BOULDER - The city of Boulder is budgeting $2,312,000 for 2014 for its ongoing municipalization exploration project. But staff warned city council on Tuesday night that more funds could be needed.

That's largely because dealings with the Colorado Public Utilities Commission that city staff had expected to come at the back end of the municipalization process were recently bumped to the front of the line. A PUC ruling upheld on appeal earlier this month stated that Boulder must clear its transition plan for acquisition of the Xcel Energy Inc. assets necessary to create an electric utility before the city files for condemnation of those assets.

Boulder executive director of energy strategy and electric utility development Heather Bailey told council at its regular meeting that the acceleration of spending could cause budget issues. When setting the 2014 budget, staff had been working off of its original timeline for municipalization.

"The reality is that we will be spending time and resources at the Public Utilities Commission," Bailey said.

In 2011, Boulder voters approved an increase to the utility occupation tax in the amount of $1.9 million per year for five years to help support the Energy Future project.

The city spent $3,251,935 toward the project in 2013. That was funded by the $1.9 million occupation tax, a one-time general fund request of $303,000 to support staffing needs, and $1,048,935 of carryover from unspent 2012 occupation tax funds.

The 2013 expenditures included $581,000 in salary for Energy Future personnel. But it didn't include another nearly $600,000 in city staff time spent working on the project, though council members seemed to indicate that the allocation methods used didn't appear to be out of line with other major city projects that draw work from staff across several departments.

The 2014 budget includes $1,957,000 in funding from the utility occupation tax, an amount that includes a three-percent tax increase approved by the city council in October in accordance with the original ordinance. The other $355,000 comes from "one-time savings in the general fund to support salaries and benefits for high priority staffing needs," according to a report to council.

With the anticipated extra legal fees in 2014 due to the PUC process, council member Tim Plass asked Bailey whether the total Energy Future expenditures would be the same over time, just shifted forward to this year, or whether the total cost is going up. Bailey said staff is working on figuring that out now.

Timing was a topic of discussion for multiple issues in staff's Tuesday year-end update to council on the municipalization process.

Public task force on hold

Council members voted 9-0 to direct city staff and members of the public who had been working on a joint task force with Xcel to stop convening with the company until June.

The task force had been working on developing products and services that could help Boulder meet its carbon emissions reduction goals while remaining with Xcel rather than forming a city-run utility. The city had planned on hearing from the task force Tuesday an analysis of such Xcel products and services. But Xcel officials have indicated that the vetting of such programs internally requires extra time and that it will not be able to present a final package to council until June, a delay that prompted council's vote to halt meetings of the task force and to stop devoting staff time to it until Xcel had done its internal work.

Earlier this fall, the task force proposed 17 ideas for demand side management that could aid in carbon reductions. Of those, Xcel said it would move four forward to modeling of cost and benefits: HVAC installer training, commercial and industrial employee, a rented residence split incentive pilot, and a T8 lighting program.

Bailey said city staff was frustrated that after nine months of task force work that Xcel was moving forward only four of the proposals to modeling. But Paula Connelly, an attorney representing Xcel at Tuesday's meeting, said Xcel is considering eight more of the proposals for modeling. Connelly added that the company is committed to working with the city to prevent a lengthy condemnation battle in court.

"We firmly believe that we can meet the city's goals," Connelly said. "We're working very hard to meet these deadlines and get you what you want."

Addressing council concerns about what would happen if Xcel isn't ready by June to present a package of services that could be readily compared to Boulder's municipalization models, Bailey said municipalization efforts could still move forward as planned. She said a settlement with Xcel on services could be reached any time during the condemnation process prior to the city issuing money to pay Xcel for its assets. But she added that if things got much farther into the process than next summer, the city would be pretty vested in the condemnation efforts at that point.

"If Xcel is interested and really wants to do this with us, which I think they do, then they'll meet the deadline," Bailey said. "If they can't meet the deadline, then the question was just posed, do you really want to work with us?"

In addition to an update on the status of municipalization efforts, city staff also told council of plans to develop a series of city-run pilot programs that could help Boulder chip into its carbon emissions regardless of whether the city decides to create its own utility or remain with Xcel. Those include things like helping facilitate as much local electricity generation as possible and analyzing the behavior of energy customers through circuit-level meters made by Boulder-based eGauge Systems LLC.

Jonathan Koehn, Boulder's regional sustainability coordinator, said such programs could be developed while municipalization efforts are ongoing over the next couple of years so that they could be integrated into services either with Boulder's own city-run utility or with Xcel.