5 Min Read
UPDATED: A city that wants to run its own utility is not an entirely new concept. But the Colorado city of Boulder has embarked on a path to do just that because it wants more clean power than what its long-time utility is willing to provide.
The city council voted on Tuesday night to put a measure on the November ballot that will ask its residents if it should form its own utility. The city’s franchise agreement with Xcel Energy expired last year, and the city was looking at either getting Xcel to provide more clean power or forming its own utility, which the belief is that a locally-controlled utility would have more control over the type of energy it purchases.
The ballot will ask voters if Boulder should pass a bond measure to operate the utility, and will also ask residents if they are willing to double the Climate Action Plan tax to help pay for the cost of negotiating with Xcel to get the municipal utility started.
Boulder, which has a population of roughly 293,000100,000, will have to come up with money to buy the distribution system from Xcel and will need to create plans about where to buy the cleaner electricity. It could buy it from Xcel directly or other power producers. The process of negotiating and setting up a municipal utility will likely take three to five years, said Sarah Huntley, a spokeswoman for the city.
The council has also hired consultants to look into the legal and engineering challenges of starting and running a utility, as well as the costs, Huntley said. Although the city won’t be able to negotiate with Xcel on key issues such as buying its distribution system, until after the voters approve the ballot measure, the city believes it can provide services at the same rate or even lower than Xcel, Huntley said.
The city’s estimates peg the cost of running a utility at $13 million per year. On top of that there will be $59.1 million in costs per year to buy power and $24.7 million of annual debt for the bonds issued to help pay for operating the utility, Huntley said. The city also anticipates spending $6 million in legal and engineering fees to negotiate with Xcel, and this money will come from the Climate Action tax.
Local Energy Independence
Creating a municipal utility isn’t a completely new idea. There are more than 2,000 community-owned utilities in the country, according to a trade association, American Public Power Association. Most of them are quite small. But larger cities such as San Francisco have entertained forming their own utilities in recent years. California utility Pacific Gas and Electric spent millions of dollars last year to lobby for a ballot measure, Prop. 16, that would’ve limited the local governments’ ability to create their own utilities. Voters didn’t approve that measure.
Xcel was pushing for the city to renew its franchise agreement with the city for another 20 years. In June, the utility proposed to toss in a 200-megawatt wind farm as part of the franchise agreement. With the wind farm and new proposal, Boulder would get 70 percent of its electricity from renewable sources after the wind farm comes online and eventually reach 90 percent by 2020. The wind electricity would flow into Xcel’s grid but Boulder would get the energy credits to offset its emissions. However, talks about the proposal broke down last week.
Because Boulder is still served by Xcel, the city’s renewable energy mix corresponds with what the utility provides to all of its service territories in Colorado. Xcel is the largest utility in the state, and it gets 10-12 percent of its electricity from renewables, mainly wind, said Gabriel Romero, a spokesman for Xcel. The state mandates 30 percent by 2020, which Xcel is on track to meet with more wind power, Romero said. More than half of the electricity provided by the utility comes from coal.
Xcel argued that, as a municipal utility, Boulder wouldn’t have the resources to get away from buying power generated from coal or natural gas. Wind or solar electricity isn’t available around the clock, for one thing. Renewable electricity also is more expensive, so it’s not likely to be cost effective for Boulder to run its own power service, Romero said.
“The question is do they really care about renewable energy or do they just want to municipalize?” Romero said. “It’s disingenuous for them to say we want to do it because we want to be green. That’s not a valid agreement in the eyes of Xcel Energy.”
Photo courtesy of Boulder and Google.
Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.Putting Big Data to Work: Opportunities for EnterprisesReport: Cleantech’s Third-Quarter Growing PainsCleantech Was a Market Leader in Q4