Should Boulder create its own municipal utility and pursue green energy on its own?
And should Xcel customers who don’t live in Boulder care?
Yes, it should.
And yes, they should.
Until recently, the answers might have been different — and especially as to whether non-Boulder residents should give a hoot. After all, if city residents are willing — even eager — to pay higher energy bills to reduce their reliance on fossil fuels, what business is it to the rest of us?
Last month, however, that calculation changed when Xcel offered Boulder a deal it hopes the city can’t refuse: If Boulder agrees to sign a 20-year franchise with the utility (the city did not renew the previous franchise last year), Xcel would add 200-megawatts of wind power to its system that would not otherwise be built. By paying for the extra capacity that would flow into the overall electricity grid, Boulder would get enough renewable energy credits to “make Boulder’s electricity supply 70 percent ‘green’ in the first year and 90 percent green by 2020,” according to a preliminary analysis by the city.
A potentially sweet deal — but there’s the rub for the rest of Xcel’s customers.
At the moment, Xcel doesn’t devise separate rate schedules based on where people live. As an Xcel spokesman confirmed when I asked, “Basically all of our customers pay the same, are on the same rate scale, everything is exactly the same. This [deal] is proposed specifically for Boulder.”
The principle of equal rates is even embodied in statute, which says, “No public utility shall establish or maintain any unreasonable difference as to rates, charges, service, facilities, or in any respect, either between localities or as between any class of service.”
Ah, but you probably saw the loophole, too: What’s an “unreasonable difference”?
Under Xcel’s proposal, Boulder would pay the difference between the cost of wind power and the cost of power from fossil fuels. It would also be responsible for expenses associated with backup generation for when the wind doesn’t blow, as well as “curtailment” costs for when wind isn’t needed (the wind, as you may have noticed, likes to blow at night when demand is anemic). And who would allocate these costs? Xcel, naturally, with state regulators looking over its shoulder and Boulder breathing down its neck.
Unfortunately, Xcel’s record of allocating costs for renewable energy under the guidance of the Colorado Public Utilities Commission does not inspire confidence. State law supposedly limits the impact of Colorado’s renewable energy mandate to 2 percent of customers’ total annual electric bills, but a variety of accounting loopholes and cost-obscuring devices have stripped the cap of meaning and made it nearly impossible for customers to know what, in fact, they’re paying for wind and solar power.
Granting Boulder a special green franchise will add yet another complexity to rates while fueling arguments about which set of customers is subsidizing the other.
If Boulder wants a special wind farm, fine. Let it create a municipal utility and build one. The city would still have to buy backup power from Xcel, so disputes over costs wouldn’t vanish. But they wouldn’t be so deeply embedded in a politically charged regulatory process.
In two weeks, the Boulder City Council is scheduled to take up potential ballot language asking voters whether they want to stick with Xcel or possibly go it alone. Some officials appear confident they can start their own electric utility without hiking rates — although an analysis the city revealed late last month undermines that prospect, suggesting under “medium- and high-cost scenarios, customer electric bills could increase by 7 to 15 percent.” And that’s for launching a utility “using the same fuel portfolio that Xcel does” — the portfolio, in short, that Boulder will try to replace. Surely that process will burden bills, too.
But if Boulder wants to buck the odds, so be it. Just don’t drag the rest of us into the equation through a special deal with Xcel.
E-mail Vincent Carroll at vcarroll@denverpost.com.
