Opinion: The Xcel proposal and the ‘pause’ fantasy


Xcel is a for-profit monopoly that was created in 1998 to take advantage of outmoded, non-competitive, but highly profitable regulated utility systems in multiple states. Xcel wants Boulder to give up its chance for freedom in exchange for a new franchise that effectively locks Boulder to Xcel for 20 years, guarantees nothing of substance in return, and from which the escape terms are so expensive or painful that they could not ever be used.
As Camera readers, I suspect you’ve already read about the flaws in Xcel’s proposal. But just to reiterate some important points: Practically everything would have to go through PUC review, and so could easily be stopped. The renewable energy programs offered are either already available or overpriced. And giving Boulder what it doesn’t offer to others would put Xcel at risk in all sorts of ways.
Perhaps the biggest flaw is that Boulder could not really enforce the terms. It was clear going into discussions over a year ago that it would be a non-starter if Boulder had to spend millions of dollars and years of time at the PUC to implement proposals or resolve disputes. So the only way to gain the needed leverage would be to have a fast and inexpensive way to exit and then create a municipal utility.
But the two exits Xcel is offering at the five-year point are unusable: 1) Boulder could “buy out” Xcel’s facilities, or 2) Boulder could restart the PUC process, basically putting us back where we are now, but in a much worse position with the PUC.
In the “buyout,” Xcel wants Boulder to pay 80 percent more than what Xcel still has in its Boulder facilities. This is almost $100 million more than Xcel would ever get if Boulder remained a captive customer. To add insult to injury, Xcel also wants 25 percent of its then current revenues from Boulder to continue for 10 years after Boulder takes over. By 2023, this would start at almost $40 million a year, and would be for doing nothing, since Boulder would be running its own system. Xcel’s terms for physical separation would likely add an additional $100+ million above the city’s cost estimates. All together, these would push the muni’s bond ratings far into junk bond territory and its electric rates would be way above Xcel’s. So this “buyout” provides no leverage, simply because it could never be used.
Xcel’s main proposal is pretty much a standard 20-year franchise, but with a half-Xcel, half-Boulder committee to supervise future efforts, so paralysis is guaranteed. One interesting teaser is Xcel’s offer to buy any renewable power that Boulder might generate. But Boulder would have to get proposals, contract with suppliers, and then still go through the PUC/Xcel resource plan bidding process. So for all that brain damage, Boulder would actually not be increasing the renewable percentage in Xcel’s portfolio. Another teaser is that Xcel is offering to pay Boulder the money for undergrounding that Xcel has not paid since 2011. But this money should never have been shut off in the first place, since state law requires equal treatment of all ratepayers.
A critical question is what the PUC commissioners would think if a majority of the City Council hit the “pause button” now, right before the PUC is about to make some important decisions, and then put this Xcel proposal on the ballot. If I were in the commissioners’ shoes, the first thing I’d do is ask my staff to evaluate this proposal and see if there was anything really worthwhile for Boulder. Since there isn’t, and it would be yet more work for the PUC, I’d start thinking that the “pause” and ballot measure indicated that Boulder wasn’t really serious about its energy future. So I would certainly view any future attempts to reopen the municipalization process with a very jaundiced eye, compounded by my irritation at having to get up to speed again on the issues.
So a “pause” will just make things tougher. Let’s get the upcoming PUC decisions, and find out if we will have a clear path to implement our constitutional right to municipalize. We also need to remember that the utility universe is changing rapidly. The Legislature could clarify the rules for municipalization, or Colorado could end up with a competitive system with consumer choice, like much of the rest of the country, including Texas! We certainly don’t want to be locked into in Xcel’s 1920s utility model when that shift occurs.

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