Matt Cortina in the Boulder Weekly, May 21, 2020
Over the last decade, Boulder residents voted to pursue a municipal electric utility six times: First, in 2011, to authorize a municipal utility and to fund planning for it and to acquire assets; then in 2013 to put a cap on how much debt it could take on to acquire Xcel’s — Boulder’s primary energy provider — assets; in 2014 to allow City Council to meet in executive session to discuss the municipalization effort (known, colloquially, as the muni); in 2015, to extend the tax Boulder assesses on Xcel (which it then passes on to consumers) for its general fund; and in 2017, to again extend and increase the utility tax.
Each vote had a wider margin of victory in support of the muni than those first ballot questions in 2011 (though the last vote was close), even as the City became mired in a long legal battle with Xcel and as the prospect of creating a public utility became murkier. So the announcement this week that Boulder is entering settlement negotiations with Xcel, which could result in a partnership with the energy company and not a public utility, was surprising.
The potential partnership is particularly curious given Xcel claims it can reach an 80% reduction in carbon emissions by 2030. But Boulder’s climate goals call for 100% renewable energy by 2030. How do those two numbers square?
“They don’t,” says Boulder Mayor Sam Weaver. “If Xcel got 80% emissions reductions, and they continued to be our main supplier, we will miss that goal.”
However, Weaver says a partnership with Xcel, instead of a muni, could allow Boulder to reach its 100% renewable goals, if (and that’s a big if) the company allows Boulder to pursue other clean energy options, like community choice aggregation. That is, the City could procure power from other companies to supplement Xcel’s offerings to meet its goals.
Finding out if Xcel is willing to allow that is part of the discussion, Weaver says — early conversations with Xcel indicate the company may be willing to shift its position on other issues that were nonstarters in years prior, he says — things like allowing microgrids and letting the City have a say in planning the electric grid. Though, to be clear, nothing is guaranteed.
“We are optimistic that we can work with Boulder officials to help the City achieve its unique energy goals, just as we’re successfully helping other communities across Colorado to achieve their own energy goals,” said Alice Jackson, president of Xcel Energy – Colorado, in a statement announcing the discussions.
But where did this conversation even begin?
“It started with Council members,” says Emily Sandoval, communications specialist in the City’s Climate Initiatives Department. Sandoval adds, “This will be the fourth time we’ve gone to the table with Xcel.”
The conversation started in January, Weaver says, during a lunch meeting and phone call between Jackson, himself and Councilman Bob Yates, wherein the two sides “checked in” due to leadership changes at both Xcel and on the Boulder City Council. That led to five more discussions, in April, and at the end of one of them, Weaver says Jackson asked if Xcel could assure that it would reach its 80% carbon reduction goal by 2030: “Would that be the basis for settlement negotiations?”
Michelle Aguayo, Xcel media relations representative, writes in an email that the company can’t confirm the exact wording of the exchange but that it “can confirm the conversation and scenarios discussed are accurate.”
Yates and Weaver were both “surprised” by the offer, Weaver says, and the mayor relayed this information to City Council, which has since discussed the partnership publicly, and the City has issued a press release announcing the negotiations. The settlement refers to litigation, currently in the appeals process, brought by the City to condemn Xcel’s assets in order to determine how much it would cost to purchase them.
Still, Weaver has concerns about how Xcel will reach an 80% reduction in carbon emissions by 2030. Looking at the company’s resource plan, the City estimates Xcel can get to 55% renewables by 2026.
“That’s the easy part of the transition,” Weaver says.
The hard part is that last 25%, particularly if coal is still in Xcel’s resource plan. Xcel’s Colorado Energy Plan calls for retiring two coal plants by 2026, while adding more wind and solar plants and battery storage.
“Our focus is on Xcel Energy’s commitment to deliver 80% carbon-free electricity to customers by 2030. To achieve this goal, we need to explore all options. That includes the potential for closing coal plants or operating them differently,” Aguayo writes.
And, an 80% reduction in emissions does not necessarily equal Boulder’s climate goal of using only renewables to power the city — for instance, Xcel’s Carbon Reduction Plan calls for natural gas to comprise 21% of its energy portfolio in 2027 (and 19% coal).
In short, the bottom line is Xcel’s goals do not meet Boulder’s goals, and do not abide Boulder voters’ repeated wish to pursue the muni. Weaver says that while both a partnership and the muni “have a chance” to meet Boulder’s emissions goals by 2030, “the muni would have a higher likelihood.”
Any uncertainty in the muni path reaching the 2030 goals lies in the question of how, when and if the City could assume Xcel’s assets. It may take five years, Weaver says.
“If in 2023 or 2024 we kicked that off, it would be quite clear we could get to 100% renewables by 2030,” Weaver says, adding that there are several companies lined up, who have already responded to the City’s request for pricing, that can promise 100% renewables by 2030.
However, Weaver adds, “even if we went with Xcel, because there’s a decade [between then and now], we might be able to augment their process through some sort of community aggregation. That way would have the possibility of getting us to 100% renewables.”
Boulder will continue working on the muni even as settlement discussions continue. The work includes finalizing the separation plan from Xcel, getting approvals from federal energy regulators, figuring out acquisition costs and more. And ultimately, any agreement would have to be approved by voters — that is, if City Council and Xcel can agree on a plan that gets Boulder to 80% renewables, residents will decide if all that negotiating was worth anything to them.
“We’d be offering a choice to voters,” Weaver says. “They’ve been consistently behind the muni and this is a chance to check in. It’s a very clear choice that voters will be offered, if we even get there.”
That vote would be in addition to a go/no-go vote to further pursue the muni scheduled for at least 2021. We’ll see what the voters decide then.
On Tuesday May 12, 2020 we heard that Boulder Mayor Sam Weaver and Mayor Pro Tem Bob Yates, as well as some City Staff, were in discussions with Xcel about a possible future agreement to enter back into a franchise relationship with Xcel. While any effort that can accelerate the rate at which we reduce our carbon emissions and build a more decentralized and democratic electrical system is good, we’re concerned that the City of Boulder has gone down this road before and have seen that the results have been a costly waste of time for Boulder with a partner that has neither delivered nor even seemed to be in good faith. There are many reasons why we are not inclined to trust Xcel or their ability to deliver an agreement that will meet Boulder’s energy and climate goals. Some of these reasons include:
- Investors–Xcel is a for-profit, out-of-state monopoly corporation that has proven again and again that it’s first and final consideration is its shareholders—not its customers/Coloradans – despite its lingo and advertising (which we also pay for). They advocate for preservation of Xcel’s monopoly status and profits uber alles.
- Smart Grid City—Xcel promised us/the City of Boulder a very “shiny” Smart Grid City project that would cost us nothing. It ended up costing $44 million with ratepayers all over Xcel’s Colorado territory paying $29 million for it—yet today there is essentially nothing to show for it with none of the customer-based functionality that Xcel promised.
- Comanche 3 Coal Plant (2010)—Xcel persisted in building a new, approximately billion dollar coal plant in Colorado that it expected to operate until 2070 even after coal was on the decline nationwide (since 2007-8) with no apparent understanding of the changing energy landscape or the need to radically reduce our carbon emissions from electricity. Xcel and the state have had strong evidence since 2009 that renewables were cheaper and would save money.
- Legal Delays in Boulder’s Efforts to Address Climate Change—Boulder is the home of literally dozens of climate scientists and thousands of citizens who recognize the dire nature of the climate crisis and who have been trying for close to 20 years to address the largest source of greenhouse gas emissions in our community, which is the carbon intensity of our electricity. If Xcel really wanted to partner with us in addressing the defining issue of our times, they have had more than enough time to demonstrate that they understand the seriousness of the climate crisis and to constructively help Boulder achieve its climate and energy goals.
- Stranded Fossil Fuel Assets—Despite the clear signs that fossil fuels were not the correct choice for a 21st century electrical system, Xcel has continued to spend large amounts of money on coal and natural gas generation and infrastructure, leading its customers into a deep hole that at this point very likely represents over $1.5 billion in stranded assets. Boulder citizens are not likely to want to inherit these fossil fuel mistakes.
- Failure to Optimize Cost-Effective Renewable Generation—Xcel received over 50,000 MW of low-cost, wind, solar and storage projects in late 2017. While they are moving about 2,000 MW of those projects forward, they have left over 95% of these carbon-reducing projects “on the table,” while the coal and natural gas plants continue to drive us into a devastating situation for Colorado (see image from NASA 2015 research below – April 2020 update shows we are already on this path, which was previously projected for late this century). The Covid-19 virus has shown us what happens when we don’t listen to the scientists; it is unconscionable that Xcel’s Colorado generation is still approximately 70% fossil fuel driven when we’ve known since at least 2009 that Colorado had abundant wind and solar projects ready to go that would decrease system costs.
- Large Expenditures and Debt Without Representation—Just as it isn’t wise to marry someone who runs up large credit card debts, so it is with Xcel. We are already on the hook for billions of dollars in debt and equity—a lot of it for fossil fuel infrastructure—and Xcel intends to spend an additional $7.5 billion in Colorado in the next five years. If Boulder goes back into franchise with Xcel, we would be responsible for this debt and equity, with essentially no say on how much Xcel spends or what they spend it on.
- Determination to Raise Rates Repeatedly—Xcel has had a rate increase almost every year since 2006 and they seem determined to continue to raise our rates going forward—no matter how low prices for renewable energy and storage go. Xcel spent most of 2019 pursuing yet another rate increase in Colorado and they have stated they intend to file another rate increase application in 2020. With spending habits undisciplined by market forces, Xcel expects its captive customers to continue to pay for its large capital expenditures including a profit.
- Constraints of the PUC—Xcel is often constrained by what the Public Utilities Commission (“PUC”) will or won’t let them do—or by their unwillingness to honestly ask the PUC for approval for innovative projects and relationships. As long as this is the case, there is a strong likelihood that Xcel will be unable to deliver quantitative and enforceable provisions in any agreement with Boulder.
The list could go on, but as you can see, there are more than a few reasons why we question whether the time spent in discussions with Xcel will lead to a fruitful outcome.
https://www.nasa.gov/press/2015/february/nasa-study-finds-carbon-emissions-could-dramatically-increase-risk-of-us. Or check out this Boulder/NCAR-led research published in the Proceedings of the National Academy of Sciences, which reported in 2009 that climate change effects due to CO2 should be considered irreversible. https://www.pnas.org/content/106/6/1704. Atmospheric temperatures do not drop significantly for at least 1,000 years and 20% of the CO2 causing heating remain in the atmosphere 10,000 years after it is emitted.
Any agreement with Xcel should represent the broad array of opportunities before us now and not 100+ year old models of monopoly accumulation that keep extracting from our community and state. Please make sure the following are included in any agreement with Xcel and please find a way to make it more enforceable and reliable than what Xcel has said they would do in or for Boulder in the past. If you find yourself saying “That won’t happen,” when you read this list, then it is probably time to question whether Xcel is the best partner for Boulder. It is clear from the experience of other communities that there are providers that stand ready and willing to help communities achieve goals like these.
- Xcel’s Colorado generation is coal-free by 2025 or sooner.
- Minimize the use of natural gas, using wind, solar, storage and demand management, response and flexibility options whenever possible
- No more than 50% of the remaining depreciation on fossil fuel plants charged to ratepayers
- Xcel becomes a “B-Corp”
- Recognize the economic, environmental and resilience benefits of distributed resources
- Help Boulder maximize the use of microgrids and “transactive” energy policies in the City
- Agree to support the development of Community Choice Energy policies in Colorado
- Include citizens directly in the negotiation process, including low-income and otherwise marginalized populations
- Hold listening sessions in Boulder at least twice a year to learn what is and isn’t working
- Include citizens in all aspects of Xcel’s resource, distribution, transmission and capital expenditure planning
- Provide $1 million per year to cover expenses for Boulder to participate at the PUC
- Agreement to hold rates steady for 10 years due to the low cost of wind, solar, storage and demand side options
- Move to rate structures that maximize reliance on renewable energy (e.g. “Time of Renewables”)
- Sell excess renewable generation at a low cost to customers first
- Review capital spending plans with Boulder and other communities before moving forward; establish a veto mechanism for Boulder and other communities
- Procure all resources competitively
- Allow utility ownership of resources only where it can be demonstrated that the market cannot or will not supply needed resources of equal or better value to ratepayers.
- Agree to a goal of 100% carbon-free electricity (or as close as possible) by 2030, doing everything possible to reach the goal while, of course, recognizing any real reliability constraints that arise.
- Eliminate the 120% rule for solar capacity; allow excess solar generation to be donated to local low-income and non-profits
- Remove limits on Community Solar Gardens
- No obstruction of solar or solar plus storage installations
Reliability and Resiliency
- Penalties for failure to provide reliability at least as good as Longmont achieves
- Recognize the risks of the “Big Grid” during extreme weather events
- Recognize the value of distributed resources for resiliency
- Support Boulder’s efforts to develop a community-controlled broadband system
Finally, any agreement should be quantifiable and enforceable and have a sunset clause; if there is not an affirmative vote of the residents of Boulder to continue with Xcel, then Boulder should revert to an out-of-franchise status with clear rights to proceed with a community-controlled electric system. In that case, Xcel should agree to:
- Not oppose municipalization or other community-controlled system in any way
- Sell Boulder the distribution system assets at their depreciated book value (not what the ongoing profits they would like to have from their monopoly of this in an ongoing fashion)
- Allow joint use of poles and substations
- Boulder serving the enclaves in the City without annexation
- Boulder’s legal expenses reimbursed
- No stranded asset or going concern claims
We could go on but this is a good start. We trust you not to sell us down the river and ensure that Boulderites and our values come to the fore. A 21st century electric system that meets these goals will be worth the effort!