BOULDER - City of Boulder officials on Thursday accused power company Xcel Energy Inc. of letting its distribution system fall into disrepair because of the city's pending attempt to create a municipal electric utility.

The remarks came in a press release that outlined an agreement between the city and Xcel to install a new distribution line beneath Boulder-owned open space near Shanahan Ranch.

The work is necessary due to September flood damage to a line serving the Shanahan Ridge neighborhood on the south end of town. But Boulder's release also made clear that the city had lobbied for a much different solution that Boulder officials believe would provide better service and be less susceptible to damage from future extreme weather events.

In the release, city attorney Tom Carr implied that Xcel had offered to make the city's desired repairs to Shanahan Ridge service only if "the possible creation of a local utility was not on the table.

"It appears that Xcel, knowing that it may have to sell its equipment to the city at a later date, is running the distribution system down and refusing to make reasonable and prudent repairs to keep it functioning," Carr said.

Xcel officials could not be reached for comment, but the company issued a statement.

"The Boulder city attorney appears to be misinformed about the facts and background on this matter," Xcel's statement read. "With this project, as with all of our projects in the city, the fact that the city may attempt to create its own utility has absolutely nothing to do with the quality, operations and service we provide to our Boulder customers. We are 100 percent committed to our Boulder customers in the same way we are to our other customers."

In January, the city of Boulder served Xcel with notice that it intends to acquire the company's assets and equipment necessary to create a municipal utility. Xcel is an unwilling seller, meaning the case will likely end up in condemnation court.

The damaged distribution line that formerly served Shanahan Ridge runs beneath the Shanahan Ranch directly to the south of the neighborhood. The property's owners, city officials said, refused to give Xcel access to make repairs. As a workaround, Xcel attached a temporary conduit to a fence on open space to restore service to Shanahan Ridge after the flood.

When discussions of a permanent solution began, city officials proposed installing a new line from a feeder out of the substation near the National Center for Atmospheric Research. That line would have run beneath sidewalks and other pavement along easements to Shanahan Ridge.

Instead, the city has agreed to allow Xcel to bore beneath open space to route the new line, which will come from the Eldorado Springs substation just as the old line did. The access was approved by the Open Space Board of Trustees in December and signed off on by city staff Thursday.

As part of the agreement, Xcel must seek city approval of all construction plans at the site and must notify the city 72 hours before work begins. In emergencies, Xcel must notify the city within 48 hours of accessing its lines under the property. Finally, the company must re-seed the area where boring occurs.

"The company and city explored other alternatives, but in order to get the temporary, above-ground line buried as soon as possible, this was the best route," Xcel's statement said. "The design and location of the replacement feeder that will cross open space was the best possible route to get the line in a permanent underground location."

The city argues that the new line won't be located far from the old line, and is on land that is no better suited to house a distribution line as it relates to potential reliability issues.

"It became clear, however, that this was the only fix Xcel Energy would entertain, and continuing the dispute could subject Shanahan Ridge customers to worsening power outages and disruptions to electric service," Carr said.

Carr added: "It basically came down to money. Xcel was unwilling to bear the cost for the preferable repair. Our position is that Xcel Energy has a responsibility to provide reliable service to its customers. Xcel Energy should not shirk that responsibility by choosing a less reliable, lower cost option, especially one that has already failed at least once."

Carr said that any worries Xcel has about not being able to recoup the cost of repairs if the city forms a municipal utility are unfounded. Xcel last week filed an application with the Public Utilities Commission asking permission to limit its customer-funded renewable energy programs for Boulder customers going forward to prevent its non-Boulder customers from subsidizing the benefits that would be reaped by a future city-run utility.

"A court will consider the condition of the equipment, as well as any improvements or repairs that have been made, during condemnation proceedings," Carr said.

Boulder spokeswoman Sarah Huntley said discussions between the city and Xcel about where to locate the new line began in October and grew more intense over the past several weeks. She said the situation illustrates one of the reasons for the city wanting to create its own utility. She said much different decisions might be made about how to best serve customers if the city had local control.

"But we don't have that option right now," Huntley said.