City outlines Boulder/Xcel partnership

BOULDER – The creation of “Xcel Boulder” or the enhancement of SmartGridCity could be the basis of a future partnership that would keep the city of Boulder in the Xcel Energy system, according to a white paper released Thursday by the city.

The 17-page document outlines the city’s goals and introduces ways it thinks Xcel Energy and the city could achieve them in a way that would not result in Boulder creating a municipal utility.

The paper was authored by the Energy Strategy and Electric Utility Development Department, which is headed by executive director Heather Bailey.

The authors said achieving goals Boulder already has established should be the priority. Those goals include ensuring Boulder has a stable, safe and reliable energy supply while getting power at a competitive price. The city also wants a provider that can cut carbon emissions and pollutants and gives Boulder residents and customers a greater say about their energy supply and sources.

That could mean remaining in the Xcel Energy Inc. (NYSE: XEL) system if both sides could agree to a common strategy and the investor-owned utility is willing to accommodate Boulder’s goals.

“The strategy should focus on changing the energy supply system and traditional utility model. Changing ownership of the local distribution network may ultimately prove to be a means to achieving the energy future goals of the community, but it is not the end in itself,” the report said.

Possibilities it discusses include creating “Xcel Boulder,” which would be a partnership with Xcel that would serve Boulder and be committed to achieving Boulder’s goals while leaving management of the utility to Xcel.

Boulder also would like to consider improving SmartGridCity so it can better support distributed generation from sources such as residential and commercial solar panels.

Xcel Energy received the white paper Thursday afternoon and did not collaborate on its creation or receive an advance copy, said Jerome Davis, the company’s Colorado vice president for customer and community relations. He said the company is unready at this time to discuss it contents.

“We haven’t really had the opportunity to review it and analyze it in great detail, so it’s probably premature to comment in detail on it,” Davis said.

Xcel Energy believes state regulations limit the ways it could form Boulder-specific programs, Davis said, and when it considers changes it has to act in ways that benefit all its customers across the state.

Xcel still believes Boulder could best reach its goals by staying with the utility, Davis said.

Producing the paper is part of Boulder’ commitment to explore all options, city spokeswoman Sarah Huntley said. The city also hopes it leads to future meetings with Xcel Energy where the two sides generate ideas about new ways of working together.

Boulder voters in November 2011 narrowly approved ballot measures that give the City Council the authority to create a municipal utility. Since then, there have been occasional meetings between the city and Xcel Energy executives. Both sides said the meetings did not really address ways the two sides could work together and avoid potential litigation.

Since the election, Xcel Energy executives said it is up to the city to make the first move when it comes to discussing ways to collaborate or negotiate about acquiring the company’s assets. Huntley said that’s what Boulder intended to do with the white paper.

“This is really an attempt to invite Xcel to move beyond that posture and think about some of the ideas we’re proposing as well as some ideas they could propose,” Huntley said. “We felt like someone had to take the first step forward.”

Davis said the white paper could be a productive first step.

“It’s a good thing the ideas are there. There are things in there you can probably say are attainable. There are other things in there that are more of a challenge,” Davis said.

Boulder’s energy staff will continue to study whether forming a municipal utility is feasible and would be the proper course to follow. It is expected to recommend to the Boulder City Council whether or not the city should municipalize early next year. The council could decide in March whether to initiate legal proceedings that could lead to Boulder taking the system through condemnation litigation.

Xcel Energy would like Boulder to delay that for several months so the two sides can discuss options, Davis said.

Huntley said the city has a small window for action until the funds allocated for the project run out, and climate change makes action urgent. She said the city could simultaneously study municipalization and take the initial steps toward creating a utility while also negotiating with Xcel.

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