Thu June 9, 2011

Xcel Wants to make Boulder “Greenest” City in the World

The city of Boulder and utility provider Xcel Energy are embroiled in a controversy over a new franchise agreement. But the company offered a new proposal this week that could make Boulder the “greenest” city in the world. KUNC’s Brian Larson speaks to Boulder County Business Report Publisher Chris Wood.

Larson: So what is this latest development?

Wood: Some of the details aren’t yet known, but essentially, Xcel is promising to take Boulder to 70 percent renewable energy in the first year of a new franchise agreement. The utility company says it could also help the city approach 90 percent renewable energy by 2020, which it says would make Boulder “the most green city worldwide.”

Larson: Okay, this is the new proposal – but how did we get to this point?

Wood: This all stems from the expiration of Xcel’s franchise agreement with the city at the end of last year. Xcel and the city had been battling throughout 2010 over the terms of a renewal to the agreement. In the end, the city went to voters to seek approval for a new utility tax that would replace lost revenues from Xcel. That tax passed in November, and the agreement was allowed to expire. Since then, the city has been deciding whether to go to voters this fall with plans to create a municipal-owned utility, essentially replacing Xcel as the city’s exclusive electricity provider. Xcel’s latest proposal seeks to forestall that effort.

Larson: Achieving up to 90 percent renewable energy for the city by 2020 seems to be a very lofty goal. How does that compare with what the rest of the state has achieved?

Wood: It blows it away. The state overall has mandated that Xcel achieve 30 percent renewable sources by 2020, so this would triple that standard. Xcel announced last month that it expects to reach the 30 percent benchmark well ahead of schedule, in 2017.

Larson: Do we know exactly how Xcel would take Boulder to 90 percent just three years after that?

Wood: It’s provided a basic outline. Xcel is proposing to purchase additional power that would allow for new wind farms in Colorado that would generate an additional 200 megawatts of electricity. Rather than have the city go to voters in November asking them to launch a new municipal-owned utility, Xcel is asking the city to go to voters with two other ballot measures.

One would ask voters to approve a new agreement with Xcel, giving it a new 20-year franchise as the city’s exclusive electricity provider. The second ballot measure would ask voters to approve a public-private partnership whereby Boulder customers would pay the difference between what it cost Xcel for adding new wind power and Xcel’s cost savings from having that renewable source on its electricity grid.

Essentially, Boulder customers would be subsidizing construction of the new wind power, and the city would earn any renewable-energy tax credits. Even with that, Xcel is projecting that the city could save money over the term of the agreement.

Larson: What is the likelihood that the Boulder city council — and Boulder voters — will approve these agreements?

Wood: That’s a monumental question. City council members Tuesday expressed some concern about balancing the risk. They also want to see the details, which have to be fleshed out. Additionally, some environmentalists in Boulder have been pushing hard for a municipal-owned utility, and they want to make sure that these agreements will help the city achieve its overall goals before giving up on a city-owned utility. Yet another player in this is the Public Utilities Commission, which must approve both agreements.

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