Boulder municipalization: City, Xcel battle for 5,800 county customers

June 22, 2013

Boulder Daily Camera

Mac Clouse is a professor of finance at the University of Denver’s Daniels College of Business

The roughly 5,800 Boulder County households and businesses that city leaders want to claim under a possible municipal electric utility represent less than 1 percent of Xcel Energy’s Colorado customers and just 9 percent of the customers of a future Boulder utility.

But these county customers, mostly in Gunbarrel and in some unincorporated enclaves within the city, have become the center of intense debate and legal maneuvering as Boulder moves closer to a decision on whether to create its own electric company.

Boulder’s predictions around both the cost and the reliability of a future city-run electric utility depend on acquiring two Xcel substations in Gunbarrel and Niwot that currently serve both city and county customers.

Xcel has gone to the Colorado Public Utilities Commission to ask that body to stop Boulder from taking those 5,800 customers, a figure that relates to service meters and which the utility company says actually represents more than 11,000 people. A hearing date on Xcel’s request has not been set yet, but is expected as early as next month.

The issue has divided residents in the contested area of Boulder County, with some actively supporting municipalization and others expressing concerns and strong opposition. Opponents have rallied under the slogan “We want a vote.” They did not get to vote in the November 2011 election in which city voters narrowly approved an increase in the utility occupation tax to pay for studying municipalization and authorized the City Council to issue bonds for the utility.

A charter amendment proposed by a citizens’ group and opposed by many elected officials and activists would require that affected county residents get to vote in a future debt-limit election if the city wants to serve customers outside its boundary.

Xcel Energy polled the ballot language on behalf of supporters earlier this year. Opponents contend the measure uses the idea of accountability and voting to “kill” municipalization.

“The county has never been consulted,” said Gunbarrel resident Jill Hammel, echoing the sentiment of many of her neighbors. “Our opinions have never been asked for.” Hammel, an optical engineer, took it upon herself to organize an informational meeting for county residents this Thursday after hearing the issue discussed at a meeting of her homeowners’ association.

She said she’s not necessarily opposed to municipalization, but she’s wary of Boulder and its intentions. More than anything, she feels Boulder County residents haven’t been included in the discussions or provided the information they need to understand what’s at stake. “I’m not on ‘Team City’ or ‘Team Xcel,'” Hammel said. “I’m on ‘Team Let’s Get All the Right Information,’ because who knows? We might get to vote.”

Hammel said she has a solar system on her house and is concerned about her carbon footprint, but the city’s inclusion of Gunbarrel also feels like a “backdoor attempt” to annex the area.

Mac Clouse, a professor of finance at the University of Denver’s Daniels College of Business, said Xcel has enjoyed the advantages of being a monopoly. But already some states allow customers to choose their power provider. Just as technological changes challenged the monopoly of telephone companies, technological and regulatory changes could challenge Xcel’s monopoly in the future.

Even in the current regulatory environment, Boulder’s move raises the possibility of other municipal utilities taking customers in Xcel’s service territory.

“Those 5,800 customers may not seem like a large amount, but it’s opening a hole in the dike,” Clouse said. “If this is something municipalities discover they can do, that opens the way for larger losses of customers in the future. They want to keep the strong market position that they have.”

Clouse said Xcel may have a legitimate point when the utility argues that that county customers didn’t get to vote, and, at the same time, it can be an important piece of the company’s strategy.

“I think they’re raising a good point, and it’s also a strategy,” he said. “If you’re going to allow the consumers to vote on something, then it only seems fair that all the consumers should get to vote. And then strategically, they’re trying to do everything they can do to stop this and give themselves an opportunity to campaign again in front of those voters.”