Utility to offer details of new electricity deal to Boulder City Council
By Heath Urie, Camera Staff Writer
Posted: 06/06/2011 07:03:03 PM MDT

If Boulder renews its contract with Xcel Energy instead of becoming a municipal utility, the company claims Boulder will be the “most green city worldwide” by 2020.

But that could come at a cost of higher utility rates — at least until wind power becomes cheaper than coal or natural gas.

Xcel officials said late Monday afternoon that they are prepared to offer the city an energy plan that would provide up to 70 percent renewable energy to Boulder within the first year of a new 20-year franchise agreement.

By 2020, the company claims Boulder would reach 90-percent renewable energy. Currently, an average of 10 to 15 percent of Boulder’s electricity comes from renewable sources.

The city’s top energy officials did not return multiple phone calls seeking comment Monday. But late Monday, David Driskell, Boulder’s executive director of community planning and sustainability, said in a written statement that the city welcomes Xcel’s ideas.

“The city council, with input from staff, consultants and the community, will be working to better understand the new proposal that has been outlined, and to evaluate it against the full set of Boulder’s energy goals,” he wrote. “We do, though, want to emphasize that we are happy to see the proposal come forward and appreciate the effort of Xcel Energy in putting it together.”

Steve Pomerance, a former Boulder councilman who actively has participated in the city’s “Energy Future” campaign, said he’s skeptical of the initial details of Xcel’s plan.

“Whatever it is that they are proposing, it appears to be only a wind purchase deal with an unclear pricing structure,” he said. “Boulder is looking for a comprehensive solution to our energy future, including efficiency, local solar, demand management and the opportunity to implement emerging technologies as they become cost effective.”

Boulder officials have been considering whether to renew the city’s now-expired franchise agreement with the utility giant — which is worth about $100 million a year — or pursue becoming a municipal utility. Either way, the city wants a greater mix of renewable and reliable energy.

Xcel representatives will provide details about the proposal to the City Council for the first time on Tuesday, before the council votes on a “placeholder” franchise agreement that could make its way onto the November ballot.

According to the few details released Monday, Xcel would meet the city’s ambitious renewable-energy goals though a 20-year power-purchase agreement that involves the renewable energy credits from an already planned expansion of Xcel’s wind farms in southeast Colorado.

“Initially, we were bringing in the wind to the entire system,” said Gabriel Romero, a spokesman for Xcel. “Now, we’re taking a little bit different approach. We’re going to create a power-purchase agreement that essentially says the (renewable energy credits) and the power they’re coming from will be exclusive to Boulder.”

Renewable energy credits allow a company — or a city — to claim ownership of renewable energy such as wind or solar power. In other words, Xcel would go ahead with its plans to add wind power to the grid, but Boulder would get to claim the benefits.

Wind plan

Xcel’s plan would have Boulder pay the difference between the cost of the wind energy and Xcel Energy’s savings from having the wind energy on its system.

“In the first few years, the city would pay an additional cost because the current cost of wind is greater than the cost of other energy on the Xcel Energy system,” according to a statement provided by Xcel.

At some point, Xcel expects wind power to become less expensive than fossil fuels, so Boulder would “receive money back for several years of the contract.”

“The city could use the extra monies to stabilize rates as the prices of fossil fuels increase or use the money for local energy programs,” the statement reads.

Under the proposed agreement, Boulder would pay Xcel for the cost of integrating new sources of wind power into its system, the cost of supplementing wind power when it’s not available and a premium to show the Colorado Public Utilities Commission that there is a benefit to all Xcel customers.

All of the proposal is subject to approval by the commission.

“A lot of these things are in the planning phase,” Romero said. He could not provide any details about the cost structure of the proposed franchise agreement.

Reducing emissions

Pomerance, the former councilman participating in Boulder’s “Energy Future” campaign, said another 20-year agreement with Xcel already has been rejected by the City Council.

“In the world on energy, 20 years is a really long time,” Pomerance said.

He also questioned the effectiveness of Xcel’s proposal to reduce overall greenhouse-gas emissions.

“Our objective really is reducing the absolute amount of greenhouse-gas emissions that occur,” he said. “If all we do is shift around who pays for renewables without actually reducing our carbon output, we haven’t accomplished anything.”

Leslie Glustrom, a longtime utility watchdog who has also been tracking Boulder’s energy options closely, expressed similar concerns.

“We’re grateful that they are looking at a high-percentage of renewables, but there are many, many other aspects of an agreement that need to be worked though,” she said.

She also questioned whether Xcel would stand by its promises.

“What Xcel promises and what they deliver are vastly different,” she said. “Asking the community to evaluate a complex decision based on a percentage is not the right way to do business.”

Xcel’s reversal

Xcel’s decision to release some details about its plan on Monday is a sharp reversal from just a few days ago, when it was revealed that Xcel asked city staffers not to reveal any details of the plan for at least several more weeks.

Some members of the City Council took offense to that request, saying the discussions need to be made public immediately. Some, including Lisa Morzel, Crystal Gray and Macon Cowles, made pleas for Xcel officials to attend Tuesday’s council meeting and explain their plan publicly.

Morzel wrote in an e-mail to the rest of the council over the weekend that she recently was approached by Craig Eicher, Xcel’s area manager for the Boulder region. Morzel wrote that, during their conversation, Eicher explained that the company didn’t want to reveal its ballot proposal because one of Xcel’s partners didn’t know about it yet.

“Xcel has a partner that doesn’t know that the proposal they are doing with Xcel is for the city of Boulder,” Morzel wrote. “I told him that should make the partner excited and confident that it is Boulder.”

Xcel spokeswoman Michelle Aguayo said the partner company — which she declined to name — has since been made aware of the plans.

‘In good faith’

Last week, Aguayo said Xcel didn’t want to reveal its proposal because the details are still being negotiated and could change. When asked about the reversal on Monday, she said the company wants to work with Boulder “in good faith,” and that the decision to come to the council meeting is not in direct response to council members’ complaints.

“If they are trying to push an agenda, that’s not what we’re going to respond to,” Aguayo said. “We normally do not negotiate contracts in a public forum.”

Morzel sharply criticized the company for its late proposal, and for the way it is conducting itself.

“The city needs to be in the driver’s seat and give up on some hollow hope that Xcel will deliver — they will not,” she wrote.

Contact Camera Staff Writer Heath Urie at 303-473-1328 or [email protected]

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