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Budget & Funding

Exploring the creation of a local electric utility represents a significant investment, and the city is committed to full transparency about funding and spending.

Expand the accordion menu below to find detailed responses to frequent questions related to this topic.

What is the 2018 budget?

The 2018 budget totals $6,000,000.

  2018
Expenditure by type
Energy Administrative Work   $949,927
Communications and Engagement $130,744
Separation Engineering $4,022,573
Acquisition and Condemnation $644,000
Power Supply and Resource Planning   $100,000
Transition Planning and Implementation   $228,937
                                      Budget 6,076,181

 

The budget funds salaries for employees dedicated to the effort, associated NPE purchased services, equipment and supplies, and legal and technical work (plus 30 percent contingency) necessary to prepare for the potential acquisition of the local electric distribution system and launch of a municipal utility, including condemnation, PUC and engineering costs. 

How much has the city spent on municipalization to date?

As of Quarter Two 2018, the city has spent approximately $14.1 million on the municipalization project. 

Funding Sources for Municipalization, 2012 through Quarter One 2018

Funding 2012 through 2016 2017 2018 TOTALS
Utility Occupation Tax 9,788,420 2,015,710 6,076,181 17,880,311
City Manager Contingency 374,400 239,476   613,876
Other One-Time Funding --- 1,545,480*   1,545,480
Total 10,162,820

3,800,666

6,076,181 20,039,667

*One-time funding (2012-2017) for high-priority staffing needs (salaries and benefits) in support of this project. 

Expenditures by Category, 2012 through Quarter Two 2018

Expenditures 2012-2017 Actuals 2018 Actuals (through Q2) TOTALS
Personnel 4,361,111 535,393 4,896,504
Operating 8,888,229 359,357 9,247,586
Total Expenditures 13,249,340 894,750 14,144,090

 

There are several factors that impact the reporting out of spending associated with municipalization.

1. A difference in interpretation about what should be included in the Energy Future budget

During the course of each year, city staff members in supporting departments provide support to many large city projects. Some examples besides municipalization are the Civic Area planning process, the recent acquisition of Boulder Community Hospital property, and work related to improving community resilience. The city uses this collaborative process to ensure that all departments who need to be involved are, and that resources are being used as efficiently as possible. The city covers these individual’s salaries from the General Fund or other approved sources of funding regardless of what project(s) they are working on. The salaries are expended from their departments’ budgets and not charged directly to specific projects. This has been Boulder’s practice for years and is consistent with how other municipalities handle in-house support.

A good example of this would be the media relations/communication manager. She assists this initiative, along with many others across the city. As such, the budget expenditure for communications is held within the Communications Department, consistent with the budget treatment for all other city initiatives. Other examples include staff from the City Manager’s Office, Finance, Human Resources and Information Technology. In the interest of full disclosure, and at the specific request of City Council, staff provides an estimate of this time and its approximate dollar value in its quarterly report to council (page three of the latest Information Packet), but the city does not log this as an expense from the Energy Future/municipalization budget.

The 2012-Q1 2018 actual project expenditures ($14,144,090) along with the indirect staff resources ($4,191,595), shown above, total $18,335,685.

2. Including “lost” dollars associated with the undergrounding of electric lines  

When the city was under franchise with Xcel Energy, Xcel agreed to make 1 percent of the electricity revenue it collected from Boulder customers available for putting electric lines underground for public purposes. When the franchise expired in 2010, Xcel stopped making this credit available to Boulder.

The amount of the yearly credit varied according to electricity usage, but it amounted to approximately $1 million a year. There was value in this contribution toward undergrounding, but it was not without its challenges. Xcel Energy has a monopoly on undergrounding its lines. To tap into the credit, the city was required to use Xcel Energy for the service. This work frequently cost significantly more than Xcel Energy had estimated to the city, resulting in more credit being used than the city anticipated. The city had no way to determine if these overages were appropriate or adjust work while in process to preserve the credit for other projects. In a 2010 report by DenverChannel7 , Xcel estimated the average cost to underground to be $700,000 to $840,000 per mile. Given inflation, $5 million would cover only a few miles worth of undergrounding.

Since the franchise expired, the city has continued some critical public undergrounding work. The most significant of this has been at Boulder Junction, which was covered through remaining Xcel credit. Most underground projects, however, occur as a part of new development, the cost of which, according to city code, is borne by private developers.

Regardless of the value of this resource, city staff believes it is misleading to suggest this money could have been used for any other purpose or should be considered a part of the municipalization budget. 

Where does the funding come from?

Funding for Boulder's Energy Future comes from a portion of the Utility Occupation Tax. In November 2017, voters approved an extension and raise of the portion of the Utility Occupation Tax that funds municipalization. The tax will continue through 2022 and fund the project through 2020. The tax will be collected in different amounts each year:

Year

Total Collected

2018

$6,015,710

2019

$5,015,710

2020

$2,015,710

2021

$2,015,710

2022

$2,015,710

 

(A separate Utility Occupation Tax on electricity bills replaces a franchise fee Xcel Energy paid prior to the expiration of the franchise. This amounts to about $4 million a year and supports General Fund costs, like police and fire, roads and libraries, that had been covered by the franchise fee. Voters renewed this tax in 2015. It is now in effect until Dec. 31, 2022, or when the city creates a local electric utility and this fee becomes a part of its rates, whichever occurs sooner.)

 

Will the allocations from the city's General Fund be repaid?

Yes. Once the utility is up and running and begins collecting revenue, any allocations from the General Fund that have not been covered by subsequent Utility Occupation Tax dollars will be repaid. It is possible some General Fund dollars will remain unpaid if the city decides later that it will not create a local electric utility; city staff is expending this money cautiously in order to minimize this risk.

Does the city's CAP tax pay for municipalization?

No. The city's Climate Action Plan (CAP) tax, renewed in November 2015, funds a set of aggressive programs and services designed to reduce local greenhouse gas emissions and mitigate climate change. While there is a connection between climate action and municipalization, this tax is not used for this purpose. For more information on these programs, visit www.BoulderClimate.com .

How can I keep track of spending on this project?

The Energy Future team provides quarterly budget updates to City Council. The most recent Information Packet provides spending totals through June 2018.

How were the city's financial assumptions vetted?

In addition to working with financial consultants with specialized knowledge of the utility industry, the city benefited from considerable expertise in our community. Local financial experts served on a Financial Working Group and analyzed the validity of the city's assumptions. More information about this group and its findings is available here.

 

Additional resources:

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