DENVER - The Colorado Public Utilities Commission on Wednesday morning denied Boulder's appeal of an October ruling that the city had argued was over-reaching in relation to its attempt to create a municipal electric utility.

Barring a successful appeal of Wednesday's decision in district court, the ruling could delay by several months the city's plans to file condemnation action to acquire the Xcel Energy Inc. assets necessary for forming its own utility.

The PUC reaffirmed that it holds ruling authority related to Xcel assets that Boulder intends to acquire that serve customers living outside the city limits, so as to assure system reliability for all. Also, the PUC upheld its assertion that Boulder's plan for separation from Xcel must be approved by the PUC before the city can file for condemnation.

Boulder had argued in its written appeal in November that the city retained constitutional and statutory rights to determine which assets it acquired and the timing of such condemnation.

But the PUC asserted that the Colorado constitution grants the PUC authority as it relates to assets outside the city limits. Part of Boulder's municipalization plan has included the acquisition of a pair of substations outside city limits that serve both city and county residents.

"What I think is important to me is for Boulder to understand that the necessary actions of this commission shouldn't be construed by them as an obstacle to municipalization," commissioner Pam Patton said.

In August, the Boulder City Council approved a timeline that allows city staff to file condemnation action as early as January if good-faith negotiations with Xcel stall. As things stand now, though, the city first would have to file an application with the PUC for a transfer of assets. From the time of such a filing, the PUC would have 210 days to render a decision, meaning it could be late summer or early fall before the city would be able to file for condemnation.

In its appeal, Boulder officials had stated that they were eager to work with PUC staff on separation plans while condemnation proceedings were under way. But the commissioners stated Wednesday that such an arrangement is unacceptable.

"There are regulatory methods," commissioner Joshua Epel said. "Boulder can work cooperatively with this agency. But nonetheless, it is the duty and responsibility of this commission to look out for the interest of the entire state."

Boulder spokeswoman Sarah Huntley said the city wouldn't issue any official statement until the PUC issues its formal written ruling next week. But she said in general the city is encouraged that the commissioners don't view themselves as an obstacle to municipalization but rather are seeking to be thorough in fulfilling their own responsibilities.

Huntley said the city's options right now include appealing in district court or simply seeking to better understand what process the PUC is asking of the city.

"Attorneys are evaluating what to do about the points of law that continue to exist where there's disagreements," Huntley said. "The lawyers are evaluating the options, and I expect we'll know more about how we'll proceed next week."

Xcel, which has been an unwilling seller from the start of Boulder's municipalization exploration, issued a statement Wednesday applauding the PUC's decision.

"The Colorado Public Utilities Commission's decision today is another indication that the city of Boulder has underestimated what would be involved in taking our electric business," Xcel's statement read.

On Tuesday, the PUC approved Xcel's resource plan that would add 170 megawatts of new solar generation and 450 megawatts of new wind generation to its Colorado portfolio in addition to retiring a 105-megawatt coal plant and converting another coal plant to natural gas at the end of 2017. Xcel has long asserted that Boulder could reach its goals of reduced carbon emissions faster and more cost-effectively by remaining a customer of Xcel rather than creating a municipal utility.

"This ruling gives the city council the opportunity to step back and look at the facts before continuing to spend millions of dollars on municipalization and time on long, drawn-out legal proceedings," Xcel's statement said.