Denver residents would see their electric and gas bills jump 75 cents a month to help pay the energy bills of low-income residents under a new pact the city negotiated with Xcel Energy.
The city, meanwhile, would save tens of millions dollars under the proposal by requiring the utility to pay the entire cost when it relocates gas pipes and electric lines on city-owned property.
Environmentalists said they were pleased by provisions to boost renewable energies, although they said they would push for further commitments from the city and the fifth-largest investor-owned utility in the nation.
“Clearly this is one of the more important contracts the city will negotiate, and we have treated it as such,” Mayor John Hickenlooper said during a press conference announcing the new pact. “We have tried to bring every aspect and every agency of the city and tried to make sure we looked at their issues and how it is affecting them.”
The City Council must decide whether to put the new 20-year franchise agreement on an August ballot. The proposal would replace a 1986 franchise pact set to expire in December.
The current franchise agreement will generate $22 million in franchise fees for the city’s general fund this year. Those fees are generated by a 3 percent fee each utility customer pays on their electric and gas bills.
The current fee does not apply to the first $12.50 of those bills. Under the new proposal, the fee would apply to the entire utility bill, increasing the average monthly gas and electric bill of a typical consumer by about 0.6 percent to generate an extra $2 million for the low-income assistance fund.
Under the agreement, the utility also agreed to contribute $200,000 to a proposed municipal solar power plant and agreed to accelerate efforts to make low-income housing in the city more energy efficient.
The pact also requires the utility to work toward purchasing up to 22 megawatts of hydroelectric power from the Denver Water Board over the next 20 years. The utility also agreed to reduce the amount of water it pulls from the Colorado River during droughts.
“Could there have been more? Yes,” said Jim Martin, executive director of Boulder-based Western Resource Advocates, a nonprofit that pushes environmental issues. “Is this agreement something we can live with? The answer to that also is yes.”
Other Colorado municipalities were closely monitoring Denver’s negotiations. Denver has the utility’s largest customer base, so other municipalities are looking to Denver to set a benchmark.
Denver took a different tactic than Boulder, which is considering creating a municipally owned utility. Hickenlooper said Denver officials also considered a municipally owned utility but decided against doing so.
“I felt that the risks were so incredibly high, and the potential benefit was relatively minimal,” Hickenlooper said.
The agreement leaves it up to the state’s Public Utilities Commission to regulate service disruptions and blackouts.
“We think this is a very, very good deal for the city,” said City Attorney Cole Finegan, also Hickenlooper’s acting chief of staff.
Finegan said that in the past, relocation of Xcel facilities located on city-owned property often led to costly litigation between the utility and the city.
The new agreement requires the utility to pay those relocation costs and extends that requirement to city projects that are at least 50 percent funded by government entities, such as the FasTracks light-rail transit expansion.
Staff writer Christopher N. Osher can be reached at 303-820-1747 or at cosher@denverpost.com.
