PUC dismisses portion of Boulder utility application, but case moves forward

DENVER — The Colorado Public Utilities Commission on Wednesday dismissed a portion of the city of Boulder’s application to create a municipal electric utility, but left the door open for the city to return with a supplement to its application that includes more robust technical details of Boulder’s plan.

Boulder submitted its application to the PUC in July outlining the city’s plan for acquiring from Xcel Energy all of the assets and equipment necessary to provide electricity to city residents. Included in Boulder’s acquisition plan was some equipment that also serves Xcel customers who live outside the city limits.

The three-member PUC’s decision won’t become official until sometime later this month when a written version comes out. But the commissioners essentially said they were dismissing the portion of Boulder’s application that seeks to acquire assets or equipment that serve only Xcel customers in unincorporated Boulder County. They noted that acquiring such equipment does not comply with the doctrine of regulated monopoly, which gives Xcel the right to serve such customers unless it is proven that the company is unwilling or unable to serve those customers. However, the commissioners did not seem to address whether the city could acquire equipment that serves both county and city customers.

“It is clear that the application as submitted infringes upon the exclusive service territory of (Xcel),” PUC’s chairman Joshua Epel said. “When the city submits a subsequent amended application, it must be designed to enable the city to provide service exclusively for the benefit of the citizens of Boulder without running afoul of the doctrine of regulated monopoly.”

In August, Xcel had filed its motion to dismiss Boulder’s application, arguing that, if the city owned all of the equipment serving county customers, Xcel would remain their service provider in name only and have little control over the reliability of those customers’ service. But rather than dismiss Boulder’s application entirely and require the city to start the application process over, commissioners said they would allow Boulder to return with a supplement to their application in the interests of time and not impeding Boulder’s plans to create a utility.

Epel said the PUC has been “agnostic” all along with respect to Boulder’s efforts to create a municipal utility. But he and the other commissioners noted that it is their job to ensure that any separation plans still allow Xcel — and the city for that matter — to provide safe and reliable service at a reasonable cost. To that point, the commissioners said that the technical and engineering analysis in Boulder’s application was not sufficient for them to rule on the city’s plan. As the city had requested, the commissioners felt it would be best for the city and Xcel to engage in discovery so that Boulder can submit a supplement to its application with more of the technical details.

Both city and Xcel officials were hesitant to comment too much on what the ruling meant until they see the written decision.

Xcel officials were pleased that the PUC agreed with the company’s assessment that Boulder’s current proposal violates the doctrine of regulated monopoly. They also said they hope the ruling causes the city to reconsider its plans to create a utility altogether. Xcel has asserted for years that the city could achieve its renewable energy goals faster with Xcel as Boulder’s electricity provider than by creating a municipal utility.

“The city will now have the opportunity to supplement and correct their plan in this proceeding, but we hope the city leaders will instead be willing to work together with us to help develop a plan for Boulder to achieve the carbon-reduction it had set as its goal for municipalization,” Xcel spokeswoman Michelle Aguayo said.

City officials, meanwhile, were encouraged by the PUC’s direction to move forward with discovery, and gave no indication that Wednesday’s decision would alter the city’s ultimate plans of creating its own utility. Boulder officials said Wednesday that the plan they submitted in their initial application was based on incomplete and outdated information.

“We’re very hopeful that this discovery will help us get the information so that collectively, working together (with Xcel), we can develop a plan that works for everybody,” said Sarah Huntley, a spokeswoman for the city of Boulder.

Timing could soon become a major issue in Boulder’s municipalization quest. Huntley said Wednesday that the city at this point still anticipates being able to begin operating its utility by the end of 2017.

The city’s PUC application will not be deemed complete until the supplement is filed, meaning the 210-day clock for the PUC to rule on Boulder’s application won’t start until that time. That means that the soonest Boulder would be able to receive regulatory approval for its plan would be mid-to-late 2016, with condemnation proceedings to follow.

Boulder voters in 2011 approved $1.9 million per year through 2017 to fund exploration and formation of a municipal utility. In 2013, voters passed a measure to place a limit of $214 million on the amount of debt that could be issued for the acquisition of Xcel assets needed to operate the city-run utility, as well as any stranded costs incurred by Xcel.

Huntley said it’s unclear whether it would be necessary for the city at some point to ask voters to extend the tax that is funding the municipalization exploration.

She said it’s also too early to speculate how Wednesday’s PUC decision might impact the overall cost of the project. The city had in its initial application included some assets serving only county residents because it felt such a plan provided for the fewest interconnection points with Xcel’s system and would lead to cost-efficiency and reliability. If the city can’t take those assets, the city might have to build some new facilities of its own or add interconnection points. But Huntley said the end result could include changes to the city’s plan that lower the cost of some aspects of the project.

“Until we can get the information we need to understand the technical issues, we can’t really begin to assess the cost implications,” Huntley said.

Boulder’s initial plan had included Xcel remaining the service provider for county customers residing within Boulder’s proposed acquisition area. Under the plan, Xcel would have “wheeled” power to its customers over Boulder’s system. But commissioner Glenn Vaad agreed with Xcel that such a plan overly restricted Xcel’s ability to ensure reliability and safety for its own customers.

“We cannot hold Xcel responsible if they don’t have complete authority over their service area,” Vaad said.

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