July 14, 2011
Colorado

Boulder, Xcel negotiations break down

By Michael Davidson, Boulder County Business Report, www.bcbr.com 14 July 2011

BOULDER – The divorce between Boulder and Xcel Energy Inc. took a step closer to reality Thursday, when Xcel Energy announced negotiations over the creation of a 200-megawatt wind farm that would supply up to 90 percent of the city’s electricity from renewable sources had reached an impasse.

Boulder and the utility company have been discussing the wind farm proposal for the past month after Xcel Energy offered it as a counterproposal to the plan the city is considering, which would create a municipal utility. The new utility would take over the grid from Xcel Energy through a negotiated purchase or through the eminent domain process.

Both sides agree the impasse comes after substantial progress was made on a proposal that could have kept Xcel Energy as Boulder’s power supplier, pending approval by Boulder voters in November.

“We literally had an agreement that was 99.9 percent negotiated,” said Paula Connelly, Xcel Energy’s lawyer and its chief negotiator with the city.

The cause of the breakdown, according to statements released by Xcel Energy and Boulder, was not directly related to the wind farm deal but rather whether voters would be able to consider a 20-year franchise agreement similar to the one City Council rejected in 2010.

That proposal would keep the city with Xcel Energy but not require it to build the wind farm. At least 30 percent of Boulder’s energy would come from renewable sources, per state regulations, but a Boulder-specific project would not be built.

The requirement that a franchise extension go on the ballot has always been a part of Xcel Energy’s proposal, even though most attention has been focused on the wind farm or the city’s studies of municipalization.

The decision to end negotiations came Tuesday, after Xcel Energy made clear it would not continue with the wind proposal without the other franchise agreement going on the ballot.

Boulder officials feel it would be fruitless to ask City Council to once again consider the franchise agreement, which the council rejected in 2010 and again unanimously opposed when asked in a recent public meeting by city attorney Tom Carr whether it had reconsidered.

“City Council has told us repeatedly they are not interested in a stand-alone franchise agreement,” Boulder spokesperson Sarah Huntley said.

Xcel Energy believes voters should be able to consider the franchise renewal without the wind project because it will be cheaper and many customers are cost conscious, Connelly said.

The company also does not believe that a comparison between the plan with the 200-meggawatt wind project, which would raise rates an estimated $4 per month, and municipalization, which the city says might lead to lower rates, is fair.

If a city-owned utility is going to add more renewable energy to the mix, as Boulder officials have said it eventually would, rates will go up because renewable energy costs more than energy from fossil fuels, she said.

Boulder officials have stated repeatedly that their cost model is evolving and will be updated as additional information about the costs of municipalization emerges. They also have said that voter support for a municipalization ballot issue does not mean the city will create the utility. Council can abandon the plan if the cost is determined to be too high.

Negotiators on both sides said the talks were in good faith.

“We spent many hours at the table, and it was clear that all the parties were committed to trying to reach a mutually acceptable agreement,” Carr said in the statement released by the city. “I thank everyone for their participation, but sometimes there are problems for which there are no solutions. This appears to be an obstacle we could not overcome.”

“We worked through all of the very tough economic and feasibility questions,” Connelly said. “I guess each side hoped very strongly the other would change their mind.”

City Council will meet July 19 to discuss other power supply options and consider ballot language that would give the city the authority to pursue municipalization.

URL to article:  https://www.wind-watch.org/news/2011/07/14/boulder-xcel-negotiations-break-down/