Opinion: Moving forward on the “muni”


On Tuesday night the Boulder City Council discussed the report on the potential for Boulder to create its own municipal electric utility, like Longmont, Fort Collins and many other Colorado cities. The conclusion of the report was that a muni could deliver rates competitive with or below Xcel’s, a lot more renewable energy and much lower GHG emissions, and as good or better reliability, all on a solid financial basis, assuming that Boulder does not have to pay Xcel an exorbitant amount for “stranded costs.”
The modeling results compared a number of different options. A critical aspect was to ensure that the Xcel “baseline” option, to which the muni options were compared, was conservative. So the Xcel option was given the benefit of the doubt on whether Xcel’s planned $3.5 billion capital investment program was fully incorporated into rate projections for Xcel, and whether coal costs will continue to rise faster than Xcel’s official estimates.
The Low Cost and the Low Cost/No Coal options were very appealing. They optimized a mix of wind, solar, electricity spot market purchases and power purchase agreements with gas generators so as to minimize total costs. (Many energy providers have already contacted the city, so there are real providers ready to bid.) The No Coal option was further constrained by eliminating spot market purchases that could be partially coal powered. The results were that renewable energy increased quickly to 50-60 percent, CO2 emissions were reduced by more than half from current levels, and rates were below those projected for the Xcel option. These levels do not count on additional extensions of the tax credits, etc. All the renewable energy prices were based on investment in new facilities, so no one is being deprived of existing renewables if Boulder becomes a municipal utility.
Fugitive methane from gas drilling is a real issue, and the options address it. For example, by 2037 the Low Cost option is less than 40 percent gas, whereas Xcel, per their 2011 resource plan, will be at 51 percent gas plus 20 percent coal. Further, a muni can contract with its independent power producers to buy gas from drillers who use Best Available Technology and Best Practices to limit fugitive emissions, water and air pollution, and other environmental impacts.
Another important point made was that although investing in increased energy efficiency and demand management may raise the per Kwh cost, it could lower bills, since total consumption would be reduced, and efficiency is a very cost-effective investment/resource. Thus, although the Lowest GHGs/Increased Efficiency option came out with slightly higher rates than Xcel, in the end, it would likely be both the cheapest for the ratepayer and the most environmentally benign. It is definitely worth further exploration, as some council members noted.
A question was asked as to whether ratepayers, whether inside or outside the City, should have a choice about being part of the muni. It’s interesting that this issue is being raised now, whereas in 2001, when Xcel took over Public Service Company of Colorado, and rates, which had been going down, started going up, no one asserted that they should have been given the right to get power elsewhere. Also, it’s not unheard of for muni’s to have out-of-city customers; Fort Collins has had them for decades.
Finally, some are pushing for a citizen task force, made up of Xcel and city appointees, to look for opportunities for “partnership.” To avoid this becoming like Congress, wasting months with no product other than nasty press releases, it needs a tight timeline. And there are some fundamental issues that will need to be resolved: First, real partnerships require equality, and frankly Xcel is the “800-pound gorilla” , with huge clout at the Legislature and the PUC. Second, any partnership arrangement needs to be replicable, so that whatever Boulder works out is available to other cities. Third, if other cities go green (as I expect, and survey data supports), then the PUC and the Legislature will finally have to address the probability that Xcel’s coal plants (including those to be refurbished under the Clean Air Clean Jobs Act) will be stranded for lack of customers. Xcel needs to decide if it really wants to become a utility of the future and implement the innovations it claims it wants from Boulder, because a real partnership will result in radical changes in how energy is delivered.


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