Boulder files to condemn Xcel’s assets

BOULDER – The city of Boulder filed Thursday in Boulder County District Court a petition to condemn portions of the electric system owned by Xcel Energy Inc. (NYSE: XEL) through eminent domain.

Boulder deems parts of the Xcel’s system as necessary to create a local electric utility that would serve customers within city limits. The move follows Boulder’s notice of intent in January to acquire Xcel’s assets.

Boulder has sought to create its own utility to achieve a greater mix of renewable energy, including wind and solar, while reducing greenhouse gas emissions that lead to climate change. Xcel does not want to sell its assets, saying that it can help Boulder reach its clean energy goals faster and more economically than the city can do on its own.

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“While we had hoped to reach an agreement with Xcel Energy that would make litigation unnecessary, the city is fully prepared to move forward in pursuit of our community’s goal,” said Heather Bailey, executive director of the city’s Energy Strategy and Electric Utility Development, in a statement.

An Xcel representative did not immediately comment on the petition. Xcel sued the city in June, contending that Boulder illegally formed a light and power utility. Boulder has asked a judge to dismiss the lawsuit.

Boulder contends that the state Constitution gives cities authority to condemn property both inside and outside city limits to provide public power to residents and businesses. Property owners have the right to due process and just compensation for the taking of their property.
The city has conducted “good faith negotiations” with Xcel since January, but those negotiations have failed. If Xcel is willing, there are opportunities to discuss settlement during the condemnation process, according to the city.

In cases where the parties do not reach a negotiated settlement, a city may file a condemnation case in court. The 43-page condemnation petition filed by Boulder on Thursday seeks to acquire all or portions of nine substations that serve Boulder as well as a transmission loop serving the city, related facilities, equipment and lines.

The substations meet the electric demand mostly within the city’s boundaries, but the same electric lines that serve inside the city also serve surrounding areas as well as city-owned properties and some out-of-city customers in the Boulder area.

Boulder would have to obtain a certificate from the Colorado Public Utilities Commission to serve those areas, but the city did not seek one in its petition. Instead, those customers could continue to be served by Xcel Energy, receiving their power from Xcel Energy’s sources and paying their bills to their current provider, while the city would own the lines over which the electricity flows if its condemnation petition succeeds.

“While the city needs to acquire an intact system from Xcel Energy in order to ensure high-quality and reliable service for our customers, we do not necessarily have to become the electric provider for out-of-city customers,” Bailey said.
The city said it may modify its petition to seek the certificate “if that becomes necessary.”