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?
Control
Renewables
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Glossary
Xcel, Boulder settlement: What’s in it?

What has been spent so far — $27.6 million, including staff time — is all to answer two questions: Can Boulder municipalize? And how much will it cost?

There’s much that is still unknown about the cost to buy Xcel’s physical system (power lines, poles, transformers, substations, etc.) and/or the eventual rates Boulderites will be paying, either under a city utility or XcelXcel Energy, a publicly traded utility company based in Minnesota. franchiseA legal agreement between a power provider and customer (in this case, Xcel and Boulder) governing t.... What is known so far:

Municipal utility costs

There are three big costs to consider, because Boulder will need to issue debt financing to pay for them: Acquisition (What it will take to forcefully buy Xcel’s system) Separation/Construction (Once Boulder buys the system, there will be significant construction required to separate the existing electric systems into two independently operating systems; this will include building three substations for the city and Xcel) and Startup (What the city will need to spend on IT systems, fleet equipment, billing systems, staff, offices, etc. to get an operational utility on Day 1, plus enough cash to keep it operational for three months)

Estimates for those:
Acquisition: $68.5 million – $214 million*
Separation: $180 million
Startup: $30 million
Total debt: $278.5 million – $424 million**

*This acquisition range was created using, at the low end, the amount a city-tapped appraiser valued Xcel’s system at and, on the high end, the voter-imposed cap on acquisition debt. But it is still subject to fluctuation.

**This is the mid-range estimate. Costs are based on industry standards and are subject to change.

The Xcel settlement caps acquisition spending at $200 million, which includes the purchase of two substations and going concernSimilar to stranded costs, this is the amount that Boulder could owe Xcel for future profits that ar...: What Boulder could owe Xcel for future lost profits. (If the settlement isn’t approved, the substations would fall under Acquisition or Construction costs.)

Boulder contends it won’t owe going concern; Xcel has pegged those costs at up to $350 million. If the settlement agreement isn’t approved, going concern would be back on the tablePostponement of a motion, or a vote and the eventual acquisition cost will be determined via a court ruling in Boulder’s case to forcefully condemn Xcel’s assets.

One unsettled question is stranded costsIf Boulder splits from Xcel, the company will have extra power on its hands that it intended for the...: What Boulder might owe Xcel for investments and plans the company made under the assumption that it would keep the city as a customer for a certain period of time. Stranded costs were not included in the settlement agreement, so those would have to be determined if Boulder were ever to restart municipalization or if voters turn down the settlement.

Xcel has estimated stranded costs between $255 million and $335 million in the past; Boulder has consistently declined to provide a range, citing the numerous factors involved in calculating it. There are several ways to reduce stranded cost obligations, including buying power from Xcel after a municipal utility is formed (see Renewables section for more details).

Rates – city utility

Boulder’s charter requires that the city be able to provide electricity at rates comparable to Xcel’s at the time of acquisition, and that the utility’s revenue has to cover the cost of acquisition, debt used to buy Xcel’s system plus 25%.

The charter requires that rates be less than or equal to Xcel’s on Day 1; thereafter, they must be “comparable” to neighboring utilities. What “comparable” means is not clearly defined, but the city’s financial forecasting uses city rates that are lower than Xcel’s projected rates — based on historic increases — for the length of the forecast.

If the city utility needs more money for capital projects, for example, rates could be raised to pay for it. There are plans in Year 4 and 9 of utility operation to take on $39.3 million more in debt for facility upgrades. However, capital spending by the utility and rate increases would be a community decision, according to staff. (See Control section for more detail)

Rates – Xcel

Xcel has raised rates five times since 2010. The city’s data shows that rates have increased between 2.8% and 3.1% over the past 8-10 years.

Although rates have gone up, Xcel counters that residential and commercial bills have actually trended down over the past five years, as customers use less energy overall. The average residential bill declined some 6% between 2010 and 2019, from $71.30 to $66.84, according to the company.

Critics of the franchise agreement note that, to reach its carbon-reduction goals, Xcel will have to invest heavily in renewables — costs that will be passed along to ratepayers. Colorado President Alice Jackson in August said any increases due to climate action will be capped at 1.5% per year.

The company intends to spend $7.7 billion on capital investments between 2020 and 2024. Of that, $785 million is related to electricity generation. Xcel has to file its planned rates through 2030 with the PUCPublic Utilities Commission, Colorado’s regulatory body for utilities such as water and electricit..., but those won’t be public until after the November election.

— Shay Castle, boulderbeatnews@gmail.com, @shayshinecastle

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