Climate. Safety. Savings.

Subject to voter approval, the city and Xcel have entered into a settlement agreement that would pause the city’s decade-long municipalization litigation and bring the parties together to work collaboratively on climate change. There are many elements of the settlement agreement, including a binding commitment by Xcel to reduce greenhouse gas emissions by 80% (from 2005 levels) by 2030, with interim benchmarks throughout the 2020s. Xcel agrees to spend $33 million undergrounding aerial electric wires–half of that in the next five years–to increase reliability and safety. And, the parties would enter into a partnership agreement to test innovative technologies and systems that will enable Boulder to get to 100% renewables by 2030, leading the way for other cities in Colorado and the U.S.

The city and Xcel have had on-and-off settlement discussions throughout the years. In 2017, the city staff and Xcel presented a settlement proposal to the city council, but it didn’t earn enough council support to put it before the Boulder voters that year. Those settlement discussions resumed in April of this year, led by city staff and with the support of Mayor Sam Weaver and Mayor Pro Tem Bob Yates. On September 1, city council voted to approve the settlement, subject to approval of the Boulder voters. Council voted unanimously to place that community approval on this fall’s ballot as Measure 2C.

With Boulder’s Great Green Deal, we can roll up our sleeves and get to work right away on local clean energy. Contrast this with the fact the City of Boulder’s municipalization endeavor has been going on for ten years and will take a minimum of five more years and hundreds of millions of dollars to complete, if everything goes the city’s way. Even then, Boulder is unlikely to have electricity any greener than what we will have under the settlement.

Not at all. This settlement builds on the last series of settlement talks in 2016 and 2017. The latest round of settlement discussions began in April and took into account suggestions and input from hundreds of Boulder residents throughout the spring and summer. The deal has been carefully negotiated to move us toward Boulder’s renewable energy goals as quickly and as inexpensively as possible. And, after the voters decide this fall to approve the settlement, we will have five opportunities over the next ten years to walk away from it and possibly resume municipalization if Xcel doesn’t keep up its end of the bargain, or if we simply change our minds. A Yes vote puts us on the fastest path to a green future, but doesn’t lock us into a deal we don’t like.

Nothing. Zero. Nada. Boulder is making no commitments to spend any money in this settlement. Conversely, Xcel is contractually committing to invest in new technologies in Boulder, to spend $33 million undergrounding Boulder’s aerial eclectic wires, and to pay the city an annual franchise fee in excess of $3 million. In addition, Xcel must spend whatever it takes to get to 80% greenhouse gas reduction by 2030, with interim commitments at 2022, 2024, and 2027. If Boulder choses to spend money to test out new technologies or systems, it can do so, at the city’s sole and absolute discretion. Indeed, Ballot Measure 2D would provide about $2 million in annual funding so that the city can do just this. But approval of 2D is not a condition of settlement. Voters can approve the settlement by voting Yes on 2C, but decide that they don’t want to spend any money on energy innovation by voting No on 2D. Of course, we hope that people will vote Yes on both, so that we have a chance of reaching 100% renewables by 2030.

Back in 2010, many in Boulder were frustrated that Xcel was not getting green fast enough. So in votes that year and the following year, the community instructed city council and city staff to explore the possibility of the city starting up its own municipal utility, using poles and wires that the city would buy from Xcel, forcibly if necessary. The thinking back then was that, if the city could control the electric distribution infrastructure, we could buy power from the greenest sources and get the city to 100% renewables faster than Xcel would. Other cities would follow Boulder’s lead and there would be scalable and replicable climate action.

It didn’t pan out the way we thought back in 2010. First, no one has started up a local municipal utility of this scale in many decades. There is no playbook for how to do it. The city made a number of legal and tactical blunders that cost a lot of time and money, and Xcel was a worthy adversary, not wanting to give up its Boulder customers without a fight. Ten years and $25 million in legal and engineering costs later, we’re not much closer to a city-owned utility than when we started in 2010.

The city has been pursuing municipalization since the voters authorized it in 2010. Over the course of that decade, the city has spent $25 million on outside lawyers, engineers, and other professionals fighting Xcel in court and before the Colorado Public Utilities Commission. That doesn’t include nearly $5 million in internal costs of Boulder city staff. The voters authorized $29 million in special taxes to pay for the municipalization litigation, with only $4 million left in the warchest. To put that remaining amount in perspective, Boulder spent more than $5 million on municipalization litigation last year, and will spend $4 million more this year. So, if we were to keep going, we’d probably be out of money in the next year or so, and the city would have to go back to the voters and ask them for more tax funds to pay for the continued litigation.

Of course, those millions for litigation do not include the estimated $300 to $400 million (on the low side) that a municipal utility would cost to start up. The city is still doing the engineering work to figure out how to separate the Xcel electric network from that proportion of the network that the city wants to buy. The amount of just the network separation cost alone has mushroomed from an estimated $10 million in 2016, to $110 million in 2018, to a predicted $180 million today. That doesn’t include the cost of actually buying the network assets themselves.

As far as timing, the city has completed the legal work with the Public Utilities Commission, but has not yet moved forward with the condemnation lawsuit or the legal proceedings before the Federal Energy Regulatory Commission. Using a baseball analogy, Boulder is on first base, with a long way to go to get home.

Xcel has previously committed to reduce greenhouse gases emissions from its electricity generation by 80 percent by 2030 (compared to 2005 levels). In the settlement with the city, Xcel contractually re-affirmed this promise and supplemented it by agreeing to meet certain interim benchmarks, reducing greenhouse gases emissions by 52 percent by 2022, 61 percent by 2024, and 67 percent by 2027. This is the first time that Xcel has ever made these interim commitments, and they will be independently verified and applied statewide. If Xcel doesn’t meet any target, the city can walk away from the deal and resume municipalization. Not an idle threat, given the city’s willingness to pursue municipalization in the past.

In fact, the new partnership between the city and Xcel enables 100% renewables, and does it faster than going it alone. While Xcel’s commitment to 80 percent greenhouse gas reduction by 2030 is laudable—and seemingly achievable—the city’s goal is actually 100 percent renewable sources in all electricity generation by 2030. To help bridge this gap, Xcel and the city will enter into a groundbreaking partnership agreement whereby Xcel will help the city experiment with a number of innovative systems, like distributed generation, neighborhood islanding, enhanced storage, and load management through data sharing. The partnership agreement identifies specific test projects at the soon-to-be-redeveloped former Boulder Community Hospital site and at Chautauqua, and it provides a process and governance structure to add new projects over the years. Successful energy R&D experiments in Boulder can be rolled out to the rest of the state and the country, ensuring that the innovative carbon-reduction work we do here is scaled and replicated. Ballot Measure 2D will fund that R&D work by re-purposing and continuing a tax that residents and businesses already pay.

Yes. One of the ironies of the municipalization endeavor is that, before it started in 2010, Xcel was spending more than $1 million per year to underground aerial electric lines in Boulder, protecting them from wind, ice, and snow, making the network safer and more reliable. But, when Boulder started the municipalization endeavor a decade ago, it also ended the city’s franchise agreement with Xcel, under which Xcel was paying this undergrounding money. For the last ten years, Boulder has been out of franchise and no undergrounding has occurred. However, in the settlement, Xcel agrees to spend $33 million to underground aerial electrical wires in Boulder, with half of this amount to be invested in Boulder over the next five years. This should more than catch up what we’ve missed out on in undergrounding over the last decade, and help us have a more reliable and safer network, like Fort Collins enjoys.

While municipalization was pending, the city was reserving its bonding capacity for the potential $300 to $400 million it would cost the city to start its own electric utility. This tapped us out financially and made it impossible to also issue bonds to build a $100 million citywide fiber optic broadband network, such as the one that Longmont enjoys. If the municipalization endeavor is ended, the city’s bonding capacity will be freed up and a citywide broadband network could become a reality. As icing on the cake, Xcel agreed in the settlement to allow joint trenching of undergrounded electric and broadband fiber cables, and attachment of city fiber cables to Xcel’s poles, where undergrounding is not feasible.

Yes. In addition to the money that Xcel has committed to spend to reduce greenhouse gases, to underground Boulder’s aerial wires, and to support innovative R&D work in Boulder, under the new franchise agreement, Xcel will also pay to the city a franchise fee of 3% of the electricity sold in Boulder. This will amount to a little more than $3 million a year, which will go straight to the city’s General Fund, used to pay for public safety, libraries, and parks. If the franchise agreement is approved by the voters voting Yes on 2C, this payment to the city will start January 1, 2021, just at a time that the city can use all the help it can get in patching the financial hole created by COVID.

The settlement is captured in a series of documents, the most important of which are a Settlement Agreement and a Franchise Agreement. The Boulder City Charter (our local constitution) requires that any franchise agreement must be approved by a vote of the people. The city council did approve the Settlement Agreement between the city and Xcel, subject to voter approval of the Franchise Agreement, and the council placed the approval of the Franchise Agreement on the fall ballot as Ballot Measure 2C. If the voters approve the Franchise Agreement and it is likewise approved by the Colorado Public Utilities Commission (highly likely, following voter approval), then the settlement will take effect.