Denver Business Journal

Jul 17, 2014

Boulder moves to condemn Xcel property for city utility

Mark Harden News Director-Denver Business Journal

Pasted Graphic
Mark Harden | Denver Business Journal
The Pearl Street Mall in Boulder.

The city of Boulder, which wants to establish a municipal power utility, filed a condemnation petition in Boulder District Court Thursday in a bid to acquire parts of Xcel Energy Inc.'s electric system serving the city.

"The move is a significant step toward achieving the Boulder community’s goal of accessing an energy supply that is cleaner, reliable and competitively priced," the city said in an announcement. "In addition, a local electric utility would not be responsible to shareholders seeking profits, enabling customers to have a more significant voice in decision-making."

Boulder has been moving toward creating its own utility as a way to boost its use of renewable energy and cut greenhouse gases. Xcel (NYSE: XEL) opposes the move and says it's better suited to help the city reach its renewable-energy goals.

Boulder voters in 2011 granted city officials permission to explore ending the city’s electric service from Xcel, as long as a new city-owned utility could meet or beat Xcel’s rates and service. Voters in November 2013 approved a $214 million cap on the cost of acquiring Xcel’s assets.

The city council voted in May to create the city-owned utility. Xcel sued Boulder in June, saying the council's May vote overstepped the limits voters imposed on the process.

Boulder wants some or all of nine Xcel substations serving Boulder and a 115kV transmission loop, as well as related facilities, equipment and lines.

Boulder claims the right under the state constitution to condemn property with just compensation to provide public power to residents and businesses. It says it acted after attempts to negotiate an arrangement with Xcel failed.

“While we had hoped to reach an agreement with Xcel Energy that would make litigation unnecessary, the city is fully prepared to move forward in pursuit of our community’s goal,” said Heather Bailey, the city's executive director of Energy Strategy and Electric Utility Development.

“Owning and operating our own utility will not only allow us to be better environmental stewards and energy consumers but will also help us make our local economy even stronger," Bailey said. "Our utility would create jobs, foster innovation and emerging technology and support the types of businesses that make Boulder unique.”

Xcel spokeswoman Michelle Aguayo said the company is still reviewing Boulder's petition, but she called the city's move "surprising," adding: "Based upon the limited information Boulder has provided us as part of its offers, the city’s action to file for condemnation of our business ignores state law and is premature."

Boulder noted in its announcement that the issue of whether a Boulder city utility would serve people and businesses outside the city limits -- mostly in north Boulder and Gunbarrel -- now connected to Xcel facilities within the city "has been a point of debate."

But the city said it is not currently seeking a certificate governed by the Colorado Public Utilities Commission that would allow it to serve out-of-city customers.

"This is because there are industry standards that would allow Xcel to serve those customers through the facilities acquired by the city," Boulder's statement said. "More specifically, out-of-city customers could continue to be served by Xcel Energy, receiving their power from Xcel Energy’s sources and paying their bills to their current provider based on that company’s rate structure. The city would simply own the lines over which the electricity flows. Such arrangements are not uncommon in the electric industry."

But Boulder said it might revise its condemnation petition later to allow for service to out-of-city addresses "if that becomes necessary."

Xcel's Aguayo noted that the Colorado PUC "issued a ruling last year, consistent with 90 years of Colorado legal precedent, clarifying that it, not the City of Boulder, gets to determine matters related to [out-of-city] county customers and associated facilities. Boulder has sued the CPUC challenging its decision as well as Colorado legal precedent, but the CPUC’s decision is still the law."

• This story draws on previous reporting by the DBJ's Cathy Proctor.