“We anticipated the city council would move forward with Phase 2 of its plan and the continued promotion of municipalization to the community,” Michelle Aguayo, an Xcel spokeswoman, said in a prepared statement Wednesday. “We will work with the city and a task force of Boulder citizens to create new energy options that will allow Boulder to achieve its energy goals better, faster and cheaper with Xcel Energy than through the risky municipalization of the utility.”
City council members voted 8-1 Tuesday night to move forward with plans to create a municipal electric utility that is expected to run using more renewable energy than is currently used. Councilman Ken Wilson cast the lone dissenting vote.
The council also voted 9-0 in favor of the city hiring a third-party, independent consultant to review the city’s analysis of plans, including financial costs.
City staffers will start preparing for condemnation proceedings against Xcel, the current electricity provider, to acquire the utility’s infrastructure that delivers energy to Boulder’s residents and businesses.
In addition, the city is expected to refine its financial modeling to show whether it could provide cleaner energy at similar or lower costs, according to Heather Bailey, the city’s executive director for energy strategy and electric-utility development. Natural gas may be used as the reliability factor in a utility that uses wind power and other renewable energy, Bailey said.
Minneapolis-based Xcel Energy (NYSE: XEL) also is analyzing existing usage data, Aguayo said.
About 50 people spoke at the Boulder City Council meeting on Tuesday, with most in favor of creating a new municipal electric utility.
Boulder Chamber spokeswoman Angelique Espinoza, one of the speakers, said the chamber wants to work with the city regarding creating a new electric utility. Her comments came after the chamber in a letter Monday asked that voters give their support again to the idea of a city-owned utility before the city moved forward.
Boulder voters in November 2011 narrowly passed two ballot measures – one giving the city a $1.9 million annual budget for five years to study how to create a municipal energy utility, and the other giving the Boulder City Council the authority to create such a utility under certain conditions.
However, asking voters for their support again could “effectively preclude the city from pursuing condemnation,´ said Tom Carr, city attorney.
Mike Grim, executive manager of Denton Municipal Electric, made a presentation Tuesday night to explain how the city of Denton, Texas, used its municipal utility to attract economic development. In 2009, the Denton utility was powered half by coal and half by natural gas. It’s now powered 40 percent by wind, Grim said.
Condemnation proceedings against Xcel could start in August, under a timeline put together by the city. After that time, the city may have to pay Xcel Energy’s legal fees if it decides to end the municipalization process, according to Sarah Huntley, a city spokeswoman.
The legal charter governing Boulder as a city puts requirements – mainly financial – on the potential municipalization process, Huntley said.
For example, rates charged to customers must be the same or less than Xcel Energy would charge if the city of Boulder creates an independent utility, Huntley said. In addition, the city must show it has debt coverage of 125 percent to pay back the debt on bonds that have yet to be issued, Huntley said. Such bonds would help finance the cost of the new utility.
Other requirements for a city utility include similar or better reliability than that of Xcel Energy, a plan for increasing renewables and a plan for decreasing greenhouse-gas emissions, Huntley said. If the city can’t demonstrate that it can meet all five requirements, the municipal utility plan can’t go forward, Huntley said.
The Boulder citizens’ task force group meeting to discuss how Boulder could work with Xcel is expected to make recommendations in July, according to a timeline laid out Tuesday night.