On November 1, the smallish but very progressive college town of Boulder, Colorado passed two interrelated, historic ballot measures that aim to discontinue service with Xcel Energy Inc. (NYSE:XEL) and replace it with a city-owned municipal utility.
Boulder, 11th in population among Colorado cities, is located at the foot of the Rockies almost due west of Denver, and is the site of the main campus of the University of Colorado. Liberal and ultra eco-friendly, the City and county of Boulder also house the National Institute of Standards and Technology (NIST), the National Center for Atmospheric Research, the National Climactic Data Center, the National Weather Service, the National Oceanic and Atmospheric Administration (NOAA), the U.S. Geological Survey (USGS), and the National Renewable Energy Laboratory, or NREL, among others.
Xcel Energy, the largest utility in Colorado, provides electricity and natural gas for cooking and heating to about 1.3 million customers. Headquartered in Minneapolis, Minnesota, where it offers both gas and electric service, Xcel also provides services to consumers in Michigan, New Mexico, North and South Dakota, Texas and Wisconsin.
The voting was on 2B and 2C, the first intended to raise utility occupation taxes on Xcel by $1.9 million per year, the second to form a city-owned and operated municipal electric (and, potentially, natural gas) utility.
The vote was close. 2B passed by only 50.3 percent; 2C by 51.8 percent – a margin which David Miller, chair of the Boulder Smart Energy Coalition, says indicates that voters are not solidly behind the referendum.
The Coalition is a grassroots organization that concerns itself with the risks and costs inherent in replacing Xcel with a city-owned and operated utility – a risk profile largely supported by a UtiliPoint International Inc. study conducted at the behest of the Coalition by Bob Bellemare, the COO of UtiliPoint, an entity which bills itself as a think tank providing expert research and analysis for the energy industry.
According to the Coalition and to the study, the greatest risk is that the City of Boulder may not be able to meet or expand clean energy goals on its own dime.
Boulder already has a landing page detailing the reasons behind its move toward municipalizing the utility, which are: greater flexibility and control (presumably in setting rates and establishing policies); an ability to reduce local carbon emissions; investment options that better mesh with local priorities; and a more competitive industry with improved energy innovation once the initial investment is repaid.
Caveats to these advantages are the fact the City doesn’t yet know the costs of taking over Xcel’s operations (and repaying stranded assets like the future value of Xcel’s distribution system in terms of customer billings), and the fact that the City would be knowingly removing itself from all future items on the Colorado Public Utilities Commission (CPUC) docket involving Xcel Energy.
The single advantage for Boulder residents, in terms of their eco-sensibilities, might be the fact that Xcel Energy currently sources about 60 percent of its generation from coal, and a city-owned utility might have cleaner options.
Cost estimates for the municipalization vary wildly, from $290 million (City of Boulder advisors) to $1.2 billion (Xcel’s experts). Actual costs will be defined by the Federal Energy Regulatory Commission, with input from the CPUC. A full changeover is expected to take about five years, perhaps more. Xcel reportedly had no immediate comment to the ballot measures’ passage.
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