The cost of 2C is unknown. Why go into a 20-year agreement without knowing the cost?
Why would Boulder agree to a deal with Xcel without knowing the cost? The agreements that comprise 2C do not have any details regarding the cost of meeting Boulder’s climate goals! This would be like signing a lease with a landlord without knowing what the rent will be. Or giving a blank check to a monopoly!
- Customers – There is nothing in the agreement about future rates. Xcel plans to raise their earnings 5-7% a year. Electricity demand is flat, so to make that kind of money they most likely will continue to raise rates. (The cost of renewables keeps going down…our rates should too!) (See charts below)
- Taxpayers – Any services (renewables, microgrids, etc.) Xcel provides to Boulder that go beyond what Xcel provides to other customers are services that Boulder taxpayers would have to pay for. (State law CRS 40-3-106.) These would cost Boulder taxpayers unknown millions of dollars extra.
- Large Expenditures and Debt Without Representation— We are already on the hook for billions of dollars in debt and equity with Xcel—a lot of it for fossil fuel infrastructure. Moreover, Xcel has told investors it intends to make over $7.5 billion in capital expenditures in Colorado in the next five years. If Boulder goes back into franchise with Xcel, we would be responsible for our share of this massive debt and equity, with essentially no say on how much Xcel spends or what it spends it on.
- Determination to Raise Rates Repeatedly—Xcel has had a rate increase almost every year since 2006 and it has announced plans to continue to raise our rates going forward—no matter how low prices for renewable energy and storage go. Xcel spent most of 2019 pursuing yet another rate increase in Colorado and it has stated it intends to file another rate increase application in 2020.
With its monopoly spending habits undisciplined by market forces, Xcel expects its captive customers to continue to pay for its large capital expenditures and large and growing profits.
Why 2C would be expensive…
Xcel is taking their fossil fuel powered electric generation fleet and layering renewables on top of it, adding to the cost of the electricity they sell us. To bridge the gap between Xcel’s goal of 70% renewable energy and Boulder’s goal of 100% by 2030 is likely to take $10’s of millions more capital to build the additional renewable energy sources necessary to bridge the gap. Renewable energy sources that Boulder would pay for (plus Xcel’s profit). This is because any services (renewables, microgrids, etc.) Xcel provides to Boulder that go beyond what Xcel provides to other customers are services that Boulder taxpayers would have to pay for. (State law CRS 40-3-106.) These would cost Boulder taxpayers unknown millions of dollars extra.
To be clear, the Franchise Agreement (para. 14.4) plainly says Xcel does not have to spend a dime on anything that it has a “good faith belief” the PUC will not allow the Company to recover [from the ratepayers]. In other words, Xcel will only spend other people’s money.
How Do Investor-Owned Utilities Make Money?
Xcel’s After-Tax Profit from Electricity Sales in CO by Year
Compared to Electricity Xcel Sold in CO in Millions of Kilowatt Hours
Source: PSCo Annual 10k reports from 2003 through 2019, the latest available.
Sales/usage is almost flat. How can Xcel’s profits keep rising?
This chart shows the after-tax profit that Xcel made from electricity sales in Colorado by year compared to the amount of electricity Xcel has sold in Colorado in millions of kilowatt hours. The data for this graph was pulled from PSCo annual 10k reports from 2003 through 2019, (the latest available).
What this chart demonstrates is Xcel’s ability to increase profits year after year while electricity sales stay in a relatively narrow range. Xcel does this by growing their rate base, essentially the amount of assets they own. Xcel’s profit is not tied to sales or quality of service, it depends solely on the value of the assets they own less depreciation.
This is why Xcel plans on spending $7.5 billion over the next 5 years in Colorado on growing the rate base.
Expensive, and Unjust
All this money from rate increases will come disproportionately from low-income customers of Xcel because middle- and upper-income customers are getting solar and seeing their bills go down while the rate increases get paid disproportionately by low-income customers whose rates and bills are going up—and up and up.
There are no guarantees in life, but we do know that a community power system (i.e. municipal electric utility or Community Choice Aggregation):
- Would power the community with renewable electricity from the get go, significantly reducing power purchase costs and speeding us to our climate goals.
- Would not have profits. By definition, public power is non-profit
- Would keep more energy $ in our community helping create jobs and taxes and economic multiplier effects (one of the many benefits of “Decentralization).
- Would allow citizens to be involved in decision-making
Vote No on 2C!
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