Xcel Franchise – Decision Assistance

TO: Boulder City Council Members, Media

RE: Xcel Franchise – Decision Assistance from EOF

DATE: 7.18.2020

To the Council,

We appreciate the attention that you are giving to the negotiations with Xcel on top of all the other difficult decisions and pressures you are facing.

Since this is a complex issue, we offer – below – some questions that we hope you (and Boulder citizens) can ask to help insure an informed decision.

These decision-assistance questions are based on the bullet points from Tom Carr’s report to City Council on July 7 on the Key Elements of the Boulder-Xcel Negotiations:

  • Carbon Goals
  • Distribution system planning
  • Undergrounding
  • Information sharing
  • Boulder right to terminate franchise after five years
  • Preservation of legal and engineering status

Here are some questions to bear in mind about these elements before voting to put something on the ballot:

  • Carbon Goals
    • Xcel is regulated by CRS 40-3-106 which prohibits favoring one customer over another. Xcel confirmed in the June 24 listening session that Boulder would have to pay more for any services (renewables, microgrids, etc.) provided to Boulder which go beyond what Xcel provides to other customers.  Are you really willing to pay more – especially since the cost of renewables is dropping so quickly?
    • Xcel’s “80% Carbon Reduction” is not the same as “80% Renewables.” Xcel could get a “reduction” by, for example, shifting from coal to gas. Is this what you want?
    • The City’s 2018 Request for Indicative Pricing (RFIP) showed that Boulder could save $40 million per year on energy costs at 89% renewable power by purchasing from vendors other than Xcel. And, even at higher costs, Xcel would be providing only 53% renewables. (https://www-static.bouldercolorado.gov/docs/RFIP_One-pager-1-201902061233.pdf) Should not this standard – 89% renewables at a cost of 2/3 of Xcel’s wholesale price – be the one Xcel should meet or beat? (And it is possible that the City’s June 17, 2020 RFP could uncover an even better deal.)
    • Xcel’s “Path to 2050 Aspiration” includes “natural gas with carbon capture and storage” and “advanced nuclear” (neither of which has been proven at scale). Are these what you want? And, if they are, is 2050 really soon enough?
    • Given all this, how would a franchise agreement enable Boulder to reach its goal of 100% renewable power by 2030? How much would it cost? How would it be scalable to the rest of Xcel’s service territory?
  • Distribution system planning
    • Adding things like micro-grids and community solar to Boulder’s distribution system to improve resilience would likely go beyond what Xcel would provide to its other customers. So, again, Boulder would have to pay more for this.  Are you willing to pay more?
    • Is it a good idea to commit that Boulder residents not be allowed to bypass the 120% limit on on-site solar?  Is it a good idea to commit that Boulder residents not be allowed to share excess renewables between neighbors, whether residential or commercial?
    • Is the proposed distribution planning solution scalable across Xcel’s service territory?
    • How would a franchise agreement contribute to Boulder achieving its reliability goals and how much would it cost? Are any reliability improvements scalable to the entire Xcel service territory?
  • Undergrounding
    • As mentioned above, the City’s 2018 Request for Indicative Pricing showed that Boulder could save $40 million per year on energy costs at 89% renewable power by purchasing from vendors other than Xcel.
    • Critics claim that Boulder has missed out on $10 million of power line undergrounding during the period that Boulder has been out of franchise.  That works out to about $1 million per year.
    • Which do you like better $40 million per year or $1 million per year?
    • Furthermore, all of Xcel’s customers pay into the undergrounding fund, though only cities under franchise see the benefits.  Xcel uses undergrounding as a “bribe,” in effect, to get cities to sign away their rights.  And Xcel adds the undergrounding money to the rate base and makes a profit on it.  Are you OK with all this?
  • Information sharing
    • Has Xcel been forthcoming about their information in the past? Please ask your attorneys and Energy Future Staff. Also ask former members of City Council who have dealt with Xcel in the past.
    • This decision hinges on details in a plan that Xcel won’t make public until 2021. Are you comfortable putting forward “a deal in the dark” to Boulder citizens?  What advantage is there in voting this year rather than next year?
    • Is the proposed information sharing solution scalable across Xcel’s service territory?
  • Boulder right to terminate franchise after five years
    • Would it not be a stronger incentive for Xcel to deliver by having an automatic termination of any franchise after two years unless Boulder affirmatively votes to continue?
    • Boulder has managed quite well without a franchise for ten years.  What good-faith trust-building accomplishments would you like to see from Xcel before they return to us to ask for a franchise?
  • Preservation of legal and engineering status
    • Five years ago, could you have forecast the technological and social changes that were to come between then and now? Could you have forecast the degree of competition that has emerged in energy markets?
    • Boulder’s engineering staff has said that there would be limited value in any “preserved” engineering studies that are five years old. It’s likely that legal paperwork would have little value either. Talented and experienced staff are unlikely to wait around for five years. Does “preservation” give Boulder any real value?
    • What can Xcel legally guarantee to make sure that Boulder remains at least as far along toward municipalization as it would have been without an agreement – in other words: that Boulder makes equivalent advances in key legal and engineering categories?
    • Why not require as part of an agreement that the big issues that are now a problem be resolved, so that if Xcel doesn’t perform adequately, Boulder could municipalize easily? Examples of this: Xcel could agree to sell the distribution system at its rate base value (so that Xcel would neither make nor lose money). Xcel could agree to not claim stranded assets. Xcel could agree to have a third party decide the most cost-effective separation plan for the substations
  • ALSO
    • What would returning to a franchise mean for social justice and equity for low-income people and people of color?
    • Would an agreement torpedo Boulder’s chance to compete with Longmont’s world-class municipal broadband?
    • What would this do to Boulder’s reputation as an innovative leader?  To its business community in lost opportunities for technological entrepreneurship?
    • How would an agreement address Boulder’s other goals of Rates, Reliability, Decentralization, and Democratization?
    • Under a franchise with Xcel, Boulder would be constrained by PUC regulations, policies and procedures. Are you willing to forego the possibility of implementing innovative rate structures which would lower costs and be more effective in promoting renewable energy sources and in reducing carbon emissions?
    • More details on the questions above and additional concerns are contained in the Empower Our Future letter to Council dated May 19, 2020 – available online at:  https://empowerourfuture.org/eof-letter-to-city-council/

We hope this list is of help.

Thank you again for dedicating your time and energy to the service of our community.

by Chris Hoffman
on behalf of
Empower Our Future

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