BOULDER – A critic of Boulder’s electric utility municipalization study is calling the city’s proposed metrics “rigged” to enable the city to create a municipal utility – a characterization city officials strongly dispute.

The Boulder City Council on Thursday night will consider taking the next step in its study of whether it should create a municipal electric utility. The council will review metrics developed by staff and consultants intended to measure whether the utility could meet standards set for rate equivalence, revenues, reliability, greenhouse-gas reduction and increased use of renewable energy.

The city would use the metrics to guide a decision in February or March about whether it should take control of the electric grid in Boulder, which currently is owned and operated by Xcel Energy Inc., or pursue an alternative strategy. Links to the metrics can be found at www.BouldersEnergyFuture.com.

If the council adopts the proposed criteria, municipalization would be a fait accompli, said Roger Koenig, a Boulder resident trying to rally municipalization opponents and skeptics.

“(They are) rigged to have a predetermined outcome,” Koenig said. He believes the metrics set a low bar and measure the wrong things.

Koenig is the founder and former chief executive of Carrier Access Corp., with an academic background in electrical engineering and engineering management. He has created a presentation he has been sharing with local business groups.

In the big picture, Koenig believes the municipalization process is moving too fast, has too little public input and could lead to years of litigation and debt payments.

“We need to have an open, public process, with published decision dates and criteria,” Koenig said. He plans to air his concerns at this Thursday’s council meeting.

City officials disagree with Koenig’s assessment. The intent of the metrics is to measure and evaluate data in a transparent and public way, city spokeswoman Sarah Huntley said.

They were created in the past few months based on industry standards and were determined by working groups that included industry experts and Boulder residents, Huntley said.

“The idea that the metrics are derived to result in a specific outcome is completely unsupported,” Huntley said. “People are forming conclusions based on incomplete or incorrect information.”

City Council has reviewed the thinking behind the metrics at recent meetings, and the city’s executive director of energy strategy and electric utility development, Heather Bailey, has participated in several public forums and outreach meetings.

Converting to metric

Koenig’s presentation is available at www.slideshare.net/slideshow/embed_code/15154244#, and on Tuesday he expanded on his points during an interview. He said his presentation was developed by “a small group of concerned citizens” that had discussions with city officials. Koenig said he is not receiving financial support from Xcel Energy.

Koenig questions several criteria, especially those related to the proposed utility’s rate comparability and long-term financial stability.

The charter requires Boulder to show that a municipal utility would not charge higher rates than Xcel Energy at the time the city would acquire the grid. City staff is proposing to use average cost per kilowatt hour as the unit of comparison, and to compare the rate between residential, commercial and industrial users.

Koenig says it will be an imperfect comparison. Xcel Energy’s rate schedule has many more tiers for different types of commercial and industrial users, who consume about 80 percent of Boulder’s power. Lumping all commercial users into two categories understates the differences, he said.

The Boulder Chamber agrees with Koenig about the rate comparisons and said so in messages to the City Council and meetings with staff, public affairs director Angelique Espinoza said. The chamber is familiar with Koenig’s efforts but is working independently, she said.

Boulder would like to base the comparison on Xcel’s schedule, but that is proprietary information the company has not revealed to the city, Huntley said.

“That is a challenge. We are going to do our best job to break apart the rates as we know them … to try to make sure we’re getting as close as we can to an apples-to-apples comparison,” she said.

The long-term financial viability of the utility also is doubtful, as is how the city could manage its debt, Koenig said.

Energy efficiency and demand management programs would “destroy demand” by reducing the amount of power used, which would hurt the utility’s revenue, he said. He also referred to persistent rumors that large industrial consumers were looking for ways to avoid becoming utility clients.

A widespread decrease in energy use and the exit of the biggest clients would make the utility’s rate base shrink and require it to increase rates to be able to make debt payments, Koenig said. He also said the city is presenting an overly optimistic take on the prospects of its bond offering and could potentially set up a repayment plan where initial payments are kept low but balloon over the life of the bond.

City officials have said repeatedly they will not recommend or approve a bond issue that hurts Boulder’s credit rating or that could leave taxpayers on the hook for large debt payments. During a Nov. 8 public forum, Bailey noted the bonds would be revenue bonds, which are paid for from revenue the utility would generate, and not general obligation municipal bonds that would be paid for by Boulder taxpayers.

Highways and off ramps

That Thursday night’s meeting will be important is not in dispute, but the long-term impact of its decision is. Huntley said the meeting is an important milestone in a long process, but council’s actions will not commit the city to a course of action.

“The metrics don’t represent a decision point in any way. They’re simply designed to give staff some more specificity and guidance about whether they can meet the requirements,” she said.

Koenig disagrees, arguing that “the rest of the process is mostly for show.” He believes Boulder’s hiring of staff such as Bailey, consultants and lawyers specializing in condemnation and federal electric regulations are indicators of the direction it is heading.

The city has said its consultants and lawyers are responsible for giving it advice it will heed, including warnings that municipalization should not proceed.

“We don’t want to go into this in a naïve fashion,” Bailey said.

The Boulder Chamber is somewhere in between, Espinoza said.

“No one’s doubting (Thursday’s meeting) is important. This is it. They’re setting the rules of the game,” she said.

The more important decision will come in March, in the chamber’s view. If City Council formally adopts a strategy, it could give the green light to taking Xcel Energy’s assets from it through condemnation litigation. The company said it will not willingly sell the system.

While the city has said it has several “off ramps” – such as ending the project if the condemnation court places a value on the system that’s too expensive, or if it is unable to sell bonds for the utility – the momentum might be irreversible, skeptics say.

“That is when we are in earnest on the highway,” Espinoza said. “It is hard to back up after that.”

Koenig also is criticizing what the city has spent so far.

Voters in 2011 approved a ballot measure that allocated $1.9 million per year through 2017 for studying municipalization. While 51.8 percent of voters supported the municipalization measure, only 50.3 percent supported the funding allocation.

Bailey said the city is being economical, with about five to seven city employees working part time on the project as they do their other jobs. Bailey’s salary of $250,000 per year makes her Boulder’s highest-paid employee. The city said at the time of her hiring the salary was based on what the utility industry pays people with her experience and duties.

Weighing the risks

A decision to municipalize would have profound consequences for Boulder and affect it for years. It could help Boulder achieve greenhouse-gas reduction goals and environmental policies that repeatedly have been approved by voters, or it could saddle the city with higher utility rates, substantial debt and a subpar utility.

“There’s a lot of built-up anxiety,” Koenig said. “This could be a historically bad decision for the city.”

Koenig seems to be getting the attention of parts of the business community, Espinoza said. This week he gave his presentation to the Commercial Brokers of Boulder’s monthly meeting, and Foundry Group partners Brad Feld and Jason Mendelson, venture capitalists who are influential in Boulder’s tech community, have been promoting Koenig’s presentation on their widely read blogs.

Koenig said he is in the process of forming a 501(c)4 nonprofit issues-and-advocacy group that would represent Boulder consumers, businesses and taxpayers.

City staffers are trying to dispel concerns and convince Boulder residents and businesses that not only are they coming up with something different, it would be something better.

“Nobody wants to create a utility and spend the money to do so simply to replicate what Xcel currently offers,” Huntley said. City staffers, consultants and volunteers want to show that a potential utility would clearly outperform the baseline set by the metrics.

City staffers also are working to prove that, no matter what the decision, the city will have reached it in a diligent and transparent manner.

“At the end of the day, this project is accountable to the community, and the community needs to know we looked at the things we needed to, and we had an open mind,” Bailey said at the Nov. 8 presentation.

On Thursday, the City Council also will consider amendments proposed by Councilman Ken Wilson. The amendments are available online at www.bouldercolorado.gov/Hotline.

The amendments were crafted to address many of the issues Koenig is discussing.

“I have worked with several experts to address these issues and we have come up with five amendments that should provide some assurance that the business case is being done in a diligent manner with the information available at this time,” Wilson wrote in his explanatory posting.