OMPA transmission, 08/2012 v.28 no.8

              AUGUST 2012 - VOL. 28 NO. 8
(Continued on page 2.)
A growing number of cities and
counties dedicated to energy
efficiency are deciding that
local sustainability initiatives
can’t coexist with for-profit utilities.
by Dylan Scott, May 2012
When it comes to environmentally friendly
cities, there’s no place much greener or more
granola than Boulder, Colorado. The city of
97,000 on the edge of the Rocky Mountains
has long been a leader in things like recycling
programs and open-space preservation.
It’s home to the University of Colorado,
a nationally renowned leader in sustainability
research, and in 2002, the Boulder City
Council officially adopted the Kyoto Protocol.
By the city’s own count, Boulder has shown
up on nearly a dozen “greenest city” lists
in the past decade. Last year, officials
committed to building 40 electric vehicle
charging stations around town. Boulder
even uses grazing goats as weed control
on some municipal properties.
So it’s no big surprise that Boulder wants
its energy sources to be green, too. But that’s
lately forced the city to ask some fundamental
questions: Can local sustainability initiatives
coexist with for-profit utilities that are
operating out of financial self-interest?
Or is there an inevitable impasse between
green-government goals and utility companies
that remain committed to their bottom line?
Simply put, if cities want to go green, must
they go it alone?
Boulder recently answered that last question
with a resounding yes. After six years of
deliberation, Boulder is taking steps toward
“municipalization,” breaking away from Xcel
Energy, its utilities provider, and assuming
full control of its own electricity system.
It’s a risky plan filled with challenges, but
advocates insist it’s a necessary move if
Boulder wants to dictate the terms of its
shift to greater energy efficiency.
‘Green’ municipalities cut ties with utilities
“Municipalization is one of the paths that
allow us to achieve our long-term objectives,”
says Jonathan Koehn, the city’s sustainability
officer. “We want to be able to have more
choices about how we get our electricity.
It gives the community a greater say about
its long-term energy needs.”
Boulder isn’t alone in the push for greater
autonomy from utility providers. A growing
number of cities and counties are exploring new
aggregation pacts that would allow them to pool
together to buy energy from alternative sources.
And Huntington Beach, California, for example,
recently tried to install more efficient LED
streetlights, only to face higher rates from
its utility. The city responded by taking
more control of streetlight installation and
maintenance.
Whether they’re providing more options or,
like Boulder, completely decoupling from their
energy providers, more places are confronting
what they say is an inherent conflict between
reduced energy consumption and private utility
companies dependent on selling as much energy
as they can.
Minneapolis-based Xcel Energy is one of the
largest energy companies in the country. In 2000,
Xcel purchased New Century Energies, whose
predecessor had provided Boulder’s electricity
for more than 80 years. The company’s latest
20-year franchise agreement with Boulder
was set to expire in 2010. With that expiration
date on the horizon, the city in 2005 began
exploring alternative ways to purchase its power.
When Xcel added Boulder to its smart-grid
demonstration project in 2008, the idea was put
on hold. But in 2010, as contract negotiations
for a new franchise agreement stalled, the city
once again started considering its options,
including municipalization.
In many respects, Xcel should have been a good
partner for a city looking to green its energy
consumption. Xcel was already one of the
greenest energy companies in the U.S. -
just two months ago, one independent analysis
ranked Xcel among the nation’s top three
most sustainable utility companies, based on
the use of renewable sources like wind, solar
and hydropower. Once negotiations started
heating up with Boulder, Xcel offered to
build the city a wind farm and pledged that
90 percent of Boulder’s energy would come
from renewable sources by 2020. (Currently,
about 10 to 15 percent of the city’s power comes
from renewables.) If city officials would drop
their municipalization plan, Xcel promised to
make Boulder the “most green city worldwide”
by the end of the decade.
But Boulder officials weren’t interested.
“I can’t tell you what happened,” says Jerome
Davis, Xcel’s regional vice president for
Colorado. “Your guess is as good as mine.
There was a faction in Boulder, and I think
all they ever wanted was municipalization.”
Part of the city’s reasoning was fiscal. City
projections showed that Xcel rates would
increase by 30 percent over the next decade.
Municipalization, according to an initial cost
analysis, should save money. The average
utility rate would fall by 10 percent for
commercial customers and 7 percent for
residential and industrial customers over
the next decade. Based on that cost model,
developed by an energy consulting firm
for the city, Boulder could save more than
$110 million over the next 10 years. Combined
with the perceived environmental benefits
of being able to source their own energy,
city officials were sold. “We want to have an
independent voice for our fuel sources,” says
Councilwoman Lisa Morzel, who supported the
move toward municipalization. “What we need
is a democratized, decarbonized energy future.”
Boulder placed two questions on the November
2011 ballot: The first asked permission to
break from Xcel and create a publicly owned
electric utility, as long as the rates wouldn’t
exceed Xcel’s at the time of the takeover.