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Boulder, Colorado, United States

Boulder’s long fight for local power

Driven by a commitment to meet its climate goals, the city of Boulder first sought to push its private investor-owned utility, Xcel Energy, to embrace a radical transition to low-carbon energy. The reluctance and obfuscation of Xcel led the city to develop plans for a municipal energy utility, which the city has continued to push forward in the face of legal challenges and misinformation campaigns.

Boulder, Colorado, United States Boulder’s long fight for local power

Affected population 103,000

by Nick Buxton, Transnational Institute

Background

Boulder is a small university town in the foothills of the Rocky Mountains in the state of Colorado and appreciated for its quality of life. However its energy supply is one of the most carbon-intensive in the United States, provided by a highly coal-dependent investor-owned utility, Xcel Energy. So in the early 2000s as Boulder citizens pushed the city to prioritise tackling climate change, the spotlight soon turned on the community’s energy supply, which makes up 53% of the city’s greenhouse gas emissions (the rest of the city’s coming emissions coming from natural gas and transport fuels).

The city has followed a dual-track strategy to change its energy supply. On the one hand, municipal authorities have pushed Xcel Energy to change its energy mix and find a way for the city to meet its climate goals in partnership with the company; on the other hand, they have explored the option of setting up a city municipal energy utility. Working with Xcel had the potential to realize a much bigger climate impact (Boulder is only 4% of Xcel’s energy load so a company-wide shift would have significant impacts on greenhouse gas emissions). At the same time, the reality of working with a private utility whose main goal is profit and which has consistently sought to block Boulder’s efforts has led citizens to increasingly see municipal ownership as the only solution.

Energy mix of Xcel Energy compared to a proposed municipal utility company

Timeline

  • 2010: Boulder’s franchise contract with Xcel Energy comes up FOR renewal. A number of its citizens persuade the city council to find a legal way to delay signing the contract and to explore alternatives.
  • 2011: Boulder citizens vote through two ballot measures: one to allow the city to study idea of a public utility and a second to pay for it. Xcel Energy spends nearly $1 million dollars to oppose the measures, but loses.
  • 2011: A city study shows that the city can eliminate coal dependency entirely, double renewable production and cut emissions by half, while maintaining the same (or better) costs and reliability as Xcel.
  • 2011-2013: The city creates citizen working groups to develop a transition plan for the future local utility. City staff begin the legal process for setting up a local electric utility in the courts.
  • November 2013: Xcel Energy through (a mainly) faux citizens group launches a ballot measure that would cripple the municipalisation However it was defeated by a 2-to-1 margin, even though again Xcel outspent citizens by 10-to-1.
  • The video below by Boulder Citizens went viral, watched by more than 1 million people and raising $200,000 in donations that helped see off Xcel’s ballot measure
  • 2014: The city passes an ordinance creating the legal entity for a local electric utility and files a petition in Boulder District Court to acquire portions of the electric system owned by Xcel Energy. This is legally challenged by Xcel Energy. The city is allowed to proceed anyway because it has proven that municipalisation is in the public interest.
  • July 2015: The city applies to the Colorado Public Utilities Commission for approval of the assets transfer, emphasising its commitment to reliability, cost-effectiveness and adherence to the city’s climate goals. This is again challenged by Xcel Energy.
  • December 2015: The Commission rules that the city can proceed if it can find a way for Xcel to use its own facilities to serve out-of-city customers. This significantly raises the costs for the city as it will prevent sharing of certain key assets (such as distribution wires), but it also requires Xcel to provide answers to Boulder’s technical questions that it hitherto was not providing.
  • September 2016: The city provides the Public Utilities Commission with a detailed engineering plan to separate the electrical system such that Boulder will serve only Boulder customers and Xcel will continue to serve out-of-city

Political environment

Most Boulder citizens support the goal for a cleaner energy supply, although initially there were concerns and doubts about the viability and appropriateness of the city running a local electric utility. Over time and with a population increasingly educated on the issues, support for a municipal utility has grown.

The main opposition to Boulder’s shift to energy democracy has come from Xcel Energy. The company has vigorously sought every means to oppose it, firstly because it stands to lose the roughly US$20 million in annual profits it makes from Boulder, but primarily because it wants to block the shift that Boulder’s municipalisation represents. Xcel Energy, like many other investor-owned utilities in the United States, is deeply threatened by the changes in the economics of renewable energy, distributed energy technologies and energy storage that challenge their monopoly.

At the state level, the Colorado Public Utilities Commission, which has to approve any municipal energy plans, has not so far blocked progress, but has acted conservatively, creating obstacles the city has had to overcome. In part, this is because it has been unprepared, as there has been no case of proposed municipalisation on the scale of Boulder in the past 80 years and because their regulatory role has been structured around an energy model favourable to private energy monopolies. Local energy advocates also argue that the Commission has by nature of its years of close work with investor-owned utilities inherited much of their culture, thinking and priorities, and made them slow to adapt to the challenges posed by climate change and the changing energy markets.

There are already existing examples of different energy models within the United States that illustrate that other energy models can function well. Although investor-owned utilities account for ownership of over 50% of net generation, almost 80% of transmission and 72% of the customers, a mixture of public-owned utilities and cooperatives makes up the rest. In Colorado, 29 other communities, including Longmont, Fort Collins and Colorado Springs, have successfully run municipal electric systems for decades.

The campaign objectives

The city’s primary motivation to develop a municipal electric utility is meeting its climate goals of 100% clean energy and an 80% reduction in carbon emissions by 2050. Its own studies show that Boulder could get 58% renewables and 54% CO2 reduction almost immediately while remaining cost competitive.

The city’s declared goals in its energy future plan are three:

  1. A path to 100% clean electricity by 2030
  • Expand rooftop, community and utility-scale solar energy
  • Boost percentage of wind-produced energy supply
  • Encourage use of residential and utility-scale battery storage
  • Phase out fossil fuel use for electricity generation
  1. Local authority over infrastructure investment decisions
  • Improve safety, reliability and efficiency
  • Integrate new technology and local generation
  • Increase customer choice
  • Achieve a resilient electric system and prepare for potential disruption due to climate change
  1. Infrastructure investment to support innovation and sustain the local economy
  • Re-invest current profits Xcel Energy makes in the electric system to support new technologies that improve reliability, energy costs, efficiency and customer choice
  • Retain and attract capital investment in our community
  • Develop a market for innovative energy products and services
  • Build a platform for clean technology development to facilitate partnerships with local and regional innovators

The theme of local control and power has featured very powerfully in campaigns in favour of a public energy utility. Moreover a number of citizens have been fully engaged in producing many of the plans (see below) for the municipal energy utility, helping to build broad public support and participation.
In terms of social justice, the city’s plan includes goals on energy equity (providing incentives for all populations to participate in efficiency programmes and distributed generation [1], such as community solar gardens), energy poverty (providing additional resources to vulnerable populations if costs increase); energy job creation (seeking to boost local job opportunities) and energy literacy (building capacity and communications on energy efficiency and energy issues).

From an environmental justice viewpoint, there is also awareness that Boulder’s efforts can help address pollution exportation. Indeed, much of the energy generated for state of Colorado customers comes from Xcel Energy coal-fired power plants that are disproportionately located in low-income communities and communities of colour; by siting clean energy generation in and around Boulder, the city hopes to address issues of environmental justice, support low-income residents and increase overall community resilience.

A community-university initiative, the Just Transition Collaborative launched in 2016, is bolstering these efforts by seeking to “support leadership of under-represented individuals and groups” in Boulder’s energy debate and “to foster more equitable energy, climate and employment practices and policies, as well as to produce community-relevant research.” The campaign is pushing for just transition targets and measurement criteria to be included in the city’s Climate Commitment Document, which will be put to vote in December 2016, to ensure that the costs and benefits of the plan are socially just.

Those who are active in the campaign point out that while issues of democratisation, social justice and public participation have driven the process, they are also principles that need to be continually fought for in order to ensure they are put into practice.

Social mobilisation

Without the action of its citizens, Boulder’s city council would never have advanced as far as it has. Boulder benefitted greatly from local energy and climate experts, working at the university in-town or in the nearby Golden national renewable energy laboratory. Their expertise helped bring the council up to speed on the issues, provided the research input for the city’s various working groups, and has provided a counter-balance to misinformation put out by Xcel Energy.

The city also benefitted from the creative talents of some activists. A local citizens’ campaigning group, for example, New Era Colorado put together a video in August 2013 to try and raise awareness and alert people to the campaign, hoping to raise US$40,000. A month later, it had received US$200,000, with donations from 50 states. An incredible 1.2 million people watched the video

The plans and transition toward a municipal public utility is being designed with input from 11 citizen working groups. These groups include ones that look at rates, reliability and safety, services, renewables and so on. They are however skewed toward people with high levels of expertise, and so may limit broader public participation.

The main actors

  • Xcel Energy – Investor-owned utility
  • City of Boulder
  • Empowering our Future (formerly RenewablesYES) – Citizens’ coalition made up of community organizations, local businesses and individuals
  • Just Transition Collaborative – University-community initiative pushing for socially just energy solutions
  • Public Utilities Commission of Colorado – Legal entity responsible for all decisions on energy within Colorado state boundaries
  • Federal Energy Regulatory Commission – They regulate generation that crosses state boundaries, but generally defer to the Public Utilities Commission

Financing

City studies for a municipal energy utility suggest it can meet its climate goals while maintaining and probably reducing rates for its users, given the decreasing costs for renewable energy. However there are some significant costs for setting up the utility, implementing the separation of assets from Xcel and ensuring the renewable transition. The drafted city budget for next year calls for up to roughly US$2.5 million for Boulder’s Energy Future office, which is currently leading the charge to separate from Xcel Energy and form a municipal electric utility. Of that total money, an estimated US$2.2 million would come out of the voter-approved Utility Occupation Tax, which will be in its third and final year of effect in 2017. The remaining US$300,000 proposed for Energy Future would come out of the city’s general fund if the municipalisation proceeds.

Challenges

It is highly likely that Xcel will continue to do all it can to delay and put obstacles in the way of Boulder – such as foot-dragging and lobbying at the Public Utilities Commission, new ballot initiatives to forestall or prejudice Boulder’s transition, or the offer of new superficial green solutions that do not change the fundamentals of their energy supply mix. Xcel is already trying to set the rules at the Commission by which it will earn its profits, potentially reducing incentives for rooftop solar and electric vehicles. The Public Utilities Commission has also put up obstacles through the requirements they have imposed on Boulder for its plan for separation of assets.

Current status, next steps, future plans

In 2016, the city of Boulder was continuing its dual-track approach of negotiating with Xcel Energy and beginning the process of setting up a municipal energy utility. By June 2017, it should be obvious which strategy the city will take. If, as currently seems likely, the city proceeds with setting up its public energy utility, the acquisition of assets will probably involve a court case, lasting 12 to 18 months. The separation and establishment of Boulder’s energy facilities/services and re-integration into the grid is likely to take another two to three years. Boulder may finally have a new energy utility by 2020.

Resources

Video on Boulder story: https://vimeo.com/184725570#video_1

http://empowerourfuture.org/

https://bouldercolorado.gov/energy-future

http://outreach.colorado.edu/programs/details/id/764

[1] Distributed generation (DG) refers to electricity that is produced at or near the point where it is used. Distributed solar energy can be located on rooftops or ground-mounted, and is typically connected to the local utility distribution grid.

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