Opinion: Decision time for our energy future


On Tuesday night, the City Council will make a very important decision — given the goal of having a cleaner energy future with more stable prices, should Boulder investigate whether creating a municipal electric utility would be better than committing to a 20-year franchise with Xcel?
The council may decide that Boulder should fully evaluate running our own electric distribution system, like Fort Collins, Colorado Springs, Longmont, Loveland, Estes Park, Lyons and many other Colorado cities do. This could provide more renewable energy, give us more local control, minimize the effect of escalating fossil fuel prices, and help both Boulder and the state toward a greener future.
If the council decides to keep this option open, we will likely see a Five Year Utility Excise Tax on the ballot in November. This tax will replace the Xcel “franchise fee” for long enough that the city can fully research the alternatives. So it`s clear, the Xcel “franchise fee” is not paid by Xcel. It is a line item on our — we pay Xcel the equivalent of a 3 percent tax on all our energy. Xcel collects it and remits it to the City. The proposed Excise Tax would simply replace this “fee,” giving the city sufficient revenues ($4-plus million annually) to maintain services and provide time to do this exploratory research.
On average, municipal utilities have lower electric rates. According to the American Public Power Association, Colorado municipal power is more than 12 percent cheaper overall than that of investor owned utilities. “Muni`s” also have cheaper financing, so infrastructure investments cost less. (Per some calculations I did, Boulder could likely save the equivalent of the “franchise fee” just on the distribution system alone.)
The recent glossy mailer from Xcel Energy was likely prompted by the council`s concerns about renewing the franchise. Xcel apparently wants us to forget that they are a monopoly, that we are captive customers, and that they just finished building a huge coal-burning, CO2-emitting power plant near Pueblo that will cost us ratepayers nearly $900 million, to say nothing of the coal ash and other pollutants.
What the Xcel mailer did not say is also important: (1) Less than six years ago, Xcel strongly opposed Amendment 37, which created the renewable energy standard (RES) for Colorado. The current “30 percent RES” is 30 percent in name only. It is actually about 26 percent because most renewable energy projects will have each kilowatt hour counted 1.25 times; (2) Colorado`s recent and much touted “Clean Air – Clean Jobs” Act was a response to Federal air quality regulations. Thus Xcel is a “partner” by necessity, not by choice. Disappointingly, most of Xcel`s proposed fixes to potential air quality violations do not involve replacing coal plants with renewable energy, but with gas. So we will still have plenty of CO2 emissions, and will still face significant fuel cost escalation; (3) The “Solar Gardens” bill is a great idea (disclosure – I helped originate this concept), but the bill only allows very limited Solar Garden development in the first few years, so that its effect on limiting CO2 emissions will be correspondingly small. And because the law allows Xcel to own Solar Gardens, Xcel will be both buying and selling the energy. This conflict of interest is a disincentive for others to enter the solar garden business.
When I look at these sorts of outcomes, I see a fundamental problem — those who are making the rules are too influenced, whether politically or psychologically, by the for-profit utilities that they regulate. This is not a new problem. For example, in the past, monopoly utilities actually paid the franchise fees themselves to cities as an incentive to sign up. But over time, regulating agencies and legislatures allowed utilities to pass this cost on to ratepayers. Other expenses (fuels costs, pollution controls, etc.) were also passed through, giving investor-owned utilities guaranteed profits, and little incentive to keep costs down or treat customers properly.
Fortunately, many members of our City Council have recognized that we do not have to be tied forever to Xcel, and that we can and should explore our energy options. There is no downside; Xcel is required to keep providing electricity and natural gas while we do this. So let`s support the council in keeping our energy options open by putting the 5 Year Energy Excise Tax on the ballot, not the 20 year franchise commitment.


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