PUC’s muni ruling leaves Xcel satisfied

BOULDER – Xcel Energy Inc. officials said they were satisfied with the Colorado Public Utilities Commission’s written ruling regarding the city of Boulder’s plan to break away from Xcel and form its own electric utility.

In a verbal ruling issued in October, the PUC asserted that it retains ruling authority over whether a Boulder municipal electric utility could serve customers in unincorporated parts of Boulder County. It also affirmed its authority over how Boulder would be allowed to separate the system from Xcel to maintain reliability for all customers.

The city acknowledges those two points but the timing is a sticking point, said Sarah Huntley, a spokeswoman for the city.

The ruling would require the city to seek permission from the PUC to serve county customers before filing eminent-domain action in court to condemn Xcel’s assets. Also before filing for condemnation, the city would have to bring its separation plan before the PUC for approval.

“It was not the exact ruling that we requested, but it is a ruling that we see as appropriate,” said Paula Connelly, managing attorney for regulatory practice at Xcel.

Xcel in May filed a petition for five declaratory orders:

• If a municipal utility seeks to serve customers located outside the city’s boundaries, it is subject to the jurisdiction of the PUC.

• The PUC already has granted Xcel a certificate of public convenience and necessity to serve the 5,800 county customers the city is proposing to serve with its municipal utility.

• Under Colorado law, there can be only one certificated utility per geographic area.

• The certificate of an existing utility cannot be taken away without due process of law, which requires a hearing before the PUC and proof by substantial evidence that Xcel is unwilling or unable to serve the certificated area.

• The need to construct replacement facilities as a result of actions taken by a challenging utility does not constitute an inability to serve.

Boulder didn’t dispute the first three orders, and the PUC confirmed them in its written decision. As for the fourth and fifth points, the PUC issued its declaratory rulings asserting that Boulder must seek its approval on how to separate the systems and whether it will be allowed to serve county customers before filing for condemnation.

“That’s one of the things we’re evaluating,” Huntley said. “We’re seeking to understand that better.”

Boulder didn’t totally cede defeat because the PUC ruling clearly acknowledged the city’s right to condemn Xcel facilities for the purpose of creating a municipal utility.

City attorney Tom Carr issued a statement regarding the ruling that read: “Today, the PUC acknowledged that the city of Boulder has authority to condemn facilities outside the city. The PUC also recognized that joint use of the system may be appropriate. The commission granted only the first three requests for declaratory orders – all of which were issues with which the city agreed. With respect to the final two orders sought by Xcel Energy, the commission directed that there needs to be further proceedings. The city is continuing to evaluate the ruling and explore its options. While the ruling may have some practical and legal implications in terms of the process the city would take to create its own electric utility, the decision affirms the city’s right to municipalize.”

The PUC ruling stated that parties have 20 days to file an application for rehearing, reargument or reconsideration. Huntley said that would be one of four potential options for Boulder. She said the city also could file a motion of clarification of points that are confusing to city officials. The city could appeal in district court or accept the ruling and adjust timelines and strategies for municipalization accordingly.

The PUC’s assertion that Boulder must seek its approval before filing for condemnation could delay the city’s municipalization efforts by several months. The city council adopted a plan in August that would allow for city staff to file a condemnation suit as early as January if a deal to acquire Xcel’s assets couldn’t be reached sooner.

The PUC believes it is vital to determine such matters before condemnation.

The commission also set a high bar for Boulder to prove in trying to take over Xcel’s certificate of public convenience and necessity. Essentially, Boulder would have to prove that Xcel is unable or unwilling to provide adequate service.

“We are clearly willing and able to serve these customers,” Connelly said, “so it’s a very high bar to prove.”

Boulder has argued all along that a municipal utility would benefit all of its customers by providing cleaner energy, equal or better rates and equal or better reliability. But the PUC also stated in the ruling that “evidence that the challenging utility may provide better service or may serve the customers more easily cannot be the basis of a finding that the existing utility is unwilling or unable to serve its certificated area.”

“I think that is an issue that would have to be fleshed out in future proceedings,” Huntley said.

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