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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 $10,698,640.

  2018 2019 2020
Expenditure by type
Personnel   $1,090,158 $1,111,961 $1,134,200
Operating Expenses $216,252 $295,577 $301,489
Regulatory and Legal $7,224,792 $2,033,958 $238,481
Contingency $2,167,438 $610,187 $71,544
                                       Total Expenditures $10,698,640 $4,051,683 $1,745,714

 

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 Three 2017, the city has spent approximately $12.1 million on the municipalization project. The majority of this has come from the voter-approved Utility Occupation Tax, which raises $2.1 million a year to cover legal, engineering and other costs associated with the exploration of municipalization.

Funding Sources for Municipalization, 2012 through 2017

Funding 2012 through 2014 2015 through 2016 2017

Total (2012-2017 )

Utility Occupation Tax 5,757,000 4,031,420 2,015,710
City Manager Contingency --- 374,400 239,476
Other One-Time Funding --- --- 1,545,480
Total 5,757,000 4,405,820

3,800,666

13,963,486

 

Expenditures by Category, 2012 through September 2017

Expenditures 2012-2014 Actuals 2015-2016 Actuals 2017 (January-September) Actuals
Personnel 1,473,003 1,880,969 733,643
Operating 3,996,280 2,661,994 1,361,692
Total Expenditures 5,469,283 4,542,963 2,095,335

 

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 (last page of October memo ), but the city does not log this as an expense from the Energy Future/municipalization budget.

Those who cite figures ranging from $20 million to $25 million are including these staff resources.

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 two sources.

The largest amount each year, about $2.1 million, is the result of a voter-approved Utility Occupation Tax that is in place until December 2017 or until the city creates a utility, whichever occurs first. This money has been used to cover legal and engineering costs, as well as the executive director's salary.

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.

(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 pdf provides spending totals through September 2017.

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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