Opinion: The flood, utilities, debt and big money politics


Last Friday, after we checked for flood damage, I emailed pictures of the flood to my brother, who was at a National Academy of Science workshop in Maryland. The scientists there were discussing the effects of the loss of arctic sea ice on the exact type of weather patterns that we were experiencing. In brief, the loss of ice cover has allowed more heat to be absorbed, reducing the temperature differential between the arctic and temperate latitudes. This has led to “blocking” of the jet stream, creating stalled weather patterns like the week of rain we experienced. And we can expect more extended periods of rain, drought, etc. in the future.
In the vein of not letting a crisis go to waste, and as I suggested to the city manager last week, Boulder should hold neighborhood and area meetings to do a retrospective on Boulder’s flood preparations. When I was on the council, we put in place an extensive program to improve the carrying capacity of our floodways and remove a number of at-risk buildings. The value is evident when comparing damage in Boulder to what happened elsewhere. But more is needed.
Now, while memories are fresh, we should update flood maps, alter street levels and cambers, rebuild pipes and culverts to increase carrying capacity, etc. In my immediate neighborhood, there is a lot of support for doing this, as some of the damage was avoidable. And there seems to be general agreement on bonding for these improvements so they get done now, not in 10 or 20 years, as well as continuing the current practice of having all properties pay, both those with water running off as well as those with water running on.
This brings me to Ballot Question 310, the Xcel-sponsored “poison pill” measure to stop Boulder’s municipal electric utility, toward which Xcel just put $300,000. Aside from its other problems, if 310 were in place, our utility would have to wait until 2015 at the earliest to borrow to underground downed wires, for example. And because of 310’s absurd requirement for up-front voter approval of “total cost of debt repayment” – not an upper limit but the exact amount – the utility would have to set the ballot amount based on more debt and a higher interest rate than might be needed to be sure that neither would be exceeded at bond issuance months later. So we would end up owing and paying more than necessary.
But what did you expect? “Regulated” investor owned utilities are money-making machines. High returns on investments are all but guaranteed by various court rulings that force regulators to reward the utility’s investments based on what other utilities get, a ridiculous circular process that has Xcel earning over 10 percent on equity, far more than we can earn on safe investments. The PUC’s analysts are forced to compete with Xcel’s myriad of lawyers and accountants, whose salaries and fees are “expensed,” meaning included in the rates we pay. A public utility has a huge advantage over an IOU — it doesn’t have to pay these exorbitant profits to investors for albatrosses like Comanche 3, Xcel’s latest coal plant, which was built in the face of climate change and global warming. Note that 10 of 11 City Council candidates are against Ballot Question 310.
Relative to the issue of debt, if we continue with Xcel, we will be saddled with a huge debt. When you add up Boulder’s portion of Xcel’s $5.6 billion “rate base” (the investments Xcel has made, including in its coal plants, that we still have to repay), the $1.3 billion CleanAirCleanJobs Act, and the billions more that Xcel plans to invest (per their investor presentations), what we would owe Xcel will almost certainly far exceed any debt the muni could take on under existing charter restrictions on rates and debt service coverage ratio.
Back to the flood. On Oct. 3, the council was to vote on annexing the Hogan-Pancost property by the East Boulder Community Center. Almost everyone in that immediate area had their basements flood, many for the first time. This problem would be made much worse by developing the H-P property. Fortunately, the developer just withdrew his request. The council should permanently re-designate this property, so it cannot ever be developed at urban densities.


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