5:15am

Thu November 22, 2012
Business Report

Boulder One Step Closer to City-Owned Utility

Boulder has taken another step toward creation of its own electric utility. Boulder County Business Report publisher Chris Wood discusses how the city will use data to make its decision.

Erin O'Toole talks with BCBR publisher Chris Wood about the next step in Boulder's municipalization process.

Erin O’Toole: Chris, the Boulder City Council recently approved some metrics that it will use to determine whether to create its own municipal utility. What exactly are these metrics, and why are they so important?

Chris Wood: These metrics are essentially requirements that will have to be filled in order for the city to justify creation of a new utility, Erin. They include data that the city will collect to determine whether it’s feasible to buy the existing power grid from Xcel Energy. These won’t be the only criteria that the city will use, but the city can’t proceed if certain criteria aren’t met.

O’Toole: It’s been a little while since we talked about this. Remind us why this issue of municipalization is coming up in the first place.

Wood: Well, this whole issue goes back several years, or even decades if you consider previous attempts to create a municipal-owned utility in Boulder. But the recent effort is aimed at increasing the city’s supply of renewable energy. That effort got a big boost a year ago, when voters authorized the city to create an electrical utility, as long as certain requirements were met.

O’Toole: So what were those requirements - and how are they tied to the metrics that were approved by the city council?

Wood: Essentially, the requirements include that electricity rates don’t exceed Xcel’s at the time of launch, that a new utility be as reliable as Xcel, that the utility’s revenues be enough to cover expenses and debt payments, and that greenhouse-bas emissions be reduced. The metrics passed by city council are intended to establish the data that the city will use to determine whether those requirements could be met.

O’Toole: Makes sense. I know municipalization has been controversial. What is the root of that controversy? Colorado has other municipal-owned utilities, right?

Wood: Yes, it does, including Colorado Springs, Longmont, Loveland, Fort Collins and Estes Park, among others. But those utilities were created many decades ago. Opponents of Boulder’s effort say that it would be too costly and would raise rates.

O’Toole: Well, given that controversy, what has been the reaction to the metrics?

Wood: Well, this is Boulder, so controversy is a given, it seems. There was concern expressed by some in the business community that the metrics passed by the city council were designed to ensure that municipalization would occur.

But city officials say that’s not the case and that the metrics provide an objective way to evaluate municipalization. And the metrics did pass by a 7-to-1 vote on the city council. The council did approve language that the metrics are the minimum requirements - and do not set a predetermined course.

O’Toole: So what’s the next step?

Wood: Next March, the city council will determine whether to proceed with municipalization or to choose an alternate strategy. One option is to reopen negotiations with Xcel Energy to determine whether climate-change goals can be achieved through Xcel.

If the city proceeds with municipalization, we’re likely to see several years of lawsuits as the city seeks to condemn Xcel’s Boulder electrical system and as it commences filings with state and federal regulators.

O’Toole: Something to watch. Chris, thank you.

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