricity on Colorado’s grid.
• In the past there was an ECA (Electric Commodity Adjustment) credit for Windsource, but when that led to Windsource being cheaper than Xcel’s fossil fuel power the program got oversubscribed and Xcel worked to remove the ECA credit. (See Bill Dalton Answer Testimony, PUC Docket  08A-260E).

Why “just buying more solar panels” doesn’t cut it

• Not everyone receives good solar radiation (due to trees, etc.).
• Xcel caps the amount of solar anyone can put on his/her house, so we can’t produce much extra to share or sell.
• Under Xcel we’re not allowed to sell excess solar electricity to anyone but Xcel.
• Solar needs to be integrated with wind power (wind blows mostly at night), and energy storage for maximum greenhouse gas reduction. If we just bought solar we would still be stuck with Xcel’s fossil fuel plants (or expensive Windsource) at night and in snowstorms.

Why “just buying REC’s” doesn’t cut it.

• REC’s (Renewable Energy Certificates / Credits) sound appealing. They purport to certify that a certain amount of renewable electricity has been generated. (www.localcleanenergy.org/what-the-heck-is-a-rec) But a lot of REC’s come from projects already operational, so no additional reduction in carbon emissions occurs.
• Also, not all REC’s are created equal. As Auden Schendler, Vice President of Sustainability at Aspen Skiing Company, points out, “In order for REC’s to drive any sort of change in the world, in order for them to enable new clean energy development and reduce carbon dioxide emissions, they must cost a lot. That’s because the REC has to enable clean energy projects to happen by tipping their finances.” (http://grist.org/article/why-buying-cheap-energy-certificates-worsens-climate-change) Unless a REC actually “tips the finances,” – that is, it changes a financially unviable project into a viable one – it merely serves as an additional income stream for a project that would have been built anyway.
• Even with “good” REC’s, since REC’s are for megawatt hours of energy produced and consumed, Boulder would have to keep buying them in perpetuity in order to be able to claim to be a green energy city. This is very different from a one-time cost of establishing a municipal utility.

Xcel has failed at innovation

• Xcel’s “Smart Grid City”, projected to cost $15.3 million, actually cost over $45 million. It delivered minimal benefits and its infrastructure was already obsolete by the time it was completed. Xcel shut down the customer portal of Smart Grid City in December 2013. But nobody noticed because it had so few users.
• Yet the Colorado Public Utilities Commission (PUC) allowed Xcel to recover $27.9 million of those costs from Colorado ratepayers. (See: http://www.denverpost.com/ci_21871552/
  xcels-smartgridcity-plan-fails-
  connect-boulder ; See also: “SmartGridCity is a Smart Grid Flop” (http://gigaom.com/2010/08/04/
  smartgridcity-is-a-smart-grid-flop/)

Why the expense is worth it – a few examples

• The municipal utility Georgetown TX has locked-in 100% renewable electricity for the next 20 years (through new Power Purchase Agreements, not through REC’s) at lower cost than fossil. (https://georgetown.org/2015/03/18/
  georgetown-utility-to-be-powered-by-solar-and-wind-energy-by-2017) Other cities with municipal utilities can do this also. (https://ilsr.org/can-other-cities-match-georgetowns-low-cost-switch-to-100-wind-and-sun/)
• There is enough high-yield solar availability in Boulder to supply about 55% of Boulder’s annual use. The payments for this could stay in the local economy rather than escaping to Minneapolis.
• In 2014, Xcel’s profits from our city alone amounted to between $20 and $34 million. Currently, these profits leave the city and go to Xcel shareholders. With municipalization the money would remain with Boulder and could potentially be used to reduce rates, increase reliability, increase undergrounding, and/or speed up our transition to renewables.
• While thousands of people on the East Coast waited weeks for big utility companies to turn the lights back on after Superstorm Sandy slammed ashore, the residents of Madison, NJ, which operates its own municipal utility, had power just days after the storm. www.npr.org/2012/11/30/166241777/after-sandy-outages-a-tale-of-two-utilities
• Boulder is home to over 40 clean technology companies. A municipal electric utility would be able to directly engage with these progressive companies to test new approaches to power and service that wouldn’t be possible elsewhere—or within the confines of our current investor-owned utility.
• The municipal utility allows local control. It is being designed with input from some 11 citizen working groups (https://bouldercolorado.gov/energy-future/energy-working-groups) Once in operation the muni will be able to respond to community needs without having to go through the Public Utilities Commission (PUC) process in Denver.
• With the recent bankruptcies of two of Xcel’s major coal suppliers and the precarious financial position of the third, Xcel’s heavy reliance on coal increases the vulnerability of Boulder’s energy supply. An exhaustive government analysis says that at current prices and mining rates the country’s largest coal reserves, located along the Montana-Wyoming border, will be tapped out in just a few decades. (http://abcnews.go.com/US/wireStory/
  amid-coal-market-struggles-fuel-worth-mining-us-37127077)
• Most importantly, municipalization is the most powerful action we can take locally to help reverse the disaster of climate change.

Why the process is taking time

• The path to municipalization hasn’t been traveled since the 1930’s, when circumstances were very different. So the applicable laws are antiquated and inadequate. Both Boulder and the Public Utilities Commission (PUC) are feeling their way. This takes time and may involve exploring some routes that turn out to be dead ends.
• Xcel doesn’t want Boulder to municipalize. So with its deep pockets it has thrown up roadblocks and diversions, including motions at the PUC, a lawsuit, a constant stream of disinformation from its public relations consultants, and a “poison pill” ballot initiative in 2013 from its faux “citizens” group.

Boulder citizens consistently support clean energy

• The idea of municipalization sprang from citizen activism, not as a city council initiative.
• Boulder citizens advocating municipalization are doing so not with a “muni or bust” attitude but because, after careful analysis, they find that municipalization is the most powerful action we can take locally to help reverse the disaster of climate change (while almost certainly saving us money).
• While the original vote authorizing the exploration of municipalization was close, the closeness of the vote probably had something to do with the fact that Xcel outspent the citizens on that vote by a factor of at least 10-to-1.
• In 2013, Xcel’s faux citizens group put forward a ballot measure that would have crippled the municipalization process. Citizens defeated that measure by a 2-to-1 margin, even though again Xcel outspent citizens by 10-to-1.
• In 2014 Boulder citizens authorized the City Council to hold executive sessions to help level the playing field with Xcel. (Xcel’s decision-making process has never been public.) Boulder citizens gave that measure a 56 percent win, despite no official campaign at all.
• In the fall of 2015 citizens voted to extend the utility occupation tax in a 76 percent win and a climate action plan tax in a 77 percent win.

Where we are now

• Deliberations are underway at the Public Utilities Commission (PUC).
• In a PUC recent ruling, Boulder gained the right of “discovery,” which means that Boulder can ask technical questions of Xcel and actually receive answers.
• The benefit of this is that now Boulder will be able to be specific about its request for acquisition. This process may take some time.

Watch out for “fool’s gold”

• It’s hard to say exactly what Xcel will do next, but it’s clear from past behavior that they see it to be in their interest to delay – essentially following a strategy of exhausting our wallet and our patience. Therefore, don’t be surprised if you see Xcel following a strategy of foot-dragging and secrecy at the PUC.
• Xcel or one of their proxies may try to force an issue at the ballot box prematurely, before any new data is in. In this way Xcel could use their deep pockets and political influence to try to buy an election. Like Goliath, in the famous story of David in Goliath, they want to fight a battle on their own terms. A recent writer to the Daily Camera put it this way, “I want to have a say in my energy future. I don’t want to have it dictated to me by Goliath,”
• Xcel may suddenly present “Fool’s Gold.” Fool’s gold products or services sound terrific on the surface but really offer minimal benefits. Xcel has done this in the past. Back in 2011, when the city was considering not renewing its franchise with Xcel, Xcel suddenly proposed a 200-megawatt wind farm with the potential to supply 90% of the city’s power. This might sound good, but the deal would have cost customers extra and, as former Mayor Matt Appelbaum said, it would have give Boulder 0% of the control while burdening us with 100% of the risk. Boulder wisely turned down the deal. If the deal had been accepted, we would all be paying a premium now for wind energy; and wind is some of the cheapest energy on the planet.
• It’s also possible that Xcel’s new “Our Energy Future” filings at the PUC may be designed to lock-in profits for Xcel while locking-out independent solar installers, or even rolling back rooftop solar benefits for all of us, as recently happened in Nevada. (http://lasvegassun.com/news/2016/jan/
  12/nv-energy-puc-price-solar-energy-beyond-residents/). Xcel is certainly trying to set the rules by which it will earn its profits, potentially reducing incentives for rooftop solar and electric vehicles. (For a small sample of the filings, see: http://www.xcelenergy.com/staticfiles/
  xe/PDF/Regulatory/PSCo-Phase-II/Rates-PSCo-Phase-II-2016-Jackson-Direct-Testimony.pdf)

Additional information

• https://bouldercolorado.gov/energy-future
• https://empowerourfuture.org