Can an ultra-green, solar-panel-festooned city and a coal-burning utility find happiness together?
The community is Boulder, the utility is Xcel Energy, and the answer may offer a glimpse into Colorado’s energy future.
At issue is the renewal of a 20-year franchise agreement between Boulder and Xcel that provides the utility access to the city’s streets and rights of way — and makes Xcel the community’s energy provider.
“Twenty years is too long considering all the changes taking place in the energy field,” Boulder City Councilman Macon Cowles said.
Boulder is seeking more renewable energy, more locally produced energy and greater stability in rates; to get that, the city and Xcel may have to part ways, Cowles said.
Faced with the prospect of losing Boulder revenues — the city provided $144 million in gas and electricity sales in 2009 — Xcel has been lobbying hard.
David Eves, chief executive of Xcel’s Public Service Company of Colorado, has held one-on-one meetings with Boulder City Council members.
The utility pressed to let residents vote on the franchise on the November ballot. The City Council rejected the idea on a 6-2 vote.
“Xcel very much wants the franchise and doesn’t want talk about other issues unless we agree,” Councilman Matthew Applebaum said.
Xcel’s dilemma is that faced with billions of dollars in investments in plants and power lines, less than 20 years is too short, said company spokesman Tom Henley.
“We need to recover those investments over time,” Henley said.
The franchise — which provides Boulder about $4 million a year in Xcel fees — is set to expire in December and the City Council has agreed to let it go.
In its place the city is proposing a five-year occupation tax on Xcel to raise the $4 million in lost franchise fees.
The tax, which like the fee would end up in customers’ bills, is on the November ballot as Initiative 2B — creating the existential question for Boulder voters of “2B or not 2B.”
2B failure would bite budget
A grass-roots group supporting the tax — Citizens For Boulder’s Clean Energy Future — has been leafleting the Pearl Street Mall and the local farmers market and planting “Yes 2B” signs in yards around town.
“I’ve spent a lifetime as a speech pathologist, but it isn’t going to matter if we teach children how to speak if the planet burns up,” said Julie Zahniser, coordinator of the citizens group.
If 2B fails it will take a bite out of the municipal budget.
“We’ve put ourselves in a tight spot,” Councilman Ken Wilson said.
Wilson was one of the council members voting to place the franchise on the ballot.
“It is a big enough issue to allow people to vote on it,” he said.
The temporary tax would provide time for Boulder to explore its options, said Jonathan Koehn, Boulder’s sustainability coordinator.
“We’ve been discussing the need for a clearer vision of an energy future for Boulder and we need a little time to see what that vision is,” he said.
The aim is to do a comprehensive study of the city’s energy goals and alternatives.
Boulder already has the most solar rooftops of any community in the state, according to the Colorado Solar Energy Industries Association estimate.
The city generates 7.5 megawatts, Koehn said, enough power for about 1,000 homes, or about 2 percent of Boulder households, based on Xcel power-conversion estimates.
The city has an “energy concierge” program offering home-energy audits, and last year citywide energy demand dropped by 1.5 percent, Koehn said.
Everything on the table
Boulder has a carbon tax based on electricity use — up to $21 a year for residences and $94 for business — as part of its commitment to cut emissions of carbon dioxide, a so-called greenhouse gas linked to climate change.
Xcel is one of the state’s largest carbon dioxide generators. In 2009, Xcel said it made 52 percent of its electricity by burning coal, a major source of man-made carbon dioxide.
This year Xcel added a 750-megawatt coal plant, the $1 billion Comanche 3, in Pueblo. Every Xcel customer pays about $1.55 a month for the plant.
Xcel did select Boulder for its SmartGridCity pilot program designed to better manage electricity distribution and give consumers detailed information about their usage.
Cost overruns and a scaling back of in-home services in the program, however, have left some Boulder residents dissatisfied.
“The question is, are they the partner that can take us where we need to go?” Koehn said.
Among the ideas discussed by city officials are a new, shorter-term partnership with Xcel, creating a municipally run utility or a hybrid in which Xcel is the main provider and Boulder buys additional renewable energy.
“Everything, including renewing the franchise, is on the table,” Applebaum said.
Xcel officials don’t see it that way.
“From our perspective it doesn’t make any sense to do the things Boulder is asking and invest money unless we have a 20-year commitment,” Henley said.
Xcel would also be limited in what it could do, because anything it offered Boulder it would have to offer other franchises, Henley said.
That makes the Boulder effort all that more important, said Susan Perkins, an attorney who represented Golden and Aurora in their franchise negotiations.
City utility would be tough
Xcel approaches franchise negotiations as being only about providing revenue for using a community’s streets, Perkins said.
Carbondale, Nederland and Denver are franchisers that unsuccessfully raised renewable-energy and efficiency goals in their negotiations, she said.
“This is a clash of values,” said Perkins. “Do we get to plan locally or do we have a top-down system . . . based on a model of dirty coal plants in someone else’s backyard?”
The main alternative to Xcel would be a municipal utility — offering local control, municipal bond rates that are lower than corporate rates, and no need to make a profit for shareholders, Perkins said.
It would not be an easy path. It could cost by some estimates $200 million or more to buy Xcel’s infrastructure, and even if the city raised the cash, Xcel might not be a willing seller.
“Xcel has indicated that is a choice they don’t want and will fight vigorously,” Cowles said.
Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com
