Boulder’s path to municipal utility still unclear
City, Xcel Energy may head to court over takeover bid


BOULDER — It has been 10 months since Boulder residents gave the city the authority to create a municipal utility, and the roles of major players on the local, state and federal levels remain unclear.

Last November, voters narrowly approved a ballot measure giving Boulder City Council the authority to create a city-owned utility. The city is required to meet several benchmarks related to reliability, rates and the amount of renewable energy used. Staff and outside consultants are working to see if a utility would be financially and technically feasible.

Creating the utility would require Boulder to obtain the existing distribution system from Xcel Energy Inc., which has vowed to fight Boulder’s takeover.

Litigation in state court is a possibility if Boulder uses eminent domain to take the grid. Both Boulder and Xcel Energy agree the Federal Energy Regulatory Commission would decide what Xcel is owed for “stranded costs,” investments it has made in Boulder that it would lose. But a recent case shows that the Colorado Public Utilities Commission, Xcel Energy’s chief regulator, could be involved — although at this point even it is not sure what role it would take.

The PUC regulates private electric and gas utilities such as Xcel Energy. When Xcel Energy asks to raise rates or change the services it offers to customers, the three-person commission must approve the plan first.

Earlier this year, Xcel Energy asked the PUC to allow it to change the terms of the SolarRewards and demand-side management programs for Boulder customers. The company argued that Boulder’s possible municipalization could leave Xcel Energy and its other customers on the hook financially for incentives and programs used by Boulder customers.

The PUC rejected Xcel Energy’s request without prejudice, but it asked the parties involved to give their opinions on some vital questions, including how and when it should get involved in Boulder’s municipalization effort. The PUC’s questions indicated its interest was in making sure customers outside Boulder are not negatively impacted by Boulder’s decision.

Not surprisingly, Xcel Energy and Boulder are on different sides, as legal opinions filed in mid-August show.

Xcel Energy still believes “the time to act is now,” according to its response, but it outlined several points in the future where the PUC could act.

Xcel Energy based its findings on a work plan city staffed created that outlines how it is approaching municipalization. Staff was scheduled to present the plan to the city council on Tuesday, Aug. 28, after the Boulder County Business Report went to press.

The plan outlines a rough timetable that would have Boulder complete its technical, legal and financial studies by early next year. At that point, the city council could decide if the plan is feasible and whether Boulder should take the initial legal steps to form a utility.

Xcel Energy says in its filing that the plan puts Boulder on a “very aggressive timeline” and the city is showing no uncertainty or hesitation about forming a utility. The PUC should respond by engaging as soon as the city moves to the implementation phase, it said.

Boulder says the time for the PUC to act is much farther down the road, after the city has decided whether to municipalize and only if legally required good-faith negotiations with Xcel Energy over the grid’s value have failed.

At that point, the dispute would have reached a state district court, which oversees condemnation hearings. A jury or a special panel appointed by the court would determine what Boulder would have to pay Xcel for the grid.

As the PUC tries to determine its role, others could emerge as the process moves forward.

One important player could be a third-party evaluator hired by the city to vet the work it has done so far. The independent reviewer could be hired early next year as the city moves on to the implementation phase, Boulder spokeswoman Sarah Huntley said.

The reviewer could either validate the city’s findings, make suggestions that lead to revisions or find “a fatal flaw” that convinces the city council to abandon the project, Huntley said.

The city also plans to keep the process open to public input, with opportunities for activists and the business community to participate, Huntley said.

Other state entities might weigh in on the process, but their impact remains to be determined and could be minimal.

The PUC has its own staff of advisers and analysts that can advocate positions before the PUC. The staff, frequently referred to as the “trial staff” in PUC filings, works with lawyers the state attorney general’s office assigns to provide it counsel.

The trial staff has advocated positions that would alter the course of municipalization if followed. In May, it suggested Boulder might need another election in which voters approve the city’s acquisition plan, but it has since reconsidered. It now agrees that the 2011 election was enough to give Boulder city council the authority to proceed.

In August, the trial staff said the PUC should make Xcel Energy place a value on its Boulder assets and submit the total to the PUC by the end of the year. Xcel Energy’s response is that it should not have to disclose a valuation until after Boulder has condemned the property and proposed its own valuation.

Although the trial staff takes positions and its members are PUC employees, the commissioners and administrative law judges do not base their decisions on the trial staff’s recommendations, PUC spokesman Terry Bote said. The trial staff’s recommendations are weighed alongside those of all the other parties, Bote said.

The Office of Consumer Counsel is another body that can make recommendations to the PUC. The OCC is part of the Department of Regulatory Affairs, and its purpose is to represent residents and small businesses before the PUC. It too gets its legal advice from lawyers appointed by the attorney general’s office.

Although lawyers from the attorney general’s office represent both PUC staff and the OCC, it is up to the respective offices to decide what positions it takes, said Carolyn Tyler, a spokeswoman for the attorney general. The relationship between the entities is analogous to that between clients and a law firm, she said, with the attorney general’s office acting as the state’s law firm.

Filings made by the OCC or PUC trial staff should not be construed as opinions independently reached by the attorney general, Tyler said.