Erica Meltzer Camera Staff Writer

Boulder will need to get the approval of the Colorado Public Utilities Commission before it can condemn Xcel Energy assets located outside city limits, the commission reaffirmed Wednesday.

Boulder had asked the PUC to reconsider an earlier decision seen by many observers as favoring Xcel Energy in its bid to stop the city from forming a municipal electric utility. The PUC said the commission has jurisdiction over areas outside city limits and over facilities that affect regional reliability and that Boulder should seek the approval of the PUC before moving forward with condemnation.

Boulder’s plans call for it to acquire two substations outside the city that serve both city and county areas and a high-voltage transmission line. Owning that infrastructure, in addition to four substations inside the city and Xcel’s local distribution network, would improve the reliability of a future municipal electric utility and save the city significant cost in building new infrastructure, city engineers have said.

The PUC unanimously upheld its earlier decision at a meeting Wednesday morning. The commissioners said it is not their intent to stop Boulder from forming a utility, but they have a statutory obligation to consider the impact of Boulder’s actions on the rest of the region.

“What is important for me is that Boulder understand that the necessary actions of this commission do not constitute an obstacle to municipalization,” Commissioner Pam Patton said. “That seems to be the reason for this request, and I just do not see that.”

Commissioner Jim Tarpey said that if Boulder takes ownership of infrastructure outside city limits, that has the potential to affect regional reliability.

Commissioners have also said that if Xcel has to build replacement infrastructure, their ratepayers shouldn’t have to bear that burden.

“That means we have to be involved, and to have a meaningful role, we need to be involved from the beginning,” he said.

The PUC decision means Boulder would need to get commission approval for the transfer of assets before moving forward with condemnation, something city officials had planned to do early next year.

Boulder does have the option of appealing the PUC’s decision to the district court.

Boulder spokeswoman Sarah Huntley said the city will evaluate its options, including appeal and complying with the PUC decision, after the commission issues a written ruling.

She said city officials were encouraged by the commissioners making it explicit that they do not intend to stop Boulder from forming its own utility.

“We’re encouraged by the tenor and the quality of the ongoing conversation,” she said. “At least one commissioner reasserted that the PUC does not intend to be an obstacle to municipalization. They are clearly concerned about their obligation in terms of ensuring reliability and watching out for customers outside the city. Those are areas where Boulder is eager to work with the PUC.”

Xcel Energy spokeswoman Michelle Aguayo said the decision is another indication that Boulder has underestimated what will be involved in forming its own utility.

At the same time, Xcel Energy continues to add more renewables to its system, she said, bringing the company closer to Boulder’s goals for greenhouse gas emission reductions. On Tuesday the PUC approved a new resource plan for Xcel that adds 170 megawatts of solar and 450 megawatts of wind generation, along with plans to retire the 105 megawatt coal-fired Arapahoe 4 generator, and discontinue the use of coal power at the 350 megawatt Cherokee 4 generator at the end of 2017.

“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,” Aguayo said. “Boulder can accomplish its energy and environmental goals faster, better and at a lower cost with much less risk by working with Xcel.”

The Boulder City Council is scheduled to receive an update on the municipalization process at its Tuesday meeting.

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