Xcel Energy may not have the capacity to transmit significant new wind energy to Boulder, even if the city is successful in securing low-cost wind contracts, company officials said Monday.
At a debate Monday, Heather Bailey, head of energy strategy and electric utility development for the city of Boulder, described a future full of opportunities for low-cost renewable energy. But an expert associated with Xcel Energy said many of the city’s projections are speculative and assume a best-case scenario.
Craig Eicher, Xcel Energy’s Boulder regional manager, and consultant Bob Bellemare addressed the Boulder Area Commercial Real Estate Brokers and Developers meeting along with Bailey.
“Most of the financial benefits are far in the future,” Bellemare said. “You all are business people. You know that means it’s fairly speculative.”
City officials say they can offer up to 50 percent renewable energy on day one of a municipal utility while offering rates similar to or lower than Xcel Energy’s. Bailey said the city accounted for a wide range of possibilities in its modeling, including higher wind costs, but the modeling is also weighted to account for the likelihood of certain issues.
Eicher pulled up the city’s proposed service area map and encouraged the commercial brokers to be familiar with unincorporated areas that would be part of a future city electric utility. Xcel has asked the Public Utilities Commission to rule on whether Boulder can take county customers if it forms its own electric utility.
Eicher said Xcel Energy shares Boulder’s goals of using more renewables and transitioning away from carbon-based power sources such as coal and natural gas.
“We believe that Boulder’s goals are right and properly aimed,” he said. “We just don’t think forming their own electric island is going to get them there as quickly as with us.”
Bellemare said the city may not be able to offer the same rebates that Xcel does for energy-efficiency upgrades and solar panels if its debts and costs end up being higher than expected.
Bailey said Boulder has a strong commitment to energy-efficiency programs – going back to the passage of the Climate Action Plan tax – and demand-side management programs would have a prominent place in a municipal utility.
The questions from the audience reflected concerns that Boulder won’t be able to provide the same rates and reliability as Xcel. In particular, brokers and developers asked whether Boulder has adequately accounted for the transmission costs of wind energy from far-flung parts of the state and whether Boulder won’t essentially have to duplicate its efforts by developing natural gas capacity alongside less reliable wind energy.
Eicher said there is now capacity to bring more wind energy online, and Xcel is taking advantage of that with a plan to add another 550 megawatts. However, with smaller utilities across the state scrambling to meet new renewable-energy requirements, that capacity could fill up by the time Boulder enters the market with its own utility.
Federal law requires providers of transmission services, including Xcel, to allow access to other power providers. However, Eicher said Xcel doesn’t have to build additional capacity for other providers, and building transmission lines tends to generate a lot of local opposition.
“We’re not obligated to do it,” Eicher said after the meeting in response to follow-up questions. “We’re obligated to meet the needs of our customers.”
An Xcel Energy spokesman said later that the company obviously has the capacity to transmit power to Boulder now, but whether it has the capacity to transmit new wind energy depends in part on where those wind farms are built and the state of the existing infrastructure.
Boulder energy officials said Boulder’s total energy usage is a tiny percentage of the power that Xcel distributes every day, but the city isn’t necessarily dependent on Xcel and can work with other providers.
Bailey said both the city and wind providers would make sure there is available transmission capacity before entering into any agreements. She said the idea that there would be demand and no one would build additional capacity is not plausible.
Bailey also said the city fully expects to see more local generation, particularly solar, in the future as technology changes. That would provide a buffer against price fluctuations in other energy markets.
“The industry is changing so fast,” she said. “The technology is getting so much better.”