Power grab: No ‘good guy’ in Boulder’s attempt to seize Xcel
By Peter Blake
The
City of Boulder vs. Xcel Energy — hmmm, that’s a tough choice for the
rest of us. It’s like deciding whom to root for when Iraq fights Iran.
Many Boulderites, you’ll recall, were unhappy with Xcel’s rates, its
profits and what they thought was its slow progress in converting to
renewable energy. They wanted to municipalize the power system in the
city. The city council put the issue to a vote in 2011.
By a narrow margin, voters (1) authorized the city to take over Xcel’s
local assets if research showed it could provide power at the same or
lower rate and (2) levied a fee of about $1.20 a month per customer to
pay for the research and legal costs of municipalization.
Condemnation proceedings could begin as early as August.
But a group called Voter Approval of Debt Limits (VADL) is trying make
sure that nothing happens until residents set a limit on the debt
Boulder could incur to buy out Xcel. There is no debt ceiling now. It
also wishes to give the 5,800 households in Boulder County, but outside
city limits, a chance to vote on the city takeover since they would be
involved.
The 5,800 weren’t in the original proposal, but the city discovered
that two Xcel substations it wants to take over also serve the customers
outside the city.
Xcel has asked the Public Utilities Commission to rule that Boulder
cannot unilaterally take over its customers outside the city. The
utility believes that only the PUC has the power to determine service
territories. Boulder argues that the PUC has no jurisdiction and the
city’s power to condemn Xcel’s facilities comes from the state
constitution.
The PUC has agreed to review the issue. Its decision, of course, can be appealed to the courts.
Voter
Approval of Debt Limit isn’t involved in the Xcel appeal to the PUC,
said spokeswoman Katy Atkinson. If the commission rules in favor of the
city, the group would still argue that the city should let the
suburbanites vote. If it rules for Xcel, the issue becomes moot.
The citizens’ group group is now in the process of gathering the 5,000
signatures needed to put their charter amendment on the Nov. 5 ballot.
Specifically, the amendment demands that voters approve the maximum
amount of debt the city can incur to take over Xcel’s properties; that
the bond house managing the issue charge no more than 1 percent of the
proceeds; and that registered electors outside city limits who might be
served by the city be given a chance to vote on the debt limit issue.
The city is recommending that the bond contract be negotiated instead
of put up for a competitive bid, claiming that could actually save
money.
But that would require a charter change, which the council is likely to
put on the November ballot. VADL doesn’t care how the bond contract is
handled so long as there is a limit on the debt.
Proponents of the city’s takeover do not favor another vote, of course,
because they could easily lose. Their margin of victory in 2011 was
much smaller than the number of households outside city limits who might
be voting in a second election.
Steve Pomerance, a former city council member promoting condemnation, argued in the Boulder Daily Camera that
no second vote should be held because “neither the city nor the utility
has the power to hold such an election. And the county cannot agree to
hold an election for some arbitrary sub-group of its electors.”
That’s one argument to prevent those you want to take over from having a say in the matter.
He also accused Xcel of being behind VADL’s petition drive.
Atkinson conceded that the proposed ballot question was based on an
Xcel poll but denied that the utility was guiding strategy or
contributing any cash. “Hopefully they’ll be involved eventually,” she
frankly admitted.
The 2011 ballot issue said that Boulder would go ahead with
condemnation only if research demonstrates the municipal utility could
meet or beat Xcel’s rates. But that equality, according to Atkinson,
applies only to Day One. “On Day Two they can start raising rates to
anywhere they want.” That’s why her group wants a limit on debt. Rates
may depend on how quickly environmentalists running the municipal
utility want to expand the use of expensive alternative energy.
Estimates of what it might cost to buy out Xcel through condemnation
vary greatly, upwards from the hundreds of millions. Probably Xcel will
demand three times what it figures it can get, and Boulder will offer
about a third of what it fears the real value is. That’s standard.
The biggest variable is something called “stranded costs,” an economic
term that applies mainly to electric utilities. It has something to do
with how much more you can make from your assets if you’re a regulated
utility than you would if you had to face market competition. Boulder
thinks it should pay none; the utility estimates such costs should bring
it at least $255 million.
The question is ultimately more political than economic, as it’s the
Federal Energy Regulatory Commission that will determine the answer.
In an ideal world, Xcel would extract as much as possible from Boulder
and its citizens, force their rates way up, then give the rest of its
customers a break on our rates. That’s an updated version of Soapy
Smith’s old dictum: “We cheat the other guy and pass the savings on to
you.”
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