Opinion: The latest attempt to stop municipalization


Clearly, Xcel is behind the current attempt to amend Boulder’s charter in a way that could stop Boulder from creating a clean, innovative, and financially responsible electric utility. The proposed language was taken word-for-word from a poll Xcel did, and Xcel is intending to fund this effort to maintain its highly profitable monopoly. (See Camera stories of May 16 and 22.)
Here’s what the initiative says, and what it means:
The first paragraph requires that, “Before the utility issues any debt, voters must approve the amount of the utility’s debt limit and the total cost of debt repayment that the utility will incur…” This requires voter approval of both a debt limit and the total cost of debt repayment. This is much more stringent than even the Taxpayers Bill of Rights (TABOR). It forces a vote on the exact total cost of repayment, not on the maximum as TABOR requires. This means that the utility will have to guess at the final interest rate, because the vote will occur well before the bonds are sold. And since the initiative says “will incur” then the utility will have to pay that rate even if the market would buy the bonds at a lower rate, costing ratepayers millions in unnecessary interest payments. Unlike TABOR, it contains no provision for emergencies. So if a flood devastated Boulder, the utility would have to wait up to two years to borrow money to rebuild. (See below.) TABOR also exempts such non-tax funded utility “enterprises” from such votes. Finally, the language “total cost of debt repayment that the utility will incur” could arguably require an approval vote now to cover decades into the future. This is insane on the face of it, but will make fertile ground for attorneys to spend our money fighting over.
In addition, this is a clear attempt to prevent the utility from condemning Xcel’s poles, wires, transformers, etc. that the utility would need to deliver power. The courts require only that the utility have adequate bonding approval (already provided by Boulder’s 2011 vote) before beginning the condemnation process. But this initiative would force the voters to commit the utility to a specific dollar amount of bonds before the court has resolved the final price, potentially putting ratepayers on the hook for tens of millions of dollars more than necessary
The second paragraphs requires that, “The utility’s service area shall not extend to areas outside the city limits unless registered electors in those areas are permitted to vote in these debt limit and repayment cost elections, …” The reason that the utility would need to include residents outside the city limits is that, given the current circuit layout, reliability would be better for everyone. But, currently, neither the city nor the utility has the power to hold such an election. And the county cannot agree to hold an election for some arbitrary sub-group of its electors. No surprise, the state statutes do not appear to provide for the creation of a special district for this peculiar purpose.
Perhaps the proponents of this charter amendment are really trying to force the city to annex all the out-of-city residents, since that’s the only certain way to grant them a vote. But the city does not have the power to do this even if the City Council wanted to do it, which they don’t. Also, I note that the city has provided water and wastewater utility service to some of these out-of-city residents for decades. So if there’s an annexation threat, it’s coming from the entities pushing this initiative.
The third paragraph says, “Such elections shall be held on the dates of general municipal elections…” i.e. in November in odd numbered years. Because interest rates are at an all-time low, delaying the bond issuance for two or four years could lead to higher repayment costs, which of course will come out of Boulder ratepayers’ pockets. Future investment opportunities will be lost, and any emergency will become a much larger problem.
The final paragraph says, “Any brokerage fees…shall be limited to 1 percent of proceeds.” It is unclear whether this includes bond counsel, bond underwriters, bond salespersons, etc. Given the other complexities and uncertainties in this amendment, the cost of issuing bonds is likely to be far higher than otherwise, so this could be a show-stopper. But in any case, it just adds to this “lawyers full employment act.”


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