Municipalization of Electric Power Monopoly in Boulder, CO. Roger Koenig 11/12/

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1 Municipalization of Electric Power Monopoly in Boulder, CO Roger Koenig 11/12/

2 Why is this an issue today? Question 2C (allowing the formation of a municipal utility) Yes: 13,784, 51.93% No: 12,757, 48.07% The ballot language allows the city to sell unlimited revenue bonds to condemn assets and pay separation costs plus stranded asset settlements to Xcel Energy.

3 2011 Ballot Question No. 2C Light and Power Utility Shall the City of Boulder have the authority to establish, acquire, erect, maintain, and operate, by any lawful means, a municipal light and power utility with programs and improvements that include without limitation generation plants, renewable energy, energy conservation, and distribution systems, with all necessary powers appurtenant thereto if the city council determines that it can acquire the electrical distribution system in Boulder and charge rates that do not exceed those rates charged by Xcel Energy at the time of acquisition and that such rates will produce revenues sufficient to pay for operating expenses and debt payments, plus an amount equal to twenty-five percent (25%) of the debt payments; and with the reliability comparable to Xcel Energy Shall the City, acting through the utility, issue enterprise revenue bonds payable solely from the net revenues of the utility, to finance the costs of acquiring from Xcel Energy and any affiliate thereof, and constructing, relocating, installing, improving, completing or expanding the equipment, facilities and other assets comprising an existing electric distribution system within or outside the City s boundaries, and paying all necessary or incidental costs related thereto, and shall the City have the authority to adopt all means necessary or appropriate to carry out the requirements, purpose and intent of this measure? To date, City Council has allocated an additional $300,000 from the city's general fund to cover municipalization cost overruns. Already in violation of the ballot charter?

4 Summary Take-Away The municipalization decision criteria measurements, as designed by Heather Bailey and staff, are rigged. If they pass City Council vote approval November 15, Bailey will have little trouble in avoiding a Council municipalization off-ramp decision and subsequent vote to proceed to condemnation court in March The rest of the process is mostly for show. Bailey is staffing up now for starting a Municipal Power Company. After condemnation filing, we pay for a multi-year legal battle with Xcel Energy, the Federal Energy Regulatory Commission, and many other electric power users in Colorado. Legal costs are estimated near $10 million and will need taxpayer funding. Businesses will avoid expansion or location in Boulder while this power battle rages. How can we protect Boulder? 1. Write and call 6 members of City Council before Thursday, November 15 Vote NO on Heather Bailey's "off-ramp avoidance" criteria. Vote YES on Ken Wilson's "municipalization decision addenda" at Council on November Fight the city s annexation of the East Boulder periphery properties in the interest of the public and property owners and all Boulder residents. If the city doesn t have jurisdiction over some critical Xcel assets, they can t seize them through condemnation. Who wants the 1923 Valmont power plant anyway?

5 Are human greenhouse gas emissions a global problem? YES!

6 Is a Boulder City seizure, settlement and separation of Xcel s distribution assets in Boulder a solution to greenhouse gas emissions? NO!

7 Boulder City Government Heather Bailey Executive Director of Energy Strategy and Electric Utility Development Compensation exceeds $250K per year Consists of the Mayor, Deputy Mayor and seven council members City Council In Charge of implementing initiatives approved by the Council City Manager Jane Brautigam appointed by City Council Boards, Commissions, Divisions 17 staff members also listed to aid the project Boulder Energy Future Project Directed by Heather Bailey City Manager s Directors 17 City Staff members Source:

8 Boulder Energy Future Project Resources Events leading to an increase in funding: Voter-approved Measure 2B instituted a tax to provide $1.9 million to the project annually during the initial phases to cover study expenditures. The City Manager recommended that the council allocate $300,000 from the city s general fund to cover staff member costs. Some of the unnamed consultants included in staff member costs receive rates of $900 per hour. (Source: The Boulder Daily Camera, Rising Costs in Boulder Municipalization Study, October 29, 2012) Bouldercolorado.gov discloses that the project has employed a number of consultants, without providing their identities. The project has selected Duncan & Allen as FERC attorneys, and Duncan, Ostrander & Dingess to represent the city in any future condemnation proceedings with Xcel Energy.

9 Left Blank! City Council will vote November 15, 2012 on the adequacy of the charter requirement proposed metrics as the off-ramp decision criteria in fulfillment of Ballot Measure 2C. Following this vote, other criteria may not be considered. Heather Bailey Verbal: February 25th - Council Study Session to discuss complete strategy options and ask clarifying questions/request further information. No votes are taken at Study Sessions March 19th - Council Study Session to vote on complete strategy options.

10 State Control of Power Monopolies? "Praise Joseph Stalin, the great protector of communism!" Didn t work out so well.

11 Likely Outcomes of Boulder City Council Control of Local Monopoly Punitive Commercial Rate Structures (80% of total demand) Forever lose consumer rate and reliability protection of Colorado Public Utilities Commission No legal recourse with City Council Technical and manpower limits to power reliability

12 These are feel-good criteria. Not measurable.

13 Xcel assets in Boulder are not a local grid (they serve the whole area) Xcel monitoring and dispatch are in remote bunker facilities near Golden not Boulder. Not condemnable!

14 Transmission Stations Boulder City Limits Louisville/Lafayette/Su perior City Limits Transmission lines Boulder Council cannot condemn Xcel assets that are not within city borders. Hence the letters and proceedings started to annex critical Xcel property and feeders on the East side of Boulder. Stop annexation! You have legal rights.

15 Closing the Transmission Loop: South Boulder County on the way to Louisville and Valmont Separation Problem: Belongs to Xcel Energy. Can t be condemned since outside of Boulder city.

16 The Not in Boulder Electrical Transmission Lariat Boulder Valmont Plant Leggett Terminal

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18 Existing Boulder Commercial Rates are like sausage. Don t know what is inside. So how can Heather Bailey claim rate equivalence? Modeling commercial rates on only three category averages creates inflated revenue expectations for a Boulder Municipal Power Company plus sticker shock for businesses.

19 Big Problem with Bailey s decision metric! The majority of existing commercial rates don t match simple categories. 80% of Boulder power is commercial and industrial.

20 Primary Transmission Customers in Colorado Will stop investing in Boulder Will self generate rather than participate in Boulder municipal

21 Bonding Boulder Municipal Power - by Gaming Debt Service Coverage Ratio (Interest time deferrals lead to customer power rate increases in later years) Easy to Game DSCR with Deferred Tranches

22 Boulder Municipal Power Monopoly Decision $10 million of lawyers and hearings proceeding 2013 to 2017(?) followed by: $300 to $600 million of debt for: Xcel asset settlements separation engineering new dispatch + transmission construction start-up costs for service and ops people punitive rates that drive business out Versus Incremental renewable generation programs and incentives with return on investment for business and gov. Demand destruction incentives where Xcel suffers, not a city power monopoly suffering Negotiate and implement a broader set of interconnections with Xcel and the PUC for micro grids (University of Colorado example)

23 Dear Council Member, Please vote NO on proceeding with inadequate financial, rate and reliability decision criteria for Municipalization on November 15. I would like to continue living or working in Boulder with affordable and reliable power. There are far less costly and lengthy paths for implementing renewable generation and energy efficiency goals in our city. council@bouldercolorado.gov Call council members who have supported proceeding with Heather Bailey s off-ramp avoidance criteria, and ask them to support open governance for Boulder. Publish decision dates, reliability concerns and financial risks. Matt Appelbaum AppelbaumM@bouldercolorado.gov KC Becker beckerk@bouldercolorado.gov Macon Cowles CowlesM@bouldercolorado.gov Suzanne Jones joness@bouldercolorado.gov Lisa Morzel morzell@bouldercolorado.gov Tim Plass plasst@bouldercolorado.gov

24 What else can I do? me to receive an invitation to join a new PLAN-Rational 501(c)4 education and issues nonprofit that represents consumer, business, and taxpayer rights in Boulder. Thanks for being involved in our local democracy! RogerKoenig@comcast.net