$214 million cap on Xcel assets proposed
With a few dozen Xcel employees in attendance on Aug. 6 to show support for their employer, the council voted 6-2 to pass on second reading an ordinance that would allow the city to move forward with acquiring Xcel’s distribution system in order to create a municipal electric utility. The council chamber was packed when the meeting began at 6 p.m. but nearly empty by the time the council had hashed out the debt-limit issue – more than seven hours later.
The debt limit is part of an ordinance proposed by city staff that will serve as a competing ballot measure to a citizen petition-initiated measure that proposes requiring a vote for any and all debt issued by a potential city electric utility, among other things. The city-proposed measure would limit the amount of debt the city could issue related only to the purchase of Xcel’s assets necessary for creating the municipal utility. The latter is a response by the city to try to head off the initiated ballot measure, which the staff contends would kill municipalization.
If both measures pass in November, the one that garners the most votes will prevail.
The council was provided several options for defining the proposed debt limit and what it would cover.
The $214 million is derived from one of the city’s four updated municipalization models presented in July. The amount covered a combination of acquisition and “stranded” costs – the costs Xcel would be owed to compensate for investments it had made in serving Boulder customers for some future period.
Because the debt limit in the proposed ballot measure covers only acquisition costs, council members and city staff made clear that they think acquisition costs alone will be significantly less than $214 million. That number allows for some wiggle room if things don’t go the city’s way in negotiations with Xcel or, potentially, in condemnation court.
The city has contended that it believes that any stranded costs could be mitigated by buying some or all of its power from Xcel for a certain period of time in the early years of the municipal utility.
The acquisition ordinance and alternative ballot measure ordinance were two of four passed on second reading at the meeting. The first vote of the night concerned an ordinance to accept the findings of third-party evaluator PowerServices Inc., which on July 23 presented to the council its opinion that the city’s municipalization models meet charter requirements of a city-run utility. The other vote concerned setting the title for the initiated ballot measure, which the council is required to place on the ballot barring any potential legal challenges to the measure.
Because of various changes made to the language of the proposed ordinances, a third vote on Aug. 20 will be required for final approval of each, although the path the council prefers is becoming clear as it regards moving forward with acquisition.
Mayor Matt Appelbaum and council members Tim Plass, Lisa Morzel, KC Becker, Macon Cowles and Suzanne Jones voted in favor of the acquisition ordinance. Suzy Ageton and George Karakehian voted against. Member Ken Wilson, who has been a skeptic of municipalization, was not present at the meeting because of a previously scheduled engagement. The six who voted in favor were the same group that voted in favor on first reading July 24.
The proposed ordinance would give the city the power to move forward with acquisition even if it means condemning Xcel’s distribution system in condemnation court.
“To take this off the table means there will not be any progress,” Appelbaum said, referencing whatever chances remain of reaching an agreement with Xcel aside from municipalization. “We need to push forward.”
The council also voted 6-2 on the third-party findings ordinance. The other two ordinances passed unanimously after much discussion over the debt limit and wording of the alternative ballot measure.
About 30 citizens, most in favor of municipalization, addressed the council on the acquisition ordinance and the third-party evaluator findings during a public comment period.
Xcel issued a statement after the condemnation vote that read in part: “We remain convinced that Xcel Energy can help Boulder accomplish its energy and environmental goals faster, better and at a lower cost than through the expensive and risky path of municipalization. Notwithstanding this vote, Xcel Energy will continue to work with the Citizen Task Force and the city to demonstrate this fact.
“If the city continues down this path, we will work to make sure our remaining customers and the company are not harmed by the city’s actions. We will also work to protect the interest of our customers in Boulder County who did not have a vote in this matter and who do not want to be served by the city utility.”
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