Opinion: Working group process is more show than tell


Xcel Energy, in what appears to be an attempt to gain a PR victory to try to stop Boulder from creating a municipal electric utility to escape from Xcel’s coal-intensive monopoly, asked the city to engage in yet another last-moment process. I fully expect Xcel to use this to try to kill the muni process so it can keep its Boulder customer base.
The first four Xcel-City processes in the last five years produced little to nothing of value: The first was SmartGridCity, which Xcel promised to be the Holy Grail by helping integrate solar, wind, and demand management, providing real time billing and information, and costing the ratepayers nothing. SGC ended up producing little of customer value, and ratepayers are already on the hook for nearly $30 million of its costs. Then came the franchise negotiations, in which Xcel basically stonewalled the city. After the vote on the occupation tax that replaced the franchise came the city’s offer to Xcel to be its “laboratory” , where Xcel could take advantage of Boulder’s interest in innovation, exactly what Xcel claims it wanted; Xcel rejected it out of hand. Finally there was the wind deal, where Xcel offered a “contract for differences” that, as Mayor Appelbaum put it, gave the city 100 percent of the risk but zero percent of the control. Remember the famous quote commonly attributed to Einstein, “The definition of insanity is doing the same thing over and over again but expecting different results.”
This latest process will have to somehow integrate Xcel’s and the city’s goals. Xcel presumably wants to keep it’s customer base, maintain continuing opportunities to invest billions of dollars of equity on which it gets an almost guaranteed rate of return, and protect its coal plant investments. Boulder wants local control, cleaner energy, flexibility to deal with future changes in laws and technology, freedom from coal-based power and the carbon tax/cap-and-trade risks that come with it, a focus on energy efficiency and demand reduction, opportunities for technology innovation in clean energy and creation of associated jobs, and the transfer all this to other cities. All this is supposed to be meshed in a way that passes legal, financial and technical muster in a few months.
To call this a complex project with a tight timeline is a complete understatement. To do it properly would involve significant redesigns of parts of Xcel’s physical, regulatory, and financial systems. So to produce anything of significance, all participants should be coming in with an extremely high level of knowledge and experience with how utilities operate and are regulated. This is unfortunately not the case – no criticism intended. Just to provide some comparison, last year I attended a conference with about 30 very informed high-level players who have spent their careers working on these types of issues (ex-PUC commissioners, NREL experts, etc.). Even after three long intense days of discussion (more hours than the Xcel-city group will meet in total), they were still struggling to integrate all the pieces.
Another difficulty is how group recommendations are to be vetted and selected. Right now, there is no clear process to determine what proposals will be included in any reports. In this group, because of the still rather opaque (to me) selection process, a very few are in favor of municipalization and the majority, for various reasons, are against it or highly skeptical at a minimum. So unless every recommendation is given equal weight, and not selected based on the usual voting or sticky dots processes, this imbalance will make any recommendations that emerge highly suspect.
If Xcel wants to show it is serious about doing something that will work for its whole service territory, that will really clean up its energy supply, and that will deliver energy as a service rather than a commodity, then the first step would be to put on hold its $300-plua million investment program in fixing up its coal plants.
These coal plants are dinosaurs; they put out far too much CO2 and cannot ramp up and down fast enough to match wind and solar. The next step would be to re-assemble this project into a smaller group of people expert in utility issues who can instantly get to work at the high level required. A larger group of people with a balance of interests and opinions can then review the output.


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