Why Is Xcel Trying To Block The Muni At Every Turn?
Boulder’s efforts represent a fundamental threat to Xcel’s current business model. This is why Boulder electric customers have been targeted repeatedly by misleading front groups, out-of-town industry experts, and incomplete and unsubstantiated information smoke screens. In recent elections Xcel has outspent citizen advocates by over 10 to 1, and once was even caught spending its customers’ money to fight Boulder. Often Xcel has pursued a campaign of sowing fear, uncertainty, and doubt. Perhaps Xcel remembers how tobacco companies fought tobacco regulation successfully for many years by fostering doubt.
Xcel’s behavior is related to the fact that the business model of investor-owned utilities may have outlived its usefulness. Utilities like Xcel are facing the intersection of disruptive technologies (e.g. solar, wind, distributed generation, batteries) and consumer demand for clean energy, in a regulatory structure that was ideal for the 20th century but not the 21st. As New York State’s energy czar Richard Kauffman says in an interview with Renewable Energy World, “The way we structured utilities 100 years ago, with cost recovery plus a return on their capital, doesn’t work today.” A 2013 report from the Edison Electric Institute, the investor-owned utilities’ trade association, warned that the new disruptive challenges could spell the end of the electric utility industry as it is known today.
Xcel does not want to lose Boulder partly because Boulder represents approximately $32 million in annual profits (though only about 4% of Xcel’s Colorado electricity customers). But at a more fundamental level, Xcel wants to block the shift that Boulder’s municipalization represents. The steadily improving economics of renewable energy, distributed energy technologies and energy storage present utility customers with new choices, many of which have long been the sole domain of utilities. Boulder’s municipal utility aims to give customers the benefits of these new choices.
Now Xcel is getting more interested in renewable energy, but only as long as it is deployed through central power plants that the company can own, control, and/or price for continued profitability. One example is Xcel’s new “Solar Connect” 50MW solar farm in Pueblo, which competes directly with small companies that are trying to sell community solar. Even though the cost is low, the company will be charging premium prices for this new solar resource, perhaps because renewable energy advocates are willing to pay more.
Xcel has fought distributed solar tooth and nail. Here’s why:
Xcel loses money when we install rooftop solar on our homes. We use less energy, and threaten to become even more independent through new battery technologies. The company will continue to oppose what distributed energy represents in order to protect shareholder returns.
Boulder is creating a replicable, affordable model that can be copied by other communities not wanting to continue to pay routinely approved rate increases that support Xcel’s last-century business model and long-term commitment to highly polluting fossil electricity. Meanwhile Xcel has made – and continues to make today – long-term commitments to large fossil plants, decisions that constrain Xcel from changing with the times.
Whether Xcel Energy continues to block progress or becomes a more collaborative partner, Boulder will continue to welcome being watched, visited, consulted, and supported by communities from across the state, country and around the world, as well as by innovative utility companies exploring alternative business models in an effort to make electricity cleaner and communities better places to live.