Boulder, Xcel turn up voltage on dispute

BOULDER — A dispute between the city of Boulder and Xcel Energy Inc. (NYSE: XEL) over Boulder’s desire to form its own electric utility has come to a head with the city’s recent filing to condemn Xcel’s assets.

Boulder accounts for 4 percent of Xcel’s electric sales, or 240 megawatts, and of that total, sales to commercial and industrial customers exceed 80 percent, according to Xcel. The dispute centers on three separate cases: Xcel’s lawsuit against the city of Boulder, litigation before the Colorado Public Utilities Commission and Boulder’s condemnation case.

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 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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Boulder and Xcel are embroiled in a legal conflict never seen before in the state, said University of Colorado Boulder law professor Richard Collins. Similar conversions from private to public utilities occurred decades ago, but the complexity of such a transition has escalated.

“There’s really no Colorado precedent for this dispute, so trying to predict what’s going to happen is guesswork,” Collins said. “There’s no detail that would give us any hint of how the contest today is going to be handled. Back then, the systems were much more primitive, simple.”

The city began the year Jan. 3 by informing Xcel of its intent to acquire parts of the utility’s electrical system. The Boulder City Council then followed up May 6 with an ordinance creating a municipal electric utility, which paved the way for the city to seek financing to form it.

Boulder also appealed in Boulder County District Court a decision by the PUC that the city lacked the authority to determine which parts of Xcel’s assets it can acquire. The city contended that the commission does not have the power to stop the seizure of Xcel’s infrastructure.

Xcel responded to the city’s formation of an electric utility by suing the city and council members in district court. The city has asked the court to dismiss the lawsuit, arguing that Xcel has failed to show Boulder violated the law when it created the utility.

The city filed a petition in district court July 17 to condemn portions of the electric system owned by Xcel through eminent domain, a move aimed at acquiring Xcel’s assets.

Collins said the city has a legal right to condemn Xcel’s assets and form its own utility, but the crux of the matter involves how much the city must pay Xcel for those assets. Boulder has set a $214 million cap on spending to acquire Xcel’s assets, although a report by Boulder city employees and consultants says forming a utility could cost as much as $405 million.

“At any time, Xcel could try to cut a deal with the city and agree to the city’s proposal, but so far every public indication is they don’t want to do that,” Collins said. “They want to resist the city to the full extent of the law.”

Xcel and Boulder have continued to outline their arguments in court filings through this month, but the dispute soon may enter a courtroom if a judge agrees to allow oral arguments to begin, said Nadia El Mallakh, assistant general counsel for Xcel.

“It would be an opportunity to discuss the pleadings that have been filed before the judge,” she said.

Earlier this month, the city council was set to consider approving a ballot measure for voter consideration Nov. 4 of an ordinance allowing council members to discuss the litigation in private.

Xcel said it isn’t taking a position on the closed-meetings proposal. A Boulder spokeswoman did not respond to requests for comment for this story.

Steve Lynn can be reached at 970-232-3147, 303-630-1968 or slynn@bizwestmedia.com. Follow him on Twitter at @SteveLynnBW.