Rates Working Group
Rates Working Group
Ensuring that the rates charged by a local electric utility are reasonable and fair will be a key area for community involvement in 2015. The working group is comprised of experts in utility costs and rates, as well as different residential, commercial, industrial, and institutional customers. While the working group will have a key role in guiding the city’s development of electric rates, there will be many opportunities for the Boulder community to provide feedback in that process.
The first purpose of the Rates Working Group is to help develop and recommend a package of rate structures to be adopted by the City Council and/or the Utility Board to be in effect on "Day One," the time at which the city utility would begin providing retail electric service. The second purpose of this working group is to present recommendations as to how those rate structures can be modified over time to realize the Boulder community's goal of having a utility of the future. For reasons to be discussed, this group will be starting from the assumption that the city will adopt a variation on Xcel Energy's rates for Day One of electric utility operation.
A “rate” is the specific amount you pay for electricity—it might be charged based on how much you consume or when you need it. When the city considered whether there was value to forming a local electric utility, it looked at the potential utility’s average cost per unit of electricity sold, compared to that of Xcel Energy’s. Rate design goes far beyond that high-level step to determine what a customer will actually pay on a monthly bill.
When a utility makes rates, it starts by adding up all of its costs, determining what causes those costs, and allocating them to different types of customers (like residents or businesses). Then it designs rates in ways that allow it to recover those costs. Those rates may have different components, including fixed fees or fees that vary with a utility’s expenses. Xcel Energy provides many different rates that Boulder customers participate in. Boulder customers are a little different than Xcel Energy’s Colorado customers overall—there are many more business, industrial, and institutional customers locally.
Fair and reasonable rates are key to the community’s economic vitality. The City Charter of the City of Boulder requires that rates for the electric utility not exceed those of Xcel Energy when the utility first begins operation. Beyond that, the Charter also lists guiding principles for how the utility should operate—being able to fully cover its costs while acting in a fiscally responsible manner and ensuring that rates are fairly set between types of customers. Furthermore, the Charter requires that the utility consider electric rates for Xcel Energy and other municipal utilities in the state when setting competitive rates. The Boulder community may also consider other factors, like the Energy Future Goals, in determining how rates should be set. Ultimately, the City Council would approve the rates customers pay.
The Rates Working Group will address three key objectives:
- Recommend a series of retail electric rates that can be applied by a city electric utility on “Day One”
- Collaborate with the working groups on energy services and resource acquisition to develop relevant rates and tariffs associated with energy services (e.g., distributed solar)
- Recommend a path to evaluate and redesign the city utility’s retail electric rates to more closely align with community goals, including the development of a “utility of the future”
This working group will include two phases:
- February to May 2015: targeted work with rate design experts to define a methodology for how to “adopt” Xcel’s rates.
- June to December 2015: incorporation of broad stakeholder input on rate structures, development of energy services tariffs/fees, and transition of rates post-Day 1.
Additional, separate outreach will be conducted with a broader group of stakeholders during 2015, prior to adoption of rates (anticipated 2016)—the Rates Working Group will not be the only venue to provide input on the city’s proposed electric utility rates.
The group will meet monthly from February to December 2015.
Work Products will be posted as soon as they are available.
City of Boulder Staff
Heather Bailey - Executive Director of Energy Strategy and Utility Development
Yael Gichon - Energy Sustainability Coordinator
1101 Arapahoe Ave.
Boulder, CO 80302