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City staff recommends that voters be asked to support a local power utility

City Manager Jane S. Brautigam

Brautigam also said she is confident that the process following a vote for municipalization will provide adequate opportunities to address concerns raised by some that the cost of purchasing the system from the current provider, Xcel, could exceed current estimates.

A positive vote is required before the city can enter into acquisition negotiations and/or condemnation proceedings. During this process, the city would determine what the final price would be. If the costs of buying Xcel’s system turned out to be significantly higher than anticipated or would result in rate increases that were unacceptable to the community, council would be under no obligation to issue the bonds necessary to pay for buying the system and launching a utility. The city could then re-consider how to proceed.

“There are off-ramps in place that allow the city to move forward with its eyes wide open,” the city manager said. “Our community has spelled out both its goals and its expectations. City staff and elected officials take the responsibility of balancing these very seriously.”

The recommendation follows more than two years of discussions about whether to enter into another 20-year franchise agreement with Xcel Energy. In 2010, City Council rejected that option, determining that a business-as-usual contract for two decades was too long and would limit Boulder’s ability to take advantage of exciting changes in the energy industry. Since then, the city and the community have been involved in an intensive study and discussion of other options.

The Boulder community has set clear energy future goals. These include cleaner energy, with as much local generation as possible; reliability; rate stability and more local decision-making and control.

The city hired industry specialists to conduct a detailed financial assessment of the possible creation of a local utility. They have concluded that Boulder could buy the system from Xcel, pay off the debt associated with those costs, start a utility and operate it reliably while still making money. The local utility would be able to keep customers rates lower or equal to what they would be under Xcel, maintain emergency reserves and still have a net present value of $112 million over 10 years. The cost model developed by the consultants has some room for increased costs. This flexibility is spelled out in more detail in a staff memo to council.

The staff recommendation also includes support for an increase and extension of the Climate Action Plan tax. While a locally owned power utility would cover its costs entirely through its revenues once it was up and running, the city would need additional money to cover engineering and legal expenses before that time. It is estimated that the city would need about $1 million a year for three to five years before a final determination could be made about whether to issue bonds to buy Xcel’s system. This funding mechanism would allow the city to continue this process without impacting existing programs and services.

City Council is scheduled to meet on Tuesday, July 19, starting at 5 p.m., to discuss items for the November ballot. The full memo and other valuable information about the energy future project are available at http://www.boulderenergyfuture.com. There is also a comment form on this website if community members wish to give input to the staff team and City Council.