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Municipalization of Electric
Power Monopoly in Boulder, CO
                Roger Koenig 11/12/12
                rogerkoenig@comcast.net
                303-443-4133
Why is this an issue today?



Question 2C
(allowing the formation of a municipal utility)
Yes: 13,784, 51.93%
No: 12,757, 48.07%

The ballot language allows the city to sell unlimited
revenue bonds to condemn assets and pay separation
costs plus stranded asset settlements to Xcel Energy.
2011 Ballot Question No. 2C
Light and Power Utility
Shall the City of Boulder have the authority to establish, acquire, erect, maintain, and
operate, by any lawful means, a municipal light and power utility with programs and
improvements that include without limitation generation plants, renewable energy, energy
conservation, and distribution systems, with all necessary powers appurtenant thereto if the
city council determines that it can acquire the electrical distribution system in Boulder and
charge rates that do not exceed those rates charged by Xcel Energy at the time of acquisition
and that such rates will produce revenues sufficient to pay for operating expenses and debt
payments, plus an amount equal to twenty-five percent (25%) of the debt payments; and with
the reliability comparable to Xcel Energy

Shall the City, acting through the utility, issue enterprise revenue bonds payable solely from
the net revenues of the utility, to finance the costs of acquiring from Xcel Energy and any
affiliate thereof, and constructing, relocating, installing, improving, completing or expanding
the equipment, facilities and other assets comprising an existing electric distribution system
within or outside the City’s boundaries, and paying all necessary or incidental costs related
thereto, and shall the City have the authority to adopt all means necessary or appropriate to
carry out the requirements, purpose and intent of this measure?


           To date, City Council has allocated an additional $300,000 from the city's general
 fund to cover municipalization cost overruns. Already in violation of the ballot charter?
Summary Take-Away
The municipalization decision criteria measurements, as designed by Heather Bailey and
staff, are rigged. If they pass City Council vote approval November 15, Bailey will have
little trouble in avoiding a Council municipalization “off-ramp decision” and subsequent
vote to proceed to condemnation court in March 2013. The rest of the process is
mostly for show. Bailey is staffing up now for starting a Municipal Power Company.

After condemnation filing, we pay for a multi-year legal battle with Xcel Energy, the
Federal Energy Regulatory Commission, and many other electric power users in
Colorado. Legal costs are estimated near $10 million and will need taxpayer funding.

Businesses will avoid expansion or location in Boulder while this power battle rages.

How can we protect Boulder?
1. Write and call 6 members of City Council before Thursday, November 15

Vote NO on Heather Bailey's "off-ramp avoidance" criteria.
Vote YES on Ken Wilson's "municipalization decision addenda" at Council on
November 15.

2. Fight the city’s annexation of the East Boulder periphery properties in the interest
of the public and property owners – and all Boulder residents. If the city doesn’t have
jurisdiction over some critical Xcel assets, they can’t seize them through
condemnation. Who wants the 1923 Valmont power plant anyway?
Are human greenhouse gas emissions
      a global problem? YES!
Is a Boulder City seizure, settlement and separation of
    Xcel’s distribution assets in Boulder a solution to
             greenhouse gas emissions? NO!
Boulder City Government
Heather Bailey
Executive Director of Energy Strategy and
Electric Utility Development
                                Compensation exceeds $250K per year

Consists of the Mayor,
  Deputy Mayor and                                                 City Council
seven council members



     In Charge of                                 City Manager Jane
                                                                               Boards, Commissions,
implementing initiatives                       Brautigam appointed by
                                                                                    Divisions
approved by the Council                              City Council




                                       Boulder Energy
 17 staff members also                  Future Project        City Manager’s          17 City Staff
listed to aid the project                Directed by             Directors             members
                                       Heather Bailey


     Source: www.bouldercolorado.com
Boulder Energy Future Project Resources
  Events leading to an increase in funding:

• Voter-approved Measure 2B instituted a tax to provide $1.9
  million to the project annually during the initial phases to cover
  study expenditures.
• The City Manager recommended that the council allocate
  $300,000 from the city’s general fund to cover staff member
  costs.
• Some of the unnamed consultants included in staff member
  costs receive rates of $900 per hour.
  (Source: The Boulder Daily Camera, Rising Costs in Boulder Municipalization Study, October 29, 2012)

• Bouldercolorado.gov discloses that the project has employed
  a number of consultants, without providing their identities.
• The project has selected Duncan & Allen as FERC attorneys,
  and Duncan, Ostrander & Dingess to represent the city in any
  future condemnation proceedings with Xcel Energy.
---------------------------------------- Left Blank! ----------------------------------------------------


 City Council will vote November 15, 2012 on the adequacy of the “charter
 requirement” proposed metrics as the “off-ramp” decision criteria in fulfillment
 of Ballot Measure 2C.
 Following this vote, other criteria may not be considered.
Heather Bailey Verbal:
February 25th - Council Study Session to discuss complete strategy options and ask
clarifying questions/request further information. No votes are taken at Study Sessions

March 19th - Council Study Session to vote on complete strategy options.
State Control of Power Monopolies?




    "Praise Joseph Stalin, the great protector of communism!"

            Didn’t work out so well.
Likely Outcomes of Boulder City
     Council Control of Local Monopoly
• Punitive Commercial
  Rate Structures
(80% of total demand)



• Forever lose consumer rate and reliability protection
  of Colorado Public Utilities Commission
  – No legal recourse with City Council
• Technical and manpower limits to power reliability
These are “feel-good” criteria. Not measurable.
Xcel assets in Boulder are not a local grid
               (they serve the whole area)




 Xcel monitoring and dispatch are in remote bunker
  facilities near Golden – not Boulder. Not condemnable!
Transmission Stations


Boulder City Limits


Louisville/Lafayette/Su
perior City Limits

Transmission lines




Boulder Council cannot condemn Xcel
assets that are not within city borders.
Hence the letters and proceedings
started to annex critical Xcel property
and feeders on the East side of Boulder.
Stop annexation! You have legal rights.
Closing the Transmission Loop: South Boulder County on the way to Louisville and Valmont




Separation Problem: Belongs to Xcel Energy. Can’t be condemned since outside of Boulder city.
The “Not in Boulder” Electrical Transmission Lariat




Boulder

                                                            Valmont Plant




                                                  Leggett Terminal
Municipalization process 11 12 12
Existing Boulder Commercial Rates are like sausage. Don’t know
what is inside. So how can Heather Bailey claim rate equivalence?




Modeling commercial rates on only three category averages creates inflated revenue
expectations for a Boulder Municipal Power Company – plus “sticker shock” for businesses.
Big Problem with Bailey’s decision metric! The majority of existing commercial rates
don’t match simple categories. 80% of Boulder power is commercial and industrial.
Primary Transmission Customers in Colorado



                                               Will stop investing in Boulder




                                             Will self generate rather than
                                             participate in Boulder municipal
Bonding Boulder Municipal Power - by Gaming Debt Service Coverage Ratio
(Interest time deferrals lead to customer power rate increases in later years)




                                          Easy to Game DSCR with Deferred Tranches
Boulder Municipal Power Monopoly Decision
         $10 million of lawyers and hearings
         proceeding 2013 to 2017(?)
         followed by:
         $300 to $600 million of debt for:
         • Xcel asset settlements
         • separation engineering
         • new dispatch + transmission construction
         • start-up costs for service and ops people
         • punitive rates that drive business out

Versus
                 • Incremental renewable generation
                 programs and incentives with return
                 on investment for business and gov.
                 • Demand destruction incentives
                 where Xcel suffers, not a city power
                 monopoly suffering
                 • Negotiate and implement a
                 broader set of interconnections with
                 Xcel and the PUC for micro grids
                 (University of Colorado example)
Dear Council Member,
Please vote NO on proceeding with inadequate financial, rate and reliability
decision criteria for Municipalization on November 15. I would like to
continue living or working in Boulder with affordable and reliable power.
There are far less costly and lengthy paths for implementing renewable
generation and energy efficiency goals in our city.
council@bouldercolorado.gov

Call council members who have supported proceeding with Heather Bailey’s
“off-ramp avoidance” criteria, and ask them to support open governance for
Boulder. Publish decision dates, reliability concerns and financial risks.

Matt Appelbaum     303-499-8970       AppelbaumM@bouldercolorado.gov

KC Becker          303-218-8814       beckerk@bouldercolorado.gov

Macon Cowles       303-638-6884       CowlesM@bouldercolorado.gov

Suzanne Jones      720-633-7388       joness@bouldercolorado.gov

Lisa Morzel        303-815-6723       morzell@bouldercolorado.gov

Tim Plass          720-299-4518       plasst@bouldercolorado.gov
What else can I do?
E-mail me to receive an invitation to join a new
“PLAN-Rational” 501(c)4 education and issues non-
profit that represents consumer, business, and
taxpayer rights in Boulder.

Thanks for being involved in our local democracy!


            RogerKoenig@comcast.net

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Municipalization process 11 12 12

  • 1. Municipalization of Electric Power Monopoly in Boulder, CO Roger Koenig 11/12/12 rogerkoenig@comcast.net 303-443-4133
  • 2. Why is this an issue today? Question 2C (allowing the formation of a municipal utility) Yes: 13,784, 51.93% No: 12,757, 48.07% The ballot language allows the city to sell unlimited revenue bonds to condemn assets and pay separation costs plus stranded asset settlements to Xcel Energy.
  • 3. 2011 Ballot Question No. 2C Light and Power Utility Shall the City of Boulder have the authority to establish, acquire, erect, maintain, and operate, by any lawful means, a municipal light and power utility with programs and improvements that include without limitation generation plants, renewable energy, energy conservation, and distribution systems, with all necessary powers appurtenant thereto if the city council determines that it can acquire the electrical distribution system in Boulder and charge rates that do not exceed those rates charged by Xcel Energy at the time of acquisition and that such rates will produce revenues sufficient to pay for operating expenses and debt payments, plus an amount equal to twenty-five percent (25%) of the debt payments; and with the reliability comparable to Xcel Energy Shall the City, acting through the utility, issue enterprise revenue bonds payable solely from the net revenues of the utility, to finance the costs of acquiring from Xcel Energy and any affiliate thereof, and constructing, relocating, installing, improving, completing or expanding the equipment, facilities and other assets comprising an existing electric distribution system within or outside the City’s boundaries, and paying all necessary or incidental costs related thereto, and shall the City have the authority to adopt all means necessary or appropriate to carry out the requirements, purpose and intent of this measure? To date, City Council has allocated an additional $300,000 from the city's general fund to cover municipalization cost overruns. Already in violation of the ballot charter?
  • 4. Summary Take-Away The municipalization decision criteria measurements, as designed by Heather Bailey and staff, are rigged. If they pass City Council vote approval November 15, Bailey will have little trouble in avoiding a Council municipalization “off-ramp decision” and subsequent vote to proceed to condemnation court in March 2013. The rest of the process is mostly for show. Bailey is staffing up now for starting a Municipal Power Company. After condemnation filing, we pay for a multi-year legal battle with Xcel Energy, the Federal Energy Regulatory Commission, and many other electric power users in Colorado. Legal costs are estimated near $10 million and will need taxpayer funding. Businesses will avoid expansion or location in Boulder while this power battle rages. How can we protect Boulder? 1. Write and call 6 members of City Council before Thursday, November 15 Vote NO on Heather Bailey's "off-ramp avoidance" criteria. Vote YES on Ken Wilson's "municipalization decision addenda" at Council on November 15. 2. Fight the city’s annexation of the East Boulder periphery properties in the interest of the public and property owners – and all Boulder residents. If the city doesn’t have jurisdiction over some critical Xcel assets, they can’t seize them through condemnation. Who wants the 1923 Valmont power plant anyway?
  • 5. Are human greenhouse gas emissions a global problem? YES!
  • 6. Is a Boulder City seizure, settlement and separation of Xcel’s distribution assets in Boulder a solution to greenhouse gas emissions? NO!
  • 7. Boulder City Government Heather Bailey Executive Director of Energy Strategy and Electric Utility Development Compensation exceeds $250K per year Consists of the Mayor, Deputy Mayor and City Council seven council members In Charge of City Manager Jane Boards, Commissions, implementing initiatives Brautigam appointed by Divisions approved by the Council City Council Boulder Energy 17 staff members also Future Project City Manager’s 17 City Staff listed to aid the project Directed by Directors members Heather Bailey Source: www.bouldercolorado.com
  • 8. Boulder Energy Future Project Resources Events leading to an increase in funding: • Voter-approved Measure 2B instituted a tax to provide $1.9 million to the project annually during the initial phases to cover study expenditures. • The City Manager recommended that the council allocate $300,000 from the city’s general fund to cover staff member costs. • Some of the unnamed consultants included in staff member costs receive rates of $900 per hour. (Source: The Boulder Daily Camera, Rising Costs in Boulder Municipalization Study, October 29, 2012) • Bouldercolorado.gov discloses that the project has employed a number of consultants, without providing their identities. • The project has selected Duncan & Allen as FERC attorneys, and Duncan, Ostrander & Dingess to represent the city in any future condemnation proceedings with Xcel Energy.
  • 9. ---------------------------------------- Left Blank! ---------------------------------------------------- City Council will vote November 15, 2012 on the adequacy of the “charter requirement” proposed metrics as the “off-ramp” decision criteria in fulfillment of Ballot Measure 2C. Following this vote, other criteria may not be considered. Heather Bailey Verbal: February 25th - Council Study Session to discuss complete strategy options and ask clarifying questions/request further information. No votes are taken at Study Sessions March 19th - Council Study Session to vote on complete strategy options.
  • 10. State Control of Power Monopolies? "Praise Joseph Stalin, the great protector of communism!" Didn’t work out so well.
  • 11. Likely Outcomes of Boulder City Council Control of Local Monopoly • Punitive Commercial Rate Structures (80% of total demand) • Forever lose consumer rate and reliability protection of Colorado Public Utilities Commission – No legal recourse with City Council • Technical and manpower limits to power reliability
  • 12. These are “feel-good” criteria. Not measurable.
  • 13. Xcel assets in Boulder are not a local grid (they serve the whole area)  Xcel monitoring and dispatch are in remote bunker facilities near Golden – not Boulder. Not condemnable!
  • 14. Transmission Stations Boulder City Limits Louisville/Lafayette/Su perior City Limits Transmission lines Boulder Council cannot condemn Xcel assets that are not within city borders. Hence the letters and proceedings started to annex critical Xcel property and feeders on the East side of Boulder. Stop annexation! You have legal rights.
  • 15. Closing the Transmission Loop: South Boulder County on the way to Louisville and Valmont Separation Problem: Belongs to Xcel Energy. Can’t be condemned since outside of Boulder city.
  • 16. The “Not in Boulder” Electrical Transmission Lariat Boulder Valmont Plant Leggett Terminal
  • 18. Existing Boulder Commercial Rates are like sausage. Don’t know what is inside. So how can Heather Bailey claim rate equivalence? Modeling commercial rates on only three category averages creates inflated revenue expectations for a Boulder Municipal Power Company – plus “sticker shock” for businesses.
  • 19. Big Problem with Bailey’s decision metric! The majority of existing commercial rates don’t match simple categories. 80% of Boulder power is commercial and industrial.
  • 20. Primary Transmission Customers in Colorado Will stop investing in Boulder Will self generate rather than participate in Boulder municipal
  • 21. Bonding Boulder Municipal Power - by Gaming Debt Service Coverage Ratio (Interest time deferrals lead to customer power rate increases in later years) Easy to Game DSCR with Deferred Tranches
  • 22. Boulder Municipal Power Monopoly Decision $10 million of lawyers and hearings proceeding 2013 to 2017(?) followed by: $300 to $600 million of debt for: • Xcel asset settlements • separation engineering • new dispatch + transmission construction • start-up costs for service and ops people • punitive rates that drive business out Versus • Incremental renewable generation programs and incentives with return on investment for business and gov. • Demand destruction incentives where Xcel suffers, not a city power monopoly suffering • Negotiate and implement a broader set of interconnections with Xcel and the PUC for micro grids (University of Colorado example)
  • 23. Dear Council Member, Please vote NO on proceeding with inadequate financial, rate and reliability decision criteria for Municipalization on November 15. I would like to continue living or working in Boulder with affordable and reliable power. There are far less costly and lengthy paths for implementing renewable generation and energy efficiency goals in our city. council@bouldercolorado.gov Call council members who have supported proceeding with Heather Bailey’s “off-ramp avoidance” criteria, and ask them to support open governance for Boulder. Publish decision dates, reliability concerns and financial risks. Matt Appelbaum 303-499-8970 AppelbaumM@bouldercolorado.gov KC Becker 303-218-8814 beckerk@bouldercolorado.gov Macon Cowles 303-638-6884 CowlesM@bouldercolorado.gov Suzanne Jones 720-633-7388 joness@bouldercolorado.gov Lisa Morzel 303-815-6723 morzell@bouldercolorado.gov Tim Plass 720-299-4518 plasst@bouldercolorado.gov
  • 24. What else can I do? E-mail me to receive an invitation to join a new “PLAN-Rational” 501(c)4 education and issues non- profit that represents consumer, business, and taxpayer rights in Boulder. Thanks for being involved in our local democracy! RogerKoenig@comcast.net