In a 90-page decision that follows several days of hearings over the summer, state utility regulators in Colorado have given a go-ahead to the city of Boulder to acquire assets belonging to Xcel Energy within the city limits, except for substations.
The city, which is laying the groundwork to form a public power utility, will have to negotiate with Xcel if it wants to buy the investor-owned utility’s substations, the Colorado Public Utilities Commission said in its lengthy decision, issued on Sept. 14.
Boulder, a city of 100,000, located 35 miles northwest of Denver, has sought for the last several years to find a way to reduce the carbon content of its energy supply and has been pursuing the option of creating a local public power utility as one way of doing that.
The PUC’s order, which can be found on the commission’s website, is a response to Boulder’s third application requesting permission to transfer Xcel assets to the city, to prepare for a physical separation of the electric grid. The order grants some things that Boulder wanted, imposes conditions on some, and denies others.
The PUC denied Boulder’s request to authorize inclusion of facilities inside substations, saying the request was premature. The commissioners also rejected a proposal that Xcel be required to finance and construct the proposed separation work, and declined to require co-location of facilities at substations or joint use of electric poles.
Xcel is the parent of Public Service Company of Colorado, which currently provides electric service to Boulder.
“There is too little benefit and too much risk to Public Service’s ratepayers if Public Service were to finance upfront the construction and reconfiguration work without repayment from Boulder at least five years into the future,” the PUC said in its ruling.
In a Sept. 14 statement, Boulder said that, based on an initial evaluation of the PUC order, “it does not appear that the order significantly alters either the timeline or the overall cost of municipalization.”
“This is a positive outcome for the city,” Boulder said, adding that it “will conduct a thorough analysis of the financial and timing implications of the ruling over the next few weeks.”
Conditions imposed; ‘the most progress in years’
The PUC’s ruling says that as long as Boulder meets three conditions, it can go to the condemnation court to value and acquire the Xcel Energy assets. Final approval of the assets to be transferred is conditioned on:
(1) the filing of an agreement between Boulder and Xcel providing permanent rights for Xcel to place and access facilities in Boulder it needs to continue to serve its customers;
(2) the filing of a revised list of assets that is accurate and complete; and
(3) the filing of an agreement that addresses payment from Boulder to Xcel for costs incurred by Xcel during separation.
The PUC asked for those filings to be made within 90 days of the Sept. 14 order.
The Sept. 14 order from the PUC represents “the most progress we have had in years,” said attorney Macon Cowles, a former member of the Boulder City Council and a spokesperson for a group called Empower Our Future, which supports Boulder’s effort to form a city-owned electric utility.
“Finally, the PUC has given Boulder the authority to do the things it needs to do to move forward,” said Cowles in a Sept. 14 news release from Empower Our Future. “I look forward to seeing what happens in the negotiations between Boulder and Xcel Energy over the next 90 days.”
Creates ‘a path forward’
“As the city anticipated, today’s written decision creates a path forward for the city to proceed with municipalization,” Boulder said in its statement following the PUC’s ruling. “We recognize the unprecedented nature of these proceedings. Boulder is appreciative of the effort that has gone into developing an approach that addresses a variety of competing and important interests for both the Boulder community and Xcel Energy’s customers.”
The city noted that the Sept. 14 order says that once the city has provided the commission with certain information, “the city may proceed to acquire the assets located outside substations.” The order also directs Xcel Energy and the city to work together over the next 90 days to finalize certain agreements, Boulder said.
In addition, the order “presents the city with challenges that will need to be worked through,” Boulder acknowledged.
The commission “decided that it would be premature to approve the city’s initial proposals related to substations,” the city continued. “Instead, it ruled that the city and Xcel Energy must work out agreements to co-locate, build new substations, or resolve the issue through the Federal Energy Regulatory Commission-regulated Open Access Transmission Tariff (OATT) process. The city has already initiated talks with Xcel Energy to reach an agreement on substations,” and anticipates filing an application with Xcel Energy to receive transmission service.
‘We intend to hold Public Service’ to Eves’s commitments
Given the possibility that Boulder may create a municipal electric utility, the PUC noted that David Eves, president of Xcel Energy - Colorado, has said that the utility’s “sole interest in this case is that the proper separation be planned and implemented correctly to ensure the safety, reliability and effectiveness of [Public Service’s] system and in a manner that gives the Commission proper oversight consistent with the Colorado Public Utilities Law.”
“We intend to hold Public Service to the commitments made by Mr. Eves,” the PUC said. “We expect Public Service to work in good faith with Boulder to assist the City in being able to satisfy the three conditions for Boulder to secure final approval of the designation of assets for transfer outside of the substations. We further expect Public Service to work with Boulder pursuant to the transmission load interconnection process under the Company’s OATT [open access transmission tariff] to resolve the issues surrounding the six substations.”
Boulder said in its Sept. 14 statement that it plans to make a final decision by the third quarter of 2019 on whether it will form a public power utility.
On Aug. 21, the Colorado Supreme Court granted a petition filed by Boulder, asking the high court to review a lower court’s decision in a case involving the city’s effort to create a local electric utility. The court order stems from a challenge originally filed by Xcel Energy in 2014.
For more information about the city’s efforts to create a public power utility, see Boulder’s website at BoulderEnergyFuture.com.