Muni 101: A deeper dive into control
Other MuniA utility that would be owned by the city of Boulder. Shorthand for municipalization, which is the p... 101 stories:
Basics and background
Who’s arguing what?
Boulder, Xcel settlement: What’s in it?
XcelXcel Energy, a publicly traded utility company based in Minnesota. is a publicly traded company, required to submit plans (power supply, proposed rates, etc.) to the PUCPublic Utilities Commission, Colorado’s regulatory body for utilities such as water and electricit... every four years. There is a process for public participation, though citizens’ ability to participate as individuals is limited. Boulder as a whole often intervenes on behalf of residents, as a single entity.
Boulderites will theoretically get more of a say in the operation of a municipal utility because there will be fewer layers between them and decision-makers. City council will be the final authority over a city utility, though they may appoint a utility board (similar to the Water Resources Advisory Board). Residents would be able to weigh in on rates, capital spending, grid planning, discounts for lower-income residents, etc. the way they do other city issues.
At the end of the day, muni proponents say, Xcel is beholden to its shareholders, while a Boulder utility will have to answer to Boulderites. And once the city owns the physical system, it can purchase power from wherever it wants; with Xcel, there is no choice.
(Note: This may change in the future, as Colorado lawmakers are pursuing “community choice energy,” which would allow cities to buy power wholesale from renewable providers. Other states allow this; in Colorado, discussions are still preliminary but promising, supporters say. There is nothing in the settlement that precludes Boulder from taking advantage of community choice, according to a city spokesperson.)
Critics point out that local control doesn’t necessarily result in better governance or reflect the will of the people. In the most recent community survey, just 10% of respondents said they felt city council members consider their input before making decisions.
Several city departments are running major maintenance backlogs; there were $375 million in unfunded needs before the COVID-19 pandemic. The city does run large utilities already: water, wastewater and storm/flood management. But, as critics note, rates are being raised significantly (percentage-wise) to pay for a backlog of maintenance and flood control: The 2021 budget calls for an 8% increase in water rates, 5% for wastewater and 12% for stormwater/flood management, on top of 2020 hikes.
Grid planning – The physical grid that delivers electricity to homes places some limitations on how much renewable energy Boulder can source and generate itself. The system needs to be able to transmit a certain level of power; if local generation wasn’t planned for in building that system, then even if the capacity is there, it can’t safely be realized.
That’s one reason Boulder fought so hard to be able to participate in Xcel’s planning process. It will get a seat at the tablePostponement of a motion, or a vote under the settlement deal — but, again, with less control than if the city was running its own utility. Three groups will oversee grid planning and other projects: executives from Xcel and Boulder; operational staff from Xcel and Boulder; and an “advisory committee” of community members, business leaders and CU representatives.
Xcel is better-than average when it comes to reliability, among other providers across the U.S.; even better when looking at large utilities only (more than 500,000 customers). Municipal utilities generally experience fewer and shorter outagesthan investor-owned utilities; Fort Collins, for instance, consistently averages outages shorter than 30 minutes each year.
Xcel outages averaged about 90 minutes a year over the last five years; 137 minutes on Major Event Days. (MED is a little hard to explain, but it’s an industry benchmark for serious outages.) The average Colorado customer experienced 0.9 outages per year during that time (excluding MED) and 1.1 outages annually with MED included.
Reliability of a system is often tied to how many of its power lines are buried underground. Xcel undergrounds lines for its customers using 1% of the revenue generated in that municipality; in Boulder, that’s around $1 million a year, enough to bury roughly one mile of lines each year when the city was an Xcel customer.
There are roughly 165 miles of power lines in Boulder. Lines along major roads (28th, Broadway, Canyon, etc.) are buried. Since 2011, only lines in new development — Boulder Junction, for example — have been buried.
As part of the settlement, Xcel will provide $33 million worth of undergroundingBurying power lines underground. This reduces outages, which are often caused by trees, etc. falling... over the 20-year life of the franchiseA legal agreement between a power provider and customer (in this case, Xcel and Boulder) governing t... agreement; half in the first five years. Boulder does not have an estimate of how much undergrounding it would perform as a municipal utility, but said that the city could choose to direct more funding to that task in order to speed up the process, if city council and/or residents so desire.
IBM’s largest data center in north Boulder. Due to the critical nature of the facility, the failed 2017 settlement allowed IBM to remain an Xcel customer in the event of municipalization. That provision is not included in the current settlement; the city intends to have IBM as a customer.
The company, however, plans to petition the PUC to opt out of a city utility, if one is eventually established, and remain an Xcel customer.
IBM officials say this decision is not based on an analysis of Boulder’s ability to reliably run a utility. Rather, it is a desire to stick with what works, said Pete Lorenzen, IBM Colorado Senior State Executive. Under Xcel, there has been one outage in 10 years, and the cost for electricity is “incredibly competitive.”
“When you look at making a major change — and this would be a major change for us — you say, ‘What’s the value?’ The equation isn’t close for us.”
The University of Colorado secured a deal from Boulder to keep paying Xcel’s offered rates even under a city utility. The agreement worried some who felt that ordinary residents would end up footing CU’s electricity bill if Xcel’s rates are lower than the city’s. Others look at Boulder’s willingness to offer sweetheart deals to large institutions as an acknowledgment that cost and reliability of a municipal utility may not be competitive or attractive.
— Shay Castle, email@example.com, @shayshinecastle
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