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Boulder Voters to Weigh Forming a Municipal Utility

Vince Darcangelo

One of the most hotly contested ballot measures this November is in Boulder. Issue 2C would give the city the authority to establish its own utility—if it can produce the same or cheaper rates currently provided by Xcel Energy. And a companion measure, Issue 2B, would generate about $2 million annually in extra tax revenue to cover the costs of studies and legal fees.

Last year, Boulder city council voted to not renew its franchise agreement with Xcel. Among the chief reasons was the city’s interest in adding more renewable energy to its portfolio. Despite Xcel Energy’s efforts to incorporate more wind and solar power, Boulder still gets about 60 percent of its energy from burning coal. That’s something Boulder Mayor Susan Osborne says needs to change.

“We really would hope to look at natural gas—other kinds of base power that has more flexibility to it,” she says.

..meaning more locally generated power from wind and solar farms. Boulder is looking to reduce carbon emissions under the 2002 Kyoto Protocol on climate change. The city estimates the price of forming a municipal utility at about $290 million. Meantime Xcel’s consultants say the cost could be as much as $1.2 billion. And that leads to the biggest sticking point in the debate: no one knows what the price tag is. That’s because the final cost would be determined by the courts and the Federal Energy Regulatory Commission, a process that could take years to determine.

“It will be a small investment compared to the real potential of the city being able to own and run its own utility,” says Osborne.

But opponents aren’t so sure.

“The city of Boulder will have to go into debt at hundreds of millions of dollars,” says Craig Eicher, area manager with Xcel. “It’s reasonable to wonder how they could possibly find more renewable energy than what we’re providing after the end of that process.”

Xcel’s consultants say Boulder is underestimating the costs of buying the poles, wires and equipment. They say it’s also not counting compensation the city would need to pay Xcel for taking over its Boulder utility business—so-called stranded costs.

“Smart Grid City and solar rewards: they’re predicting that they owe us nothing,” says Eicher. “This comes back to our other customers outside of Boulder helped pay for those rebates. The city is assuming they don’t have to pay those back. We don’t agree with them.”

Xcel says these question marks could add up to higher rates for Boulder customers. And that uncertainty has moved groups like the Boulder Smart Energy Coalition and the Boulder Chamber of Commerce to oppose 2B and 2C. The city says it would not move forward if it had higher rates—and the ballot language prohibits that. But opponents say there’s no guarantee for rate parity in the years following startup.

Sam Weaver with the Boulder Clean Energy Business Coalition, which is in favor of the measure, says it’s important to remember that annual rates are currently increasing under Xcel.

“People talk about status quo as if energy prices aren’t going up,” he says. “But in reality the status quo involves increasing energy prices for the next 20 years.”

Earlier this year, Weaver led a group of highly skilled volunteers who crunched their own numbers to determine if Boulder’s power experiment would be feasible. He says that according to the group’s analysis, Boulder could achieve 70 percent emissions reduction relative to what Xcel is currently offering.

“…and we think we can do it within 10 years after flipping the switch on the muni,” he says.

Weaver says the model took into account the variations on cost that the city and Xcel are disputing. While the results are interesting, it’s perhaps more remarkable that this group got together in the first place. Not many communities can produce scientific peer-reviewed predictions from a group of volunteers.

Meantime, videos in favor and against 2B and 2C and flooding the web. According to a recent Daily Camera article, opponents are outspending proponents 10 to 1. There has been little opinion polling, but if you listen to residents you hear a close 50/50 split on the topic.

“I’m all for renewable energy. I just don’t know that the government is the best way for solving these massive problems. I’m more of a free enterprise kind of girl myself,” says Cathy Laughlin.

“Boulder is seen as a city that provides an example for the direction I think a lot of cities should go,” says Brad Birch.

Boulder voters will have their final say on Nov. 1.