Potential Settlement Between Xcel Energy and the City of Boulder
The potential agreement
In July 2020, the City of Boulder and Xcel Energy reached a potential settlement agreement that could create new pathways to reach the city’s energy goals and halt the city’s decade-long municipalization effort. This agreement will not go into effect until approved by Boulder voters.
The goal of the settlement negotiations was to explore whether the city could reach an agreement with Xcel Energy that would satisfy six goals:
- Decarbonize: Renewable and clean fuel sources should be maximized as much as possible, as quickly as possible, minimizing both short- and long-term environmental impacts and maximizing energy independence over time.
- Decentralize: Energy should be generated locally or within the region to the maximum extent feasible, reducing reliance on external fuel sources; customers should be able to manage and reduce their energy use as directly and effectively as possible; and energy service companies should be empowered to compete and innovate within a diverse and robust local energy economy.
- Democratize: Customers should have more direct control and involvement in decisions about their energy, including opportunities to invest in their long-term energy needs and to have a say in energy investments made on their behalf.
- Rates: Our energy future must ensure competitive rates, balancing short-term and long-term interests.
- Reliability: Our energy future should ensure a stable, safe and reliable energy supply.
- Renewables: Our energy future should maximize local renewable resources.
The potential agreement addresses some of these goals.
Detailed settlement and agreement documents
- Document: Settlement Package
Key elements of the potential agreement
New 20-year franchise agreement with options to terminate early
Most of the time, cities have franchise agreements with public utilities operating within their boundaries. Past franchise agreements between the city and Xcel Energy provided the company the right to use the city’s streets, public places and public easements to serve Boulder customers. Franchise Agreements dictate the long-term relationship between the utility and the city and can provide a platform for unique partnership opportunities that may help the city’s progress toward its energy goals.
Since 2010, the city and Xcel have operated without a franchise agreement while the city explored the creation of a city-run electric utility.
The potential settlement includes a 20-year franchise agreement, which the city could exit at certain times, described in this table:
|Year||Reason to exit franchise agreement|
|2023||Failure to meet emissions standard|
|2025||Failure to meet emissions standard|
|2028||Failure to meet emissions standard|
|2041||End of franchise|
Franchise agreements always require voter approval. Boulder voters will vote on the franchise agreement in November.
Municipalization effort paused, but ability to municipalize in the future is maintained
The potential agreement includes commitments from the city to pause ongoing efforts to create a municipal electric utility if voters approve the settlement. Specifically, if voters approve the franchise:
- The cost agreement will be set aside unless the city reinitiates municipalization
- Xcel will complete in-progress design work and stop future municipalization work
- Xcel will release letters of credit in the amounts of $1.7 million and $2.6 million
- The city will dismiss the current FERC proceeding.
The current case in the court of appeals will continue. The pending condemnation case will be dismissed. After the appellate decision is issued, all further court actions will be discontinued.
The proposed agreement does maintain the city’s ability to municipalize in the future. The potential agreement includes several items that preserve much of the city’s municipalization work to-date and remove potential future barriers to municipalization, including:
- A $200 million cap on any condemnation award, including acquisition cost, real property interests, going concern, damages to the remainder and purchase of two existing substations
- Agreement on issues related to substations and commitments from Xcel that the company will pay the cost of any updates to the existing substation interconnection studies and design drawings
- Agreement that the PUC orders from Sept. 14, 2017 and Oct. 28 stand and apply to separation of the system if the city pursues municipalization in the future. The list of assets from the Oct. 28 decision may be used by the city.
Emissions caps for Xcel Energy — City has opportunity to exit franchise early if not met
The potential settlement includes provisions that set forth carbon emission reduction targets for Xcel Energy between now and 2030:
|2005||Baseline: 33.9 million tons emitted|
|2019||42% reduction: 19.5 million tons emitted (actual)|
|2022||52% reduction: 16.6 million tons emitted (target)|
|2024||61% reduction: 13.6 million tons emitted (target)|
|2027||67% reduction: 11.5 million toms emitted (target)|
|2030||80% reduction: 6.9 million tons emitted (requirement)|
If Xcel does not achieve these targets, the city will have the opportunity to opt out of the franchise in 2023, 2025 and 2028.
Modern grid planning partnership — Getting Boulder to 100% renewable by 2030
Under the potential agreement, the city and Xcel would work together to achieve Boulder’s renewable energy target: 100% by 2030. The city and Xcel would work together to update Boulder’s electric grid, share data and develop innovative demonstration projects under the guidance of a community board. The parties have also committed to work collaboratively to change current regulations that limit innovation and local renewable development:
- Elimination or substantial increase of the state’s 120% limitation on on-site generation
- Development of a new tariff to facilitate the rapid conversion of bus fleets to electric busses
- Removal of barriers to large amounts of local distributed generation
- Facilitation of microgrids in specific projects at Chautauqua and Alpine Balsam
$33 million in undergrounding
Undergrounding helps improve system reliability. The potential agreement includes $33 million dollars in undergrounding investment by Xcel Energy, with approximately half of the investment being made in the first five years of the franchise.
Process Timeline and Next Steps
|April 2020||Negotiations Begin|
|May 12, 2020||Negotiations Announced||Read the city's press release for more information.|
|June 2020||Town Halls||Read a summary of the meetings.|
|July 28, 2020||Potential Settlement Announced|
|Aug. 4, 2020||First Reading of the Franchise|
|Aug. 20, 2020||Second Reading and Public Hearing|
|Nov. 3, 2020||Election Day|
The franchise agreemnt is subject to approval by the Colorado Public Utilities Commission. If voters approve the settlement, the city and Xcel Energy anticipate that the PUC will review the settlement shortly sometime in 2021.
|Address||Phone||Executive Director||Want to stay in touch?|
1101 Arapahoe Ave.
Boulder, CO 80302
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