BOULDER’S ENERGY FUTURE Citizens’ Action Committees Technical/Financial Analysis Group and Public Education/Mobilization Group January 6, 2011
Why Are We Here? Xcel's 20 year franchise with the City expired on 12/31/10, providing new options. We want to create the best energy future for the City (in the middle of a rapidly changing energy market and global climate conditions).
The Next Step: Analyze Options Option “A&quot;: Do a new, different and short term Xcel agreement (if Xcel proposes an acceptable one) Option &quot;B&quot;: Do our own municipal power system (similar to our water and sewer systems)
Goals for This Analysis Identify the best financial plan Keep power rates stable Maintain energy system reliability Achieve a higher percentage of clean energy (solar, wind, hydro) in our overall power supply Create a more flexible clean energy implementation process (different than Xcel's current monopoly power)
Process For This Year Xcel proposal “A&quot; by Apr 2011 City proposal &quot;B&quot; in progress Jan through Jun 2011 (with several RFPs and reports) Council decision on the language for a ballot issue by Aug 2011 Public vote on ballot issue in November 2011
Technical/Financial Agenda (10 min.) Brief Introductions - Who are you? - Why are you here? (5 min.) The Technical/Financial Working Group’s purpose and overview (20 min.) R.W. Beck’s 2005 Preliminary Municipalization Study Presentations (15 min.) Discussion/Q and A on questions that need to be answered. Summarize/pick topics for future meetings then rejoin main meeting
Municipalization Is there an option other than Xcel? Yes, there is : Buy the distribution system Contract for operation and maintenance Buy power from independent power producers
RW Beck Preliminary Municipalization Feasibility Study of Boulder’s Electric Power System 2005
Overview Determine Total Cost = Value of Xcel’s distribution assets + cost of separation. Now imagine that Boulder has municipalized and do a free cash flow analysis …. 2. Revenue – Costs = Free Cash Flow (for debt payments) 3. Total debt payments over 20-30 years 4. Present value (PV) of principal of total debt payments
Big Question Is PV greater than the Total Cost ? If YES (by a reasonable margin), then municipalization is financially feasible.
Separation Costs Severance costs : $5 million Stranded cost : $20 million (Boulder revenue stream (annual) – competitive value of Boulder market (annual)) x number of years
Value of Xcel’s Assets Purchase price of distribution system OCLD (original cost less depreciation) RCNLD (replacement cost new less depreciation) Beck estimate: Between $93 and $123 million * *Does not include Smart Grid City. Favorable PUC ruling on Jan 5, 2011.
Conclusion Beck: “ The study suggests that there is a reasonable expectation that the City could acquire the Xcel distribution facilities within the City.”
Other observations “ Much of the information provided [by Xcel] was incomplete or unreliable.” “ The City should limit its municipalization efforts only to the electric distribution system.” “ The City should exclude generation and transmission assets from this municipalization effort.” “ All of the overhead construction observed appeared to be in very good condition with signs of continuing maintenance.”