Xcel Energy – in its bid to dissuade the city of Boulder from starting its own electric utility – is offering to build a wind farm for the community that would add no more than $4 a month to the average household bill.
“Renewable energy costs more than fossil-fuel energy,” Paula Connelly, Xcel’s managing attorney, told a Boulder community meeting Tuesday night. “We had to find a way to package renewable energy so it would raise rates.”
Eric Blank, a consultant for the city, said the prices in the Xcel offer – starting at $29.36 a megawatt-hour – “are below what I’ve seen in the last five years.”
The price of the wind power would rise over the 20-year contract to $41.93 a megawatt-hour.
Xcel currently pays about $47 a megawatt-hour for power from a combined-cycle natural-gas plant, according to data from the company.
Under the Xcel proposal, up to 200 megawatts of wind power would be added to a 200-megawatt wind farm already set to be built in Limon by Next Era Energy.
Xcel has agreed to buy the NextEra power to help the utility meet its requirement that 30 percent of its electricity come from renewable sources by 2020.
Connelly said the Boulder City Council could decide to buy 100 to 200 megawatts.
The renewable-energy credits from the wind farm would cover 93 percent of all of Boulder’s energy demands by 2020, Connelly said.
Boulder would be responsible for the costs of getting the wind energy on the grid and for the payments made to NextEra whenever the wind power has to be taken off line because there isn’t enough demand.
The city would also have to pay the difference between the cost of wind energy and the cost of providing that energy with fossil fuels. If the cost of natural gas fell, the city would pay more; if prices rose, it might make money, Connelly said.
Xcel is trying to develop a proposal to limit these costs, Connelly said.
Last year, the Boulder City Council did renew the city’s franchise with Xcel, in part because the utility depends on coal for more than half its electricity generation.
Boulder then set out to see whether it was feasible to create its own municipal utility that would focus on renewable energy.
The Xcel counteroffer relies on a federal tax credit that requires the wind farm to be completed and generating energy by December 2012.
Connelly said Xcel will need a decision from the City Council at its Aug. 19 meeting.
“It is an interesting proposal,” said Councilman Matt Applebaum. “But to try to evaluate a deal with millions and millions of dollars in a few weeks is a big task.”
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