BOULDER – Boulder City Council voted 7-1 late Thursday night to approve the metrics it will use to evaluate whether or not forming a municipal electric utility is feasible.

The city is studying whether it should take over the Boulder transmission grid from Xcel Energy. Boulder residents narrowly approved two ballot measures in 2011 giving City Council the authority to create a utility and allocate money to pay for technical and financial studies and potential litigation.

The ballot measures established general criteria the utility would have to meet before its creation and put them in the City Charter. The utility would have to have rates that don’t exceed Xcel’s, be as reliable as Xcel, produce revenues sufficient to cover operational costs and debt payments and reduce greenhouse gas emissions.

The measures approved Thursday establish the data the city will collect and set performance and financial thresholds it must meet before a utility can be created, said Heather Bailey, executive director of energy strategy and electric-utility development for the city. Bailey is overseeing the team of staff and consultants working on the project.

The metrics "are here to help answer the fundamental question of if it’s feasible for the city to municipalize,” Bailey said. They are a way to convert the ballot language into quantifiable terms, she said.

They only set a baseline, Bailey said. Whether the city should create a utility is another matter, and City Council is free to factor in other considerations -- such as the amount of renewable energy used -- as long as the thresholds are met.

“They’re not intended to be the only criteria,” Bailey said.

In March, City Council will make its next big decision, which is whether to continue the municipalization process or pursue an alternate strategy. If it decides to continue toward creating a utility, the city and Xcel Energy likely would face off in a state condemnation court and before the Federal Energy Regulatory Commission as they fight over the value of Xcel’s system and what Boulder would have to pay for stranded costs.

Those costs might not be known for several years, and if they are too high, a future City Council would have the opportunity to take an “off ramp” and not create a utility.

“As we go through litigation, the outcomes of those lawsuits will also be off ramps,” Bailey said. “It’s also an opportunity to say, 'You know what, this is where we need to stop.' ”

The transparency of the process was a major issue of discussion. Councilman Ken Wilson introduced five amendments, including one that would have required the city to reveal more about its business plan and the inputs of its financial and performance models.

Revealing those details would severely hamper the city’s approach to litigation, city attorney Tom Carr said. Xcel Energy has said it is not willing to sell its assets in Boulder. Obtaining them would require the city to litigate with Xcel Energy in a condemnation court.

“You have to leave to staff some level of judgment about what we disclose and what we don’t," Carr said. "You can’t send us into a courtroom with our hands tied behind our back, and that’s what scares me about this amendment.”

All Wilson’s amendments were defeated, and he was the only vote against the measure. Council member KC Becker was absent.

Ultimately, the City Council approved a revised measure that explained the metrics are the minimum requirements and will not be the only criteria considered by the council.

The metrics are markers and will not set a predetermined course, Councilwoman Lisa Morzel said.

“They frame the conversation, and where it’s going,” Morzel said.

The conversation should include skeptics and opponents of municipalization, of which there are a lot in Boulder’s business community, Councilman George Karakehian said.

“Many in the business community have real questions about the city’s ability to manage an electric utility,” Karakehian said. “I’m not saying we have to bend over backwards, but we have to make sure the business community is comfortable (with the business case).”