Boulder powers through electrical utility planning

BOULDER — In 2024, Boulder expects to have its own municipal electric utility up, running and serving power to the people.

By the time city residents vote in November 2020 about whether they want to go through with the plan for a municipal utility — the final “go/ no-go” vote before the trigger is pulled and building a utility starts — Boulder’s municipalization efforts will have been a decade in the making, and still four years out from seeing the fruit of those efforts.

In September, the city of Boulder got the go-ahead from the Colorado Public Utilities Commission to move forward with its plans for municipalization, under the condition that it negotiate on some sticking points with Xcel Energy, the utility that is currently serving Boulder.

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Boulder has been in the negotiation process since then, City Attorney Tom Carr told residents at a public hearing on May 17.

That public hearing was meant to update stakeholders on the current timeline for municipalization. It was also meant to introduce people to Steve Catanach, the new electric utility development director, following the departure of Heather Bailey.

“I really believe in the goals that Boulder has set,” Catanach told BizWest in a phone interview. Prior to taking on the role, Catanach served as a consultant on the project and was the light and power operations manager for the city of Fort Collins, where he worked at their own municipal utility.

“I’ve said it before, my industry is responsible for half the emissions,” he said. “We have an ethical responsibility to clean that up and address climate change.”

Xcel Energy, which serves more than 200 municipalities throughout Colorado, was unable to grant BizWest an interview for the story, but said that it was in good-faith negotiations with the city of Boulder as outlined by the PUC.

The PUC provided some conditions that had to be met, however, and that included an agreement between the city and Xcel in which the utility would have permanent rights to access rights-of-way in Boulder so it could continue to serve its customers. A revised and complete list of assets outside of the substations had to be filed, and an agreement had to be reached on payment from Boulder to Xcel for costs incurred because of the separation and related costs. Those negotiations are ongoing but are nearing completion.

One issue that is still being worked out, City Attorney Carr told attendees at the public hearing, is the agreement on costs. The issue of what to do with Xcel’s six substations is another question, one that is expected to be answered this fall. Boulder is just taking over the distribution system — poles, wires, etc. — rather than the transmission system, which is regional. Substations connect the transmission system to the distribution system, however, and need to be discussed. Carr said that Boulder has proposed a technical plan regarding how to handle substations that is being reviewed by Xcel’s engineers.

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“Xcel proposed we build new substations, but that’s not exactly practical,” Carr said. “We are hoping to have engineers look at our proposal and have a decision made based on the technical aspects.”

Separating the systems are another issue that is still being worked out, Catanach said. Rather than build new infrastructure, Boulder hopes to condemn what Xcel has within city limits — Xcel will still service anyone outside of city limits — and pay Xcel a to-be-determined price in exchange for using its infrastructure. Some modifications will be made to the existing infrastructure, however, so there will be some construction done. The plan is to transition from using Xcel. Even with that being done, however, Boulder would likely need to hire an external team to operate the city’s facility until a staff can be fully hired and trained.

Gradually reducing the purchases the city makes could also help it avoid stranded costs, that is, power supply investments that Xcel made with the expectation it would be serving Boulder that are now no longer needed. To mitigate that risk, Catanach said the city is determining whether it would be more cost effective to continue purchasing energy from Xcel over a period of time, which could reduce stranded costs, or to begin purchasing renewable energy right away and potentially pay stranded costs to Xcel. With the scenario of starting to buy renewable energy right away, the stranded costs could be offset by the low-cost of clean energy.

The goal, he added, is to have all of these cost determinations, negotiations and deliberations completed in the beginning of 2020 so voters have time to be informed ahead of the final November vote. In that time, Catanach said the goal is to have the estimated price tag be accurate to the actual price of the project, so voters are fully informed.

“The reason we’re doing this, bottom line, is to meet the city’s climate goals of effectively reducing our emissions by 80 percent by 2050 and allowing the community more freedom in distributed generation,” he said.

As for himself, Catanach said he is looking forward to bringing the project to that 2020 vote.

“It aligns with my values,” he said. “The city of Boulder’s desire to address climate change is very aligned with what I want to do and how we should get there. Plus, the opportunity doesn’t come along often to start up an electric utility.”