If you go
What: Boulder City Council meeting
When: 6 p.m. Tuesday
Where: Boulder Municipal Building, 1777 Broadway
More info: In addition to discussing the arrangement with the University of Colorado, the council will hold a public hearing and second reading on development impacts and affordable housing linkage fees. This meeting may also be one of the last before the council cuts down on the amount of open comment it accepts every week; as soon as late this month, speakers may be limited to 20 per meeting, and chosen by lottery. The meeting will be broadcast live online and on television by Boulder Channel 8.
Written into a drafted agreement announced last week — under which the University of Colorado would buy power in the future from a potential city-run electric utility — is a detail that suggests some financial uncertainty for Boulder.
Should Boulder succeed in its municipalization bid, the university will have the right to choose every three years, for 20 years, whether it wants to pay the rates offered by the city at that time, or pay whatever the best rates Xcel Energy is offering.
The City Council will discuss the agreement at its meeting Tuesday .
Boulder is required by charter to have prices that are as good or better than Xcel’s on Day One of a potential municipal utility. But because the city — and Xcel, for that matter — cannot know for sure how those rates will swing, the deal could be much sweeter for CU than for Boulder, depending on how low Xcel’s rates drop.
Councilman Bob Yates, the only member of the nine-person council who has publicly called for the city to end its utility push and reach a settlement with Xcel, called the arrangement “insanity.”
“The risk that the city is taking on with this agreement is nearly limitless,” he wrote in an email on Hotline, a city public forum. “If Xcel’s prices in the future are significantly lower than the city’s cost of generating or buying power, the city will have bound itself to sell power to the university at a loss.”
Yates is concerned that rates on individual customers would be raised to account for such a loss, and said the agreement shows how far Boulder will go “in the singular pursuit of the muni.” He cited the recent and controversial forced annexation of a series of enclaves near 55th Street and Arapahoe Avenue as another “unnatural” action taken for the same reasons.
“The city is doing things and making commitments that no business would do,” Yates said. “This is yet another example of the city committing unnatural acts” in the interest of creating a utility.
But the city believes that it could run a utility at a savings of up to about $100 million over 10 years in an optimistic scenario, compared to staying with Xcel. Spokeswoman Sarah Huntley said city staff believe the risk is much smaller than what Yates described.
” Our analysis shows we could be operating a utility where our overall cost is better than Xcel’s,” Huntley said. “If it stands to reason that your rates have to support your overall cost, we’re confident our rates would be comparable.”
She said that some of the things that could raise or lower rates, such as fuel prices and natural disasters, would impact Boulder and Xcel similarly. The city says it would underground more of its power lines than Xcel currently does, and Huntley added that doing so might in fact leave Boulder’s rates less to chance.
The city charter also requires that the theoretical utility “promote ratepayer equity in all aspects of its operations.”
A 2016 study by the American Public Power Association showed that average electricity rates for investor-owned utilities, such as Xcel, were 6.9 percent higher than the average rates paid by customers of locally-controlled utilities. For only residential customers, the average was 14 percent.
Councilman Sam Weaver, a leader of the municipalization effort, said he’s comforted by those numbers, and also does not believe the risk of the agreement with CU is prohibitively high.
But he did say he has some questions for city staff, particularly concerning the potential financial burden on average ratepayers should Xcel’s rates be markedly better than Boulder’s at any of the three-year checkpoints.
“Let’s say our costs go a little bit above where we think they’re going to go,” he said. “What is the cost to other users on the system? How big a piece is CU to our entire load, and if we were off by, say, 10 percent, what would the cost shift be?”
Questions also remain about whether Boulder could open itself up to further risk by agreeing to deals with other large institutions, such as IBM and Boulder Community Hospital, that are similar to the deal with Xcel.
The Twin Lakes Action Group — a 1,700-member citizen organization formed to fight proposed housing in Gunbarrel, and which last month was granted intervenor status in Boulder’s municipalization proceedings at the Public Utilities Commission — is worried about just that.
“We’re very concerned that when large bodies like CU or IBM or other major players in this strike these backdoor deals, the only people left to pick up the slack are individuals,” said Dave Rechberger, the action group’s chairman. “And none of those individuals have a say at the table about rates.”
Huntley confirmed that the city has in fact engaged with IBM and others on possible agreements, but said CU’s case is unique.
For one, CU has generation sources of its own that could potentially contribute to a Boulder utility. And, she said, city staff views it as a reliable partner, since the university is “not going anywhere,” while a business can always up and move.
Alex Burness: 303-473-1389, burnessa@dailycamera.com or twitter.com/alex_burness
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