Xcel Energy says it’s willing to work with Boulder on power purchase agreement

In a letter to the city of Boulder on Monday afternoon, Xcel Energy stated that it is willing to sell wholesale power to the city as it transitions its municipal electric utility toward renewable sources. But the company did not submit a specific proposal for doing so as requested by the city last month.

Instead, Xcel provided a “conceptual framework” for striking such a deal through negotiation that included three main components. Those included:

— Xcel is willing to enter such an agreement with Boulder and expects that it would use the same formula for rates that it uses to sell power to six other wholesale customers.

–Xcel would be willing to allow for flexibility for the city to work in increasing amounts of renewable sources like wind and solar into its energy mix.

–Xcel plans to file a case with the Federal Energy Regulatory Commission to recover its stranded costs associated with Boulder acquiring Xcel’s assets to form its own electric utility.

The last point is important because the one of the city’s objectives in seeking out a wholesale purchase agreement with Xcel is to mitigate some of those stranded costs. Stranded costs are those related to investments the company has made to provide service that would no longer be needed if the city formed its own utility to serve residents. The FERC will ultimately decide how much of those costs, if any, Boulder is required to pay Xcel.

Rather than a request for proposal approach to a wholesale purchase agreement, Xcel attorney William Dudley wrote in the letter to the city that, “We believe that there will be a great deal of complexity in negotiating an arrangement with Boulder given Boulder’s desire to acquire different resources coupled with a desire to mitigate stranded costs. We believe the better approach is to have a negotiation with Boulder after it has greater clarity regarding its objectives — in this regard, we believe our stranded cost filing will be useful as we note above — and desired terms. Most helpful at this time would be to have an idea of what resources Boulder wishes to acquire and when.”

Boulder officials had sent a request for proposal on a wholesale purchase agreement to Xcel in April. At that time, the city said that Xcel had 30 days to respond, but that if the company didn’t submit a proposal the city would work with other providers on possible power purchase agreements.

on Facebook on LinkedIn