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September 2016 Supplemental Application

 

Supplemental Application

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September 2016 Supplemental Application

Background

In September 2016, the city filed its Supplemental Application pdf 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 likely that the PUC will rule in 2017.

What is different about this application?

Like its original application, the city does not seek to acquire any generation assets or major transmission assets. New to this application, Boulder does not seek to acquire any assets used exclusively to serve Xcel customers. Boulder’s new separation plan will allow the city to provide electric service to customers within city limits and Xcel to serve its customers in unincorporated Boulder County.

Other key takeaways:

  • The city’s application complies with PUC direction given in December 2015
    • The city is not seeking any generation assets or major transmission assets; this both simplifies the application and reduces overall costs
    • The city is not seeking to acquire assets that are exclusively used to serve Xcel customers
    • The city’s plan will permit the city to serve all electric customers within city limits, with the exception of two city-owned facilities
    • The city will not provide electric service to any out-of-city customers
  • The city’s proposed plan meets Charter metrics approved by Boulder voters in 2011 and 2013
  • The PUC does not determine the cost of Xcel’s assets. This will be determined through separate court proceedings.
  • The city’s separation plan proposes some new construction. New construction related to municipalization will be underground or use existing poles.
  • The filing is available on the PUC website and the city’s archives. The filing does include some confidential information that is inaccessible to the public; however, this information is limited to a few exhibits and attachments.
  • The city estimates that the separation plan will require two to three years of construction to complete. During that time, the city proposes that Xcel remain the electric provider to the city; however, the city will begin billing and customer service on “Day One.”

Want to learn more? The city has compliled more detailed answers to the following questions.

1. What is the city asking the commission to approve?

Boulder is asking the PUC to approve the transfer of assets needed to operate the city’s municipally-owned electric utility, Boulder Light and Power (BL&P). More specifically, the city is requesting that the PUC:

  1. Allow the city to acquire any of the electric distribution property Boulder identifies in its application
  2. Approve a final configuration of the electric distribution property that identifies construction of new facilities and reconfiguration of existing facilities that will allow the existing system to ultimately operate as two separate systems: one owned by Xcel Energy and one owned by the City of Boulder.
  3. Approve the key principles of the Transition Period Agreement.
  4. Permit the transfer of some customer data from Xcel Energy to the City of Boulder to allow the city to begin billing customers at the time of acquisition.
  5. Allow the city to give up blocks of the electricity it gets from Xcel gradually as natural load growth occurs outside of Boulder with Xcel’s system. 

2. What assets is the city seeking to acquire?

The city is seeking the distribution assets necessary to operate the city’s municipal electric utility. This includes any of the electric distribution property, plant and equipment used to serve electric customers within the City of Boulder. Some of this property is located outside of city limits.

The assets requested include overhead and underground distribution lines, distribution transformers (poles and pad mounts), overhead and underground secondary and service conductors, fiber optic and other communications equipment associated with the distribution system, meters, easements and associated property rights for the distribution system and streetlights and traffic signal lights owned by Xcel within the City of Boulder.  only sharing in substations is of real estate (through easements) within substation fences.  The Separation Plan includes no sharing of facilities or even buildings at substations.

The city is not seeking to acquire generation assets, transmission assets or assets used exclusively to serve Xcel customers. 

a.   Does this include the Valmont Power Plant?

No, the city is not seeking any generation assets, including the Valmont Power Plant.

b.    Does this include assets that exclusively serve any out-of-city customers?

No. The city is not seeking to acquire any assets that exclusively serve out-of-city customers. Those customers will continue to be served by Xcel Energy. 

3. What is the proposed separation plan?

The city is proposing a separation plan that will allow the city to provide electric service to all customers within city limits with city-owned facilities and Xcel Energy to provide electric service to its customers in Boulder County with Xcel-owned facilities.

Boulder’s preferred plan is for no distribution interconnection (NDI) in all but one area of the city. NDI means that the city’s electrical facilities will not be connected with Xcel’s facilities at the distribution level (substations, residential and commercial power lines, meters, etc,).

In the southern portion of the city (south of Table Mesa Dr.), the city proposes two options: No distribution interconnection (NDI) and distribution interconnection—referred to as “emergency backup” (EB) in the application. For this area, the city has no preference and is requesting that the PUC choose its preferred option. Under the EB scenario, Xcel and the city would provide backup service to each other in case of system failure. Under NDI, the systems would be completely separate and would not require emergency backup.

4. Will service be reliable?

The separation plan has been fully vetted to ensure that the system would provide excellent reliability for city customers and maintain Xcel’s current reliability record for the out-of-city customers it would continue to serve. 

5. What construction does the separation plan propose?

The separation plan includes significant new construction. Boulder is proposing that it be responsible for the implementation and management of the necessary construction and reconfiguration. All construction and reconfiguration would be done at the city’s expense.

Any new lines built in the city would be undergrounded or use existing poles. Boulder is proposing that the work be performed by a qualified third-party contractor that is acceptable to Xcel Energy and all construction would be performed consistent with National Electrical Safety Code.

6. What other separation plans did the city consider?

Boulder initially looked at several different types of separation plans. These included a plan that would result in the city not serving all customers within the city; a plan that would require the annexation of all enclaves (areas that are entirely surrounded by land in the city, but are not under city jurisdiction); and a plan that would require the city and Xcel to provide backup service to each other in the case of system failure.

Ultimately, Boulder eliminated many of these options for engineering, legal and political reasons. 

7. What happens if the PUC approves the city's plans?

After this proceeding has concluded, and if ongoing negotiations between the parties are not fruitful, the city will file a condemnation action in district court to acquire the assets the commission has approved for transfer.

Once the condemnation case has concluded—or a negotiated agreement for the sale of facilities and property has been reached—the city will be entitled to provide retail service to the electric customers located within the city.

Before the city is able to function as a separate utility, however, construction and reconfiguration will be necessary. This period is referred to as the “transition period” in the city’s application.

8. What will happen during the proposed "transition period"

Ultimately, all distribution facilities within the city limits will be completely separated from Xcel Energy’s distribution system. Before the complete separation can occur, however, there will need to be a “transition period” during which construction and reconfiguration can occur. During this period, the city anticipates that:

  • Part of the distribution system acquired by the city will initially be used to serve Xcel customers outside the city;
  • There will be a period of time during which Xcel continues to operate the distribution system in the city to ensure that its customers and the city’s customers continue to receive safe and reliable service;
  • In order for Xcel to have control over the still-connected electric distribution system during the transition period, the city will immediately lease back to Xcel at no cost the facilities the city will have acquired through condemnation;
  • While Xcel is leasing Boulder’s distribution system from the city, Boulder proposes that it continue to operate the system for a PUC-approved fee. 

These principles constitute the city’s “Transition Period Agreement” in its application. The Transition Period Agreement also provides details regarding:

  • Who serves new customers;
  • Who pays for new construction to serve those customers;
  • Who is responsible for capital improvements beyond routine maintenance;
  • What limited services Boulder will provide to customers within the city during the transition period; and
  • How to address minor modifications to the separation plan related to annexations to the city prior to the conclusion of the transition period or a change in ground conditions from what is anticipated by planning-level engineering

9. Where will the city get power under this separation plan?

During the transition period, the city proposes a transitional power supply arrangement for a designated period of time. Boulder expressly recognizes the importance of ensuring that Xcel’s other ratepayers not be negatively affected by Boulder’s separation from Xcel Energy’s distribution system. This impact would occur most acutely with generation—which is why Boulder is proposing a gradual departure from Xcel’s overall electric load.

The application also makes clear that the city is planning a transitional approach to its power supply. The application proposes that the city utility would be a wholesale customer of Xcel Energy for a limited period of time. By gradually reducing its demand for power from Xcel in coordination with Xcel’s increasing need for electric resources to serve customers outside of Boulder, the city would facilitate a smooth transition for all customers. The resources released by Boulder could instead provide power to other customers, avoiding the expense of developing new energy supplies. Even with this phased approach, the city will likely be able to increase renewable sources of energy and decrease emissions much more quickly than it would by remaining a retail customer of Xcel.

This approach eases the transition of Boulder’s departure from Xcel’s system and protects Xcel and its customers.

10. How long is the proposed transition period?

The city anticipates a period of two to three years to complete the transition plan, starting upon the transfer of PUC-approved assets through negotiation or condemnation.

 

Related Municipalization Updates

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