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Energy Future - Associated Projects

Summary

Work on Boulder’s Energy Future is organized into four work areas:

      1.   Boulder's Climate Commitment 

      2.   Municipalization

  •  Legal and Regulatory
  •  Transition Plan

      3. Energy Pilot Projects

  • Resilient Energy Infrastructure Pilot Project
  • Natural Gas Replacement Project
  • Solar Development

      4. Regional Collaboration

  • Colorado Coalition for Climate Action Coalition (CC4CA)

Status and Potential Next Steps

Boulder's Climate Commitment 

In December 2016, City Council formally adopted goals to guide Boulder’s climate action efforts, including the goal of reducing community-wide greenhouse gas emissions 80 percent from 2005 levels by 2050; the goal of reducing emissions from city operations 80 percent below 2008 levels by 2030; and the goal of achieving 100 percent renewable electricity community-wide by 2030.  The adopted goals also include progress indicators, and targets for local renewable energy generation for key milestone years.

 

In 2017, several climate-related projects will be on the council calendar and are described below, including energy code updates and work toward a potential municipal electric utility and related energy future projects, including several pilot projects. In addition, the city team will continue to build community partnerships in support of emission reduction efforts and launch a new community engagement effort; launch phase 2 of Boulder’s Energy Challenge; continue to support delivery of EnergySmart and PACE services to homes and businesses; work toward 100 percent compliance of the city’s SmartRegs requirements; implement next steps for the Building Performance Ordinance; and continue to reduce landfill-related emissions through implementation of the Universal Zero Waste Ordinance.

Municipalization

The municipalization project began in 2010 as an effort to examine options that could provide Boulder residents and businesses with electricity that is increasingly clean, reliable and competitively priced while allowing for more local decision-making and control.

As a result of unprecedented analysis in 2013, the city has continued to pursue municipalization, or the creation of a local electric utility, in order to achieve this goal.

This particular approach was approved by Boulder voters in 2010, 2011 and again in 2013. The approval came with a series of conditions, which are included in the City Charter. City Council has the authority to issue bonds to purchase and operate its own utility, but it must demonstrate that the utility would:

  • Offer energy that is as reliable, or more so, than Xcel Energy (Xcel);
  • Charge rates that are lesser or equal to what Xcel would charge on the day of acquisition;
  • Raise enough revenue to cover its costs and its debt plus a margin equal to 25 percent of its annual debt payment;
  • Have a plan to reduce greenhouse gas emissions; and,
  • Have a plan to increase renewable energy sources.

In addition, in 2013, city voters imposed a limit on costs, saying the city may not spend more than $214 million to purchase the necessary equipment from Xcel and for any lump-sum payment of what the law calls “stranded costs.”

While much of the analysis has focused on legal, financial and technical feasibility of the city operating its own utility, this initiative has been about achieving a variety of community priorities, including: access to affordable energy with high reliability; support of the local economy and green energy industries; and the desire to create a new business model that can serve as an alternative to the current “energy as a commodity” model.

Today’s vision of Boulder’s Energy Future goes beyond reducing the carbon emissions resulting from Boulder’s electricity use; it envisions a fundamental shift, over time, toward a more decentralized, networked and integrated approach to energy generation, use and management. This “energy as a service” model is beginning to emerge as the high costs of the currently inefficient system become more evident, and as the reliability of current fuel sources becomes more tentative.

The idea is to evolve from the current unsustainable electric utility business model into the “Electric Utility of the Future” that gives customers a say in their utility’s operations; supports distributed generation, renewables and aggressive energy efficiency; and manages the grid to ensure high quality, reliable electricity.

The city has explored alternatives to creating its own utility. Prior to deciding not to renew its 20-year franchise with Xcel—and since then—the city engaged in a series of discussions with Xcel in hopes of reaching a partnership. Unfortunately, these discussions were not successful. Given the Boulder community’s commitment to reducing its carbon footprint, the difficulty of accomplishing this without addressing supply-side (i.e., energy generation) issues, the rapid changes taking place in the energy industry and a number of other issues raised during the franchise discussions of 2010, council decided not to renew the agreement and to spend time considering the community’s energy options.

The city subsequently initiated the “Boulder Energy Future” project to clearly articulate the community’s energy goals and objectives and to define and analyze options for achieving those goals.

This is not the first time the city has considered municipalization. Boulder considered creating its own municipal utility in advance of franchise renewals as early as the late 1890s and several times throughout the years. In each case, the issues that prompted the debate were different. Today, the core issues driving municipalization exploration include:

  • The environmental impacts caused by carbon and other pollution associated with energy production;
  • Increasing energy costs that are a larger percentage of business and residential budgets;
  • Providing access to new products and services that manage or reduce energy use;
  • The desire to support local firms and innovators that are responding to a rapidly changing energy market; and,
  • Investments in local infrastructure that is more resilient and supports localized generation.

Since 2011, when Boulder voters approved proceeding with municipalization, staff has accomplished several significant milestones related to the utility’s creation and operation. In 2013, staff completed an extensive feasibility analysis that demonstrated that a locally owned utility could be formed while meeting the requirements that Boulder voters placed in the City Charter related to rates, reliability, and renewable energy. The analysis was reviewed by an independent third-party evaluator that affirmed its methodology and findings. In August 2013, council voted to move forward with forming a local electric utility, and authorized staff to proceed with condemnation of Xcel’s electric assets.

In April 2014, Boulder City Council passed an ordinance creating a local electric utility. In June 2014, Xcel filed a lawsuit against the city, alleging that City Council's formation of a utility was "premature" and that Boulder failed to meet requirements laid out in the City Charter. In June 2015, a Boulder District Court judge upheld council’s 2014 decision to create an electric utility, dismissing the claim that the council decision was unlawful. The Judge also expressly recognized that the Colorado Constitution grants home rule cities, like Boulder, the right to create a utility.  Xcel appealed to the Court of Appeals.  In October 2016, the Court of Appeals found that the city’s ordinance accepting the report of the third party review as a final decision was not really final.  The city is concerned about the appellate court’s violation of the separation of powers doctrine as well as other legal issues and is seeking a Writ of Certiorari to the Colorado Supreme Court. 

Municipalization - Legal and Regulatory Update

In September 2016, the city filed its  Supplemental Application  to the Colorado Public Utilities Commission (PUC). This application seeks PUC approval for the transfer of certain assets owned by Public Service Company of Colorado (Xcel Energy) to the city. These assets are necessary to create a municipal electric utility.

This application substitutes an original separation application filed by the city in July 2015. In December 2015, the PUC partially dismissed the city’s original application, ruling that the city cannot seek to acquire assets that exclusively serve electric customers outside the city or require Xcel to share facilities with a new city-owned electric utility. In that same ruling, however, the PUC ordered the city and Xcel to engage in a discovery process that provided the city access to important Xcel data that the company had been unwilling to share previously. The city used this information to conduct an even more robust analysis that resulted in the current, much more technically detailed application.

It is currently anticipated that the PUC application process can reasonably be completed by the third quarter of 2017. The next step in the regulatory/legal process will be to re-file a condemnation petition in Boulder District Court. This is anticipated to occur later in 2017. 

Staff also continues to play an active role in Xcel applications to the Public Utilities Commission. The city intervened in the settled Phase 2 Rate Case--Solar*Connect--Renewable Energy Standard Compliance Plan as well as in the approved Eligible Energy Resources (also known as “Rush Creek Wind”). In the former, staff worked with other stakeholders to ensure Xcel’s proposal to shift to mandatory time-of-use rates for all residential and small commercial customers will instead be implemented as a pilot project subject to additional PUC review. Staff also argued to increase Xcel’s proposed limits on capacity available for distributed solar projects.

For the remainder of 2016 and into 2017, staff has and will continue to intervene in the Electric Resource Plan, Decoupling and Advanced Grid and Information Security (also known as the smart grid deployment proposal). Several working groups related to rate design and distributed generation will also take place through 2017. Staff plans to participate in those when topics discussed are pertinent to Boulder.

Municipalization - Transition Plan Update

The original transition work plan (Plan) was developed in 2014 in anticipation of moving forward with acquiring portions of the electric system owned by Xcel through a condemnation petition in Boulder District Court. The Plan serves as a working tool for the city that has been updated as regulatory and legal issues are addressed, tasks are refined, and work is completed. It is designed to manage the risks of acquisition while prioritizing the fundamentals of an electric utility: safety and reliability. Based on the anticipated PUC process to resolve issues related to the transfer of assets from Xcel to the city, the plan has been updated to reflect a change in the timing of events. The task list of the updated Plan has not changed significantly. However, the timing of these tasks has changed based on the current understanding of and approach to regulatory and legal processes. In the original transition schedule, the regulatory filings and condemnation proceedings were assumed to occur on a parallel path (simultaneously or on an overlapping timeline); since the courts have determined these filings will be sequential, the timeline had to be modified. Based on current budget estimates, existing appropriated funds should be sufficient to support the work plan through 2017.

In the near term, significant effort will be expended supporting the PUC process, responding to answer testimony and discovery requests. At the same time, staff will continue to implement critical activities, including integrating and leveraging existing city resources and procuring necessary external resources.

The following are significant transition plan initiatives underway and continuing in 2017.

Support Services - Information Technology Roadmap (IT Roadmap)  

In 2015, Energy Future project staff in partnership with Information Technology staff began work on designing and implementing an IT Roadmap. The purpose of this project was to identify IT systems, infrastructure improvements and staff requirements to ensure the city’s capability of owning and operating a municipal electric utility on day one as well as ensuring that the city could transition quickly to a “utility of the future.” The city hired Schneider Electric to determine the IT systems that will be necessary for a utility, and analyze which of the city’s existing IT systems could be leveraged to support the utility. Based on the results of this study, city staff is working on defining system requirements and upgrades to existing systems, as well as policies and procedures necessary to support the electric utility.

Customer Service – Customer Billing and Information System and Key Accounts

Staff has determined the existing customer billing and information system can support electric utility billing. As a result, consultants have provided a work plan for system modifications that will be initiated in 2017 contingent on PUC approval of the city’s petition for transfer of assets with the Colorado PUC. In addition, the customer service team has been working on a key account program, and policies and procedures to support a customer focused organization.

Planning and Engineering

In 2016, planning and engineering activities focused on evaluating information provided by Xcel to support the separation plan associated with the PUC application for transfer of assets. In addition, staff continues to monitor industry policies, procedures and standards for distribution system and substation design, interconnection, metering, security, safety, monitoring and control.

Operations and Maintenance

In 2015, the city issued a Request for Qualifications for ongoing services and interviewed potential operations service providers. The city also hired a consultant, Steve Catanach, to help evaluate engineering options and to develop operations, maintenance, construction, reliability and safety policies, procedures and standards. Staff will continue to meet with the service providers to vet these issues.

Power Supply

In 2015, the city issued a Request for Proposal to Xcel Energy (Xcel) for power supply options. Xcel replied affirmatively. Staff has been meeting periodically with Xcel to develop the terms of a potential wholesale power contract. To date, agreement has not been reached on those terms; however, staff and Xcel will continue to work to develop mutually agreeable terms and conditions. If necessary, staff will also enlist the resource working group to help monitor current market conditions, explore new resource opportunities and review any potential agreements with power producers. Additionally, the city has included a proposed power supply plan in its 2016 transfer of assets proceeding at the Colorado Public Utilities Commission. The city is requesting the commission approve the city’s proposed gradual departure plan as identified in testimonies of Jonathan Koehn and Lloyd Reed.

Energy Services

In 2015, staff evaluated current energy services and focused efforts on areas that further the city’s energy goals. In 2016, staff continued implementation and evaluation of energy services related to solar, electric vehicles and nanogrids. Energy services will continually be coordinated with the city’s climate and sustainability work, especially as it relates to meeting the goals of the Climate Commitment. In 2017, staff will work with the energy services working group to assist in the development of energy services for a new utility.

Finance and Accounting - Cash Flow and Budget Model

In 2015, staff began creating a cash flow and budget model. This tool will provide staff the ability to analyze the financial picture for a new utility as new information becomes available through the legal and regulatory processes. Eventually, this will serve as the budget tool for the electric utility. The model will be complete in the fourth quarter of 2016. Staff will work with the rates working group to explore methodologies for designing rates for a new utility.

Other Energy Future Areas

Staff met with risk management, safety, finance, accounting, facilities and human resources staff to identify needs and resources to support a robust utility. Work is ongoing, which includes account system modifications, identifying key staff and developing safety and risk management policies and procedures.

Energy Pilots

Resilient Energy Infrastructure Pilot Project

The city initiated its energy resilience planning initiative supported by a Department of Energy (DOE) Resilient Electricity Delivery Infrastructure grant in October of 2015.  The purpose of this grant program is to support cities in developing projects that increase the capacity of critical city functions to withstand disruptions in the electricity supply.  The proposed system improvements are also intended to improve the every-day operational efficiency and cost effectiveness of the associated facility. 

The initial focus of the city’s DOE grant was the development of a solar + storage project at the 63 rd street water treatment plant. An extensive feasibility assessment was conducted through Q4 of 2015 and Q1 of 2016.  This resulted in a decision to proceed to a full RFP solicitation which was issued in Q2.  Only one qualified bid was received in this process and it was eventually determined that the additional costs required to implement that project through that bid exceeded the additional budget available to complete the project.  However, a number of important system improvements were identified and are now being implemented at the site that will increase the site’s overall resilience and efficiency.  The project also resulted in the development of a design for a 1MW solar installation that is now being prepared for submission in the next Xcel large project solicitation in 2017. 

Parallel to this project, the city also conducted initial resilience assessments on six other facilities including both North and East Boulder Recreation centers (2 of the 3 designated community sheltering sites), the City/County Emergency Operations Center, the Fire Training Center, Via, and the Boulder Housing Partners Headquarters site.  Of these, two sites were identified as suitable for immediate implementation of resilience upgrades—Via and BHP.  Both sites also have significant matching resources associated with them, a factor critical to their use in the DOE grant.  Staff are now negotiating with DOE to request a reallocation of grant resources to these two sites.

Natural Gas Replacement Project

The city received funding through the Carbon Neutral Cities Alliance to support the development of a strategy that would support the conversion of residential structures from natural gas-based appliances to renewable-ready electric appliances.  Building on work the city funded through the Boulder Energy Challenge in 2014, the city has now completed a first stage set of tools and strategies that the city will be working with the County to integrate into the Energy Smart Program in 2017.  This will include ways of identifying residences that are likely to need both furnace and water heater replacements as well as the capacity to model the value of these conversions financially and environmentally. 

The city also took the lead role in convening a group of six cities—New York, Boston, San Francisco, Washington DC, and Burlington, VT—along with representatives of all of the major heat pump furnace and water heaters at a meeting in New York City in late September.  As a result of this meeting, the city is now leading the group of cities in the development of a joint proposal to secure funding that would support the implementation of these renewable heating and cooling adoption pilots in each of the cities.  We anticipate the first stage of this pilot to be launched in Boulder in the spring of 2017.

Solar Development

In 2017, staff will continue to refine the city’s solar plans and the development of a comprehensive strategy. The strategy will organize existing solar efforts and prioritize new efforts to align with the goals of the climate commitment and energy future work.  Significant accomplishments for 2016 include the award of a Boulder County sustainability grant for solar strategy development and the city’s SolSmart Gold designation.

As an overall solar strategy is developed and implemented, staff continues to evaluate current initiatives, analyze results and prioritize resources.

Regional Collaboration

Colorado Coalition for Climate Action (CC4CA)

The Colorado Coalition for  Climate Action Coalition (CC4CA) was created to lead efforts to advocate for policy and regulatory changes that promote and support local decision making in pursuit of a low carbon energy future including those that would simultaneously promote community resilience, economic vitality and job creation. Current CC4CA membership includes Boulder County, Fort Collins, Boulder, Eagle County, Golden, Pitkin County, San Miguel County, Vail, Aspen, Telluride, Mountain Village and Summit County. Other jurisdictions are expected to soon join the coalition. Recruitment efforts continued in 2016, and a 2016 work plan and Legislative Agenda have been developed. Each entity is currently reviewing and gaining approval for the legislative items. The Coalition has hired Frontline Public Affairs to represent the group on legislative matters.

CC4CA has been working to establish an influential presence in shaping climate policy and set the stage for coalition initiatives in 2017 and beyond. By unanimous consent, coalition members are now working to identify the coalition’s priorities, which could include:

  • Supporting pro-climate bills in the General Assembly and opposing bills undercutting state or local climate authority. The coalition has retained Frontline Public Affairs as its lobbyist before the state government.
  • Advocating for an effective state plan to comply with the federal Clean Power Plan, and specific state actions to implement the new Colorado Climate Action Plan.
  • Communicating with the Governor’s administration to urge more aggressive state climate actions.
  • Engaging in state agency proceedings to represent local interests in climate protection, energy efficiency, and clean energy. 

All policy goals agreed to by the city would be in furtherance of council’s direction as captured in its annual State and Federal Legislative Agenda. Funding for this coalition will go primarily toward the expenses necessary to hire professional consultants with expertise in these areas to advocate.

Staff will continue to facilitate meetings and the recruitment of potential members of the Colorado Climate Policy Coalition, along with the creation of the policy agenda. The city will continue to participate in efforts related to the Clean Power Plan, both at the federal and state levels.  

Council Action

  • Quarterly executive sessions or briefings, or updates as needed, to council on municipalization, based on litigation schedules. 
  • Quarterly information packets to council on the Energy Future work plan, budget and related programs.

Staff Contacts  

Heather Bailey, Executive Director, Energy Strategy and Electric Utility Development, [email protected] , 303-441-1923.

Jim Robertson, Director, Planning, Housing and Sustainability, [email protected], 303-441-4297.

www.BoulderEnergyFuture.com

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