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Boulder tells Xcel it plans to acquire parts of electric system


From the January 8, 2014 issue of Public Power Daily

Originally published January 8, 2014

By Jeannine Anderson
Editor
The city of Boulder, Colo., on Monday sent a notice of intent to Xcel Energy, informing the private utility that the city plans to acquire parts of Xcel's electric system. The step is a significant one in the potential creation of a local electric utility, as it triggers the start of formal negotiations with Xcel about the assets the city would need to provide electric service to future customers, as well as the fair market value for these assets.

In the notice, the city details the equipment and facilities Boulder is seeking to purchase from Xcel. The notice also reminds Xcel Energy that it is entitled to an appraisal of its own by a qualified professional, paid for by the city, and seeks the names of company officials with whom the city can negotiate. The notice is posted on the city's website.

"A thorough and unprecedented analysis by city staff, industry experts and community members has shown that the creation of a local electric utility could help Boulder achieve key energy goals by providing cleaner energy and reducing greenhouse gas emissions while maintaining and possibly improving rates and reliability," the city said in a news release.

"The sending of this notice is an important and concrete step toward understanding all of the costs associated with the possible creation of a local electric utility," said Heather Bailey, Boulder's executive director of energy strategy and electric utility development. 

"This notice starts what we hope will be productive and collaborative formal conversations with Xcel Energy about the equipment we would need if we choose to meet our community’s energy goals in this way," Bailey said. "It would benefit everyone – the city, Xcel Energy and ratepayers across Xcel’s service territory – if both parties could reach an agreement on this issue." 

A notice of intent to acquire and subsequent good faith negotiations by the city are required by law before the city can file a condemnation action in Boulder District Court to acquire (and determine the price of) the electric distribution assets owned by Xcel.

Xcel Energy said it had received Boulder's notice of intent to acquire and is reviewing it. "We continue to believe that we can help Boulder achieve its goals better, faster and cheaper by working together instead of Boulder attempting to take over our business," the utility said.

Last August, the Boulder City Council authorized city officials to prepare for a possible condemnation starting sometime after January 2014. In November 2013, Boulder voters approved a ballot measure that allows the city to proceed with municipalization if the city can acquire Xcel’s assets and cover any lump-sum payment of stranded costs for $214 million or less. (See the Nov. 7 Public Power Daily.) This condition is in addition to others set by voters in 2011 as part of the City Charter.

The sending of the notice "is not the same as initiating condemnation proceedings in court," the city noted. Boulder is still evaluating the legal steps it will take as a result of a recent ruling by the Colorado Public Utilities Commission that said the city must get the commission's approval prior to filing a condemnation action in state court if any of the desired assets also serve customers outside of city limits.

The city has not decided yet whether to appeal the PUC’s decision. "This is not because of any disagreement that the commission has a mandate to ensure reliability for non-city customers, but because of valid legal arguments about the timing of that oversight and the scope of the commission’s authority," the city said Jan. 6. A decision about whether to appeal must be made by Jan. 15.

Boulder said it also is in the process of releasing a request for proposals for legal and regulatory specialists to join the city team that is working on state regulatory issues. 

More information about Boulder's interest in creating a city-owned electric utility is posted at www.BoulderEnergyFuture.com.
 

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Jeanne Wickline LaBella
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