Steve Pomerance

We are closing in on the end game. Xcel`s grand experiment of SmartGridCity is dying of its own financial and technical weight without ever having fulfilled many of the myriad of claims that Xcel made when they proposed it. The story is both depressing and illuminating. Around six years ago, the City of Boulder started to look at the idea of taking over from Xcel the business of supplying electric power within the city limits. The process is called “municipalization,” and is well defined in state law. (For example, Fort Collins, Colorado Springs, and Longmont are all munis.) Then, a few years into this study, in March of 2008, Xcel announced that Boulder was going to be its grand experiment in implementing a “smart grid.” The project was called SmartGridCity, and was supposed to provide customers with real time data on their electric use, allow Xcel to manage demand in order to make more efficient use of its generating facilities, support better integration of intermittent renewabl...

As the Great Recession continues to impact local governments, we are seeing the effects of the various shortcuts that have been taken in the way we pay for services. When prices do not accurately reflect costs, serious budget problems can occur. Here are some examples. The City of Boulder is considering raising fees for recreation facilities and classes so as to more accurately reflect the real costs. Since these fees were previously subsidized, when sales taxes drop, shortfalls occur. Increasing fees seems a legitimate solution, but this economic necessity may not match the socially desirable outcome of having more people participate in these activities. The city is also looking at raising water rates. The rates, which are now pretty close to being cost-based, have actually induced conservation, which what was the intent. But the effect is that the utility is now running an operating deficit. Why? The reason is that most of the costs the utility incurs are fixed, like labor and ...