Basit	  Mustafa	                                                                                                          ...
2010.	  The	  story	  becomes	  even	  more	  sordid	  when	  you	  recall	  that	  the	  primary	  justification	  for	  ...
(l Xcel Energy•      RESPONSIBLE          BY   NATURE 1M                                                                  ...
Get the factsThere are a variety of inaccurate statements being made about your service, our programs , theballot measures...
The challenges of municipalization Voter approval In November, registered voters in the City of Boulder w1ll have the oppo...
(l Xcel Energy· Xcel Energy: A Proven Energy Partner for Boulder Creating a clean energy future at a reasonable cost •    ...
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An open response to david l. eves of xcel energy


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An open response to david l. eves of xcel energy

  1. 1. Basit  Mustafa   2975  13th  St.   Boulder,  CO  80304    Mr.  David  L.  Eves  President  &  CEO  –  Public  Service  Company  of  Colorado  1800  Larimer  Street,  Suite  1100  Denver,  CO  80202  October  24,  2011  Dear  Mr.  Eves  –  Thank  you  for  taking  the  time  to  send  Boulder  voters  a  letter  detailing  Xcel  Energy’s  opposition  to  ballot  measures  2B  and  2C.  I  typically  don’t  send  letters  of  thanks  to  those  who  waste  ink  &  paper  to  fill  my  mailbox  with  threats,  pseudo-­‐truths,  &  baseless  supposition.  However,  as  a  previously  undecided  voter  on  the  question,  your  note  helped  me  cast  my  vote  in  favor  of  2B/2C  this  afternoon  without  trepidation.    Now,  Mr.  Eves,  I  appreciate  that,  as  an  officer  of  Xcel  Energy,  you  are  duty-­‐bound  to  act  in  the  interest  of  your  shareholders,  but,  that  does  not  absolve  you  of  the  responsibility  to  be  up-­‐front  with  your  customers  or  afford  you  license  to  play  fast  &  loose  with  the  truth.  Your  claims  that  2B  and  2C  necessarily  incur  or  somehow  constitute  a  “hostile  condemnation  process  in  the  courts”  involving  “years  of  litigation”  are  simply  not  true  –  they  are  baseless  supposition  at  best.  In  fact,  I  see  the  situation  as  quite  the  opposite:  Xcel  controls  whether  this  process  would  go  smoothly  or  be  mired  by  what  you  describe  as  “litigation  and  uncertainty”  simply  by  the  level  of  cooperation  the  Public  Service  Company  of  Colorado  (PSCo)  exhibits  (or  chooses  not  to)  in  divesting  distribution  &  generation  assets  at  a  fair  market  value.  Or,  on  the  other  hand,  PSCo  has  sole  discretion  in  making  these  threats  a  reality  by  acting  in  a  retaliatory  manner  by  inflating  sale  prices,  throwing  forth  technical  barriers,  and  complicating  demarcation  to  try  and  retain  control  of  grid  assets  or  mire  the  municipalization  process  in  costs,  delays,  and  negative  press.  However,  that,  or  any  other  red  herring  –  be  it  costs,  Xcel’s  claimed  progress  towards  renewables,  or  fancy  glossy  marketing  materials  &  slogans  from  Xcel  aren’t  what  cast  my  ballot  for  me.  These  are  all  distracting  accouterment  adorning  the  core  of  the  issue:  Xcel  Energy  is  responsible,  by  nature,  to  its  shareholders  and  the  profit  motive.  Intrinsically,  there  is  nothing  wrong  with  this  notion.  In  fact,  as  a  shareholder  of  many  corporations,  former  employee  of  a  major  corporation,  and  a  founder  of  my  own,  I  truly  appreciate  that  idea.  But,  I  also  appreciate  the  deeper  implications  it  has  for  energy  policy  in  Boulder.  I’m  not  interested  in  the  fancy  portmanteau  named  programs  Xcel  has  touted  as  “innovative”  in  renewable  capacity  (many  of  which  were  done  in  part  or  in  whole  to  meet  state  or  Federal  mandated  generation-­‐mix  or  clean-­‐air  requirements,  I  might  add).  I’m  also  not  convinced  by  Xcel’s  claims,  graphs,  and  thick  glossy-­‐stock  printed  collateral  boasting  a  “proven  track  record”  in  renewable  energy.  Instead,  as  an  astute  investor,  businessman,  and  shareholder,  I’m  particularly  swayed  by  certain  facts  gleaned  from  your  annual  report,  balance  sheet,  and  investments,  which  frankly  speak  louder  to  the  issues  than  any  letter  you  might  send  my  way  (speaking  directly  to  facts  that  Xcel  has  largely  kept  off  their  talking  points  prompter  on  the  issue,  for  obvious  reasons!).  Anyway  you  slice  it,  Xcel  is  “big  coal”,  and  has  not  been  “responsible”  by  Boulder  customers  (let  alone  nature).  Xcel’s  2010  SEC  10-­‐K  filing  demonstrates  that  the  PSCo  enjoyed  a  19%  improvement  in  diluted  earnings  per  share.  Of  course,  the  informed  voter  will  not  be  surprised  that  this  is  the  case,  since  Xcel  fought  for  (and  was  awarded)  the  nation’s  2nd  highest  electrical  rate  increase  (21.4%)  in  
  2. 2. 2010.  The  story  becomes  even  more  sordid  when  you  recall  that  the  primary  justification  for  this  rate  increase  to  the  PUC  was  a  $1.3  billion  expenditure  to  construct  the  brand-­‐new  Comanche  3  coal-­‐fired  plant  and  the  conversion  of  a  former  nuclear  facility  to  fossil-­‐fuel  based  generation.  This  is  not  the  picture  of  the  clean  and  renewable-­‐centric  Xcel  your  corporation  has  spent  millions  trying  to  portray,  is  it?    There  are  so  many  more  examples  of  how  the  entire  gamut  of  Xcel’s  asset  mix,  investment  posture,  and  business  model  demonstrate  that  Xcel  is  neither  committed  to  renewables  nor  interested  in  any  other  goal  than  protecting  their  profit  motive  and  their  shareholders’  pecuniary  interest  (either  in  Boulder,  in  the  PSCo,  or  across  their  entire  portfolio  of  businesses,  distribution  infrastructure,  or  generating  capacity).  In  reality,  the  facts  (and  history)  confirm  an  even  more  disappointing  outcome:  Xcel  (and  the  PSCo)  will  act  in  its  own  pecuniary  interest  and  do  only  what  they  must  when  their  feet  are  held  to  the  (coal)  fire  to  demonstrate  a  (token)  shift  to  renewables,  and  not  only  do  they  remain  firmly  encamped  in  coal  country,  but  they  continue  to  lay  deeper  foundations  there,  too.  But,  I  won’t  waste  your  time  (or  any  more  paper)  waxing  poetic  about  the  story  the  actual  numbers  tell  themselves  (I’ll  believe  an  audited  10-­‐K  filing  over  glossy  inserts  in  my  Xcel  bill/from  an  Xcel  funded  PAC  any  day,  by  the  way).    Instead,  I’ll  leave  you  with  this  thought:  after  being  bullied  &  threatened  by  your  letter  and  the  various  “citizens  groups”  Xcel  has  funded  to  the  tune  of  nearly  $250,000.00  (at  last  count  –  the  number  invariably  will  continue  to  tick  upwards  in  the  final  days  of  the  campaign),  I’m  left  with  solid  confirmation  that  our  energy  future  is  not  well-­‐cared  for  in  your  hands  and  should  not  be  in  the  hands  of  your  corporation.  Xcel’s  values  &  conduct  in  the  past  decade  in  how  it  has  done  business  and,  more  recently,  with  how  it  has  approached  the  2B/2C  question  has  given  me  pause  and  reason  to  be  excited  to  see  even  an  inefficient,  bumbling,  and  slow  government  entity  take  the  reins  (although  I  truly  believe  the  City  of  Boulder  can  do  much  better  than  that  and  isn’t  nearly  as  incompetent  has  Xcel  has  painted  them  to  be!).    Again,  Mr.  Eves,  thank  you  for  clearing  the  air  on  these  ballot  issues  –  it  helped  me  do  something  “Responsible  by  Nature”  and  vote  to  find  a  way  to  put  more  naturally  responsible  leadership  in  place  for  my  utility  needs.      Sincerely,    Basit  Mustafa  Boulder,  CO  Meter  #17B782800A  cc:    Ms.  Erica  Stutzman,  Boulder  Daily  Camera  Editorial  Board  Mr.  Benjamin  G.S.  Fowke  III,  Chairman  of  the  Board,  President,  and  CEO  –  Xcel  Energy            
  3. 3. (l Xcel Energy• RESPONSIBLE BY NATURE 1M David L. Eves President and CEO Public Service Company of Colorado 1800 Larimer Street, Suite 1100 Denver, CO 80202 October 20, 2011 Dear Voter, The upcoming election is very important-youll decide who will be your electric service provider with your vote on ballot measures 2B and 2C. You have probably received and heard information from both sides of this important issue. While it may be difficult to determine the validity of the many projections and claims about forming a - city-owned and-o-p-erateue1e-ctric utility, its easierto---onderstam:l""what you--a-treadynave-oy lool<ing at Xcel Energys proven track record in renewable energy, reduction of carbon dioxide and other emissions, energy conservation programs, highly reliable service and reasonable rates. Measures 2B and 2C do not keep options open or increase leverage with Xcel Energy. Recently, the proponents of 28 and 2C have claimed that approval of these measures would simply keep Boulders options open and set the stage for future negotiations. Nothing is further from the truth. Measures 28 and 2C fund and authorize the start of a hostile condemnation process in the courts, launching years of litigation and uncertainty, both for the city and Xcel Energy. The measures close doors rather than open them. We serve more than 170 Colorado communities and 1.3 million customers outside of Boulder. Each city and town expects us to treat it fairly and not provide one community an unaue advantage, even with the prospect of condemnation looming. Municipalization is not the right path to obtain more renewables or reduce carbon . But if the city decides to form a municipal electric system, we need to protect the interests of our other customers. Measures 2B and 2C could affect access to our popular renewable energy and energy efficiency programs. Approval of these measures would cause us to act quickly to determine, with the city and the Colorado Public Utilities Commission, whether Boulder customers may continue to participate in many of our programs, such as Solar*Rewards, SaversSwitch, energy efficiency and conservatiOn -caemand-s1ae management or ITSIV1) programs ana -our proposeanew long-term Windsource® program. The benefits you receive as participants in these programs are based upon an on-going relationship with us. Program funding and rebates are borne by all Xcel Energy electricity customers, even though our Boulder customers participate and benefit at much higher levels than average. Its questionable if these renewable energy and efficiency programs can continue in Boulder over the next five to seven years- the time it could take to go through the condemnation process- without the citys commitment to reimburse other customers and the company for costs incurred in Boulder. It is misleading to say there are no adverse consequences if 28 and 2C are approved. Due to key undcrootimoting in the citya foCil@ibility otudy, H1c. cre>!;ltion of ::1 municip~l utility Qnt:Jil~ ~ignifir.a nt drawbacks. During the five to seven years it will take to form the utility, renewable energy and energy efficiency funding may be completely stopped.
  4. 4. Get the factsThere are a variety of inaccurate statements being made about your service, our programs , theballot measures, our energy portfolio mix and the true costs of forming a municipality. One recentexample is the claim that Xcel Energy has plans to build new coal plants in Colorado- this is falseand completely unfounded.There are additional reasons to vote NO on 28 and 2C, including the illusion of on-going rateparity, unlimited city bonding authority, the fact that the measures do not require or guaranteeadditional renewable energy, and the risk to reliable service. Get the facts by reading the"Challenges of Municipalization" on our website at and reviewing theactual ballot language.We want to continue as your energy provider. We are proud of our environmentalaccomplishments, our renewable energy and energy efficiency programs, our highly reliableservice, our customer service and our reasonable rates.We believe that by working together we can achieve your energy and environmental goals fasterand more effectively than through the citys condemnation of our business and facilities inBoulder.Sincerely,David L. EvesPresident and CEOPublic Service Company of ColoradoAn Xcel Energy company
  5. 5. The challenges of municipalization Voter approval In November, registered voters in the City of Boulder w1ll have the opportun1ty to X 28: Approves an increase and 2-year extension in the utility occupation tax to fund the condemnation vote on two ballot measures that, if possed, would ullow the r;ily lu bormw hundreds procp,ss. r.osling about $12 million of millions of dollars to takeover and operate Xcel Energys electric system. If 28 and 2C pass, the city has no plans to ask voter permission for this X 2C: Gives thfl city permission to form a municipal utility and gives the city unlimited bonding authority for on decision again. uncertain takeover cost Acquire the electric system through litigation Cost Estimate Comparison (in Millions): Boulder vs. Xcel Energy Boulder needs to acquire the el ectric system - the poles, wires, substation, -:1.!11!4-Hf1!:!!M equipment and other infrastructure. Two matters would be decided in court: $121M f- $150M Condemnation: A state court decides if Boulder can condemn the Separation $15M 1 $1OO+M I system and what is fair market value, plus what damages should be Startup $45M $45M paid to Xcel Energy GuiiiU Cur rcerr r $0 $3CiOM Stranded Costs: The Federal Energy Regu latory Commission and a Stranded Cost -- ~~ ~ $0 f----~~-- $335M federal court decide what Boulder owes Xcel Energy for economic damages Programs (SmartGridCity® Energy Efficiency/ / $0 $100M associated with having acquired electric generation to serve Boulder Solar• Rewa rds) Other (Cash Reserve/Interest/Debt Service) $102M $100MThis legal process will potentially cost millions in consulting and legal fees and Underwriting $3M $6Mtake five or more years to complete. Further, we believe the citys plan doesnot represent the full cost of a takeover. An unbudgeted expense (see TOTAL $286M ?chart) of more than $112 million puts its break-even point in jeopardy. *From UtiliPoi nt analysis of Boulder feasibi lity study_See xcel for reportFinance the takeover and continued system operationsBoulder would not know the final takeover cost until litigation concludes,and it would need to seek municipal bonds to pay for it so 2C gives Boulderunlimited bonding authority.Acquire Electricity from Renewable Sources Electricity Supply Comparison: Colorado Municipal Utilities vs. Xcel EnergyThe city would need to contract fo r who lesale electricity, with the promise of 75%providing more renewable energy to meet Bou lders energy future goals. Whencompared to Colorados municipal utilities, Xcel Energy offers a more diverseelectricity supply with less coal and more rene wa ble ene rgy on our system .Much of the renewable energy that Colorado municipal utilities supply comesfrom long-time, lost-cost hydroelectric contracts that are not available in themarket today.Boulder has offered no guarantee that it will be able to provide as muchor more renewable energy as Xcel Energy, and the potential costs are XCE ENERGY {C } COLOR L O ADO SPRINGS FORT COLLINS LONGMONT LOVELAND • COAL • NATURAL GAS • WIND/SOLAR • HYDRO OTHERnot included in the citys current financial analysis. Source: Governors Energy Offi ce, 2010 Co lorado Utilities Report, w::ing 2009 dataUtility Startup Customer Rate Comparison: National Average vs. Xcel Energy (CO)The city will need to develop an organizaliurlol structure, hire personnel, learn 1 0 ~/kWi r - - - - - - - - - - - - - - ---::;;:;;,;:;===--ito operate the system and other services There is no guarantee of safe. NAtinnA I AvP.rAQP:relinble service ond rcoJonobh:; Guatomcr rotGa.Xcel Energys electricity rates are currently below the national average as setby the Colorado Public Utilities Comm ission in a process that includes input Xcel En ergy- Coloradofrorn state consumer advocates and other parties The Boulder City Council 6¢/kWh t =-="<---- - - - -- - -- -would set customer electricity rates and fees under the municipal utility 2001 2010 Source: Energy Information Adm inistration(l Xcel Energy® © 2011 Xcel Energy lnc. l 1·800·895·4999l xcelene I Xcel E P for by the Xcel En ergy Issues Comm ittee aid nergy is a registered trademark of Xcel Energy Inc. Public Service Company of Colorado. an Xcel Energy Company 111 ·09·1 00
  6. 6. (l Xcel Energy· Xcel Energy: A Proven Energy Partner for Boulder Creating a clean energy future at a reasonable cost • Serving Boulder for over 100 years • Customers can already choose • $4 million spent in 2010 with • High reliability with electricity 100% renewable energy through Boulder companies available 99.98 percent of the time our Windsource® program • Most generous corporate giver in • $13.5 million in fees and taxes pai d Colorado (Denver Business Journal) • Electric rates below the national average to Boulder in 2010 for the past three years; contributed $162,000 in 2010 to Boulder non profitsOne elwirollmentalllrcrderh-etptng-an-oth-erl"eader• No. 1 utility wind energy provider in the United States (American Wind Energy Association)• In the top 10 for solar capacity (Solar Electric Power Association)• One of the largest voluntary green energy programs, Windsource®(NREL)• Five times on Dow Jones Sustainability Index North America• American Carbon Registry Utility Excellence winner 2011• Power Company of the Year 2010, Platts Global Energy Awards• EPA Energy Star Partner of the Year 2011• Were ahead of schedule to meet the states renewable energy standard of 30 percent renewables by 2020, the second-highest standard in the United States.We are on track to reduce our carbon dioxide emissions 28% by 2020 from 2005 levels 30 20 10 2005 MEASURED IN MilliONS OF TONS 2020We offer customers clean energy choiceOur successful energy-saving and voluntary renewable energy programs providecustomers choice in how they receive and use energy. These programs are popularwith Boulder customers. For information about our programs. visit 34%of Colorado BOULDER CUSTOMERS