Boulder declares intent to acquire Xcel assets

BOULDER – The city of Boulder on Monday sent formal notice to Xcel Energy Inc., informing the utility of the city’s intent to acquire parts of its electrical system.

The notice kicks off formal negotiations with Xcel on the assets that Boulder would need to create a municipal electric utility. Good faith negotiations are required by law before the city can file condemnation action in district court. Xcel has maintained its position as an unwilling seller throughout the city’s exploration of municipalization.

The notice released Monday details the equipment that the city intends to acquire, including all or parts of seven substations plus a 115-kilovolt transmission loop serving the city and access to service the substations serving that loop.

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Boulder leaders have asserted that a city-run utility could help the city achieve its goals of reducing greenhouse gas emissions while simultaneously maintaining or improving rates and reliability.

“This notice starts what we hope will be productive and collaborative formal conversations with Xcel Energy about the equipment we would need if we choose to meet our community’s goals in this way,” Heather Bailey, Boulder’s executive director of energy strategy and electric utility development, said in a press release. “It would benefit everyone – the city, Xcel Energy and ratepayers across Xcel’s service territory – if both parties could reach an agreement on this issue.”

By law, Xcel has 90 days to have the property appraised at Boulder’s expense and enter into negotiations. The company could also decline to enter into negotiations. Should Xcel have its own appraisal done, the city would then be required to submit its appraisals of the property to Xcel. At that point, there’s no set timetable for how long negotiations must last before Boulder could file for condemnation. But the law does require that Boulder submit to Xcel a written final offer before proceeding to trial if the parties can’t agree on a price through good faith negotiations.

Xcel spokeswoman Michelle Aguayo said it’s too early to say whether the company would enter into negotiations as Xcel officials are still evaluating Boulder’s notice.

“Xcel Energy has received Boulder’s notice of intent to acquire, which is under review,” a statement from Xcel read. “We continue to believe that we can help Boulder achieve its goals better, faster and cheaper by working together instead of Boulder attempting to take over our business.”

When Boulder city council gave staff the go-ahead to begin pursuing acquisition of Xcel’s assets last summer, the original timeline called for good faith negotiations to occur in the fall so that the city could file for condemnation as early as this month. But that timeline was delayed for a couple of reasons.

The city was waiting to see the results of a couple of utility debt-limit measures on the November ballot to gauge the community’s interest in moving forward with municipalization. The city also wanted to learn the results of a proceeding with the Public Utilities Commission and how that would affect the municipalization process.

The PUC ruled in October and confirmed its ruling in December that, because Boulder’s municipalization plans include serving customers and acquiring assets outside the city limits, the city must have the technical aspects of its acquisition plan approved by the PUC before filing for condemnation.

The city has until Jan. 15 to appeal the PUC decision to district court. If it does, it could still start working with the PUC on the approval process while the appeal is in process. The approval process is expected to take up to seven months from the time the city files its acquisition plans with the PUC, meaning it would be the second half of this year before Boulder could file for condemnation regardless of how good faith negotiations go.

In addition to the notice of intent to acquire, the city also announced Monday that it is in the process of seeking requests for proposal for legal and regulatory consultants to join the city’s efforts on issues related to the PUC and the state’s regulatory processes.