Financial Working Group
Financial Community Working Group
The Financial Working Group was formed to consider a variety of relevant financial considerations for a potential local electric utility, including modeling data inputs and assumptions. The group was composed of interested community members, city staff and consultants.
Results of the group's analytic work were incorporated into the Feb. 26, 2013, City Council Study Session.
The Energy Future Financial Working Group helped develop a tool, building on previous work, that could accept complex inputs, including:
- Cost of resources
- Operations & Maintenance
- Growth factors
- State and Federal system compliance requirements
- Services and incentives
The financial tool was the backbone of financial analysis, as it integrated cost data from other work plan areas to test the charter requirements.
The tool's outputs helped inform City Council as to the financial viability of proposed strategies and provided enhanced documentation for review by an independent third-party analyst. Financial viability was determined based on whether the cost inputs supporting a given strategy met the charter requirements to:
- Acquire the electrical distribution system in Boulder and charge rates that do not exceed rates charged by Xcel at the time of acquisition;
- Maintain rates that will produce revenues sufficient to pay for operating expenses and debt payments , plus an amount equal to 25% of the debt payments;
- Ensure reliability comparable to Xcel (the cost of ensuring that reliability); and,
- Include a plan for reduced greenhouse gas emissions and other pollutants and increased renewable energy (and the cost of that plan).
Based on Charter guiding principles, a n additional test that must be met is that 90% of the utility's operations must be paid for by revenues from electric services -- in other words, less than 10% of annual revenues can be derived from state or local taxes.
The group vetted data inputs and assumptions and provided additional research and analysis included in modeling. They focused on operations, financial parameters, economic attributes and the interface with the resource modeling effort. The group worked to:
- Collect data to expand model over a projected 20-year time frame to explore the impact of decisions on the project goals over a longer period of time.
- Work with a financial advisor to incorporate public power financial criteria into the model and process.
- Run financial scenarios to test the model and charter requirements. As the modeling tool was refined, various scenarios were run to test the functionality and the outputs as they relate to the charter amendments. The model underwent quality assurance tests and refinements throughout this process.
Select a tool for modeling the cost impacts of various municipalization strategies. The tool built on the cost model used in the 2011 feasibility study by the city. The tool was modified to:
- Forecast over a 20-year time period.
- Calculate monthly cash flows, including reserves and debt service coverage ratios on a monthly basis.
- Set up operations inputs to model various scenarios.
- Set up average cost per kWh rate calculations by major customer segment (residential, commercial, industrial).
- Interface with a separate resource modeling tool (HOMER) in order to model the financial impact of various resource costs and energy load scenarios.
The group met monthly from November 2012 through January 2013.
Jim Barret – Community member
David Becker – EFAA
Alison Burchell – Geologic consultant
Lynda Gibbons – Gibbons White
Steve Pomerance – Community member
Dan Powers – Western Disposal Services
Joshua Putterman – Community member
Nick Rancis – CU Cleantech
Frank Selto – University of Colorado
Sam Weaver – Cool Energy, Inc.
City of Boulder Staff
Yael Gichon – Residential Sustainability Coordinator
Kelly Crandall – Sustainability Specialist
Sarah Huntley – Media Relations/Communications Coordinator
1101 Arapahoe Ave.
Boulder, CO 80302