Environmental Engineering Reference
In-Depth Information
investor-owned utilities such as Xcel are legally responsible for generating profits for
their investors and shareholders. Despite calls to internalize costs associated with fossil
fuels such as air and water pollution and direct health effects, many of these costs remain
external to current accounting schemes, and do not directly figure into the profits/loss on
a company's balance sheet. While Xcel has invested heavily in renewable resources (Ceres
coal, which still makes up roughly 56 percent of its Colorado energy generation. Boulder
residentsareattemptingmunicipalization asameansofchangingthefundamentalpremises
that have prevented Xcel from responding to their desire to even more strongly emphasize
renewables in its energy generation mix.
Critics argue that munis have an unfair tax advantage over private utilities, are risky
because they cannot diversify their portfolios, lack the large economies of scale that
private companies have, and demonstrate government interference in what should be the
private sector. Advocates, such as Boulder, respond that munis are more responsive to their
consumers, are more able to diversity their energy mix, and provide opportunities for local
employment. In Boulder's case, the ability to incorporate more renewables into the energy
mix is a primary motivator.
Boulder is a profitable customer; one that Xcel has been unwilling to let go without
extracting a high payment to reimburse them for their investments in infrastructure. It
franchise agreement between the city and Xcel expired in 2010, and they began negotiating
the new agreement in 2008. Conflicts over the smart grid pilot that Xcel had hoped would
resolve some of the city's concerns and opposition to a new coal plant that Xcel began
building in 2005 combined to crystalize Boulder's dissatisfaction into a municipalization
plan. In 2005, Boulder commissioned a municipalization feasibility study to estimate how
much the process would cost the city, but noted that the amount due to Xcel would be
determined by a FERC proceeding (Browning
2013
). The legal wrangling over relative
financial responsibility continues, withXcel arguingthat thecity isresponsible formillions
of dollars in stranded costs and the city arguing that Xcel had no legal right to expect its
agreement with Boulder to continue beyond 2010.
Although Boulder's 2011 municipalization referendum passed (as have additional
referendums since then), the legal maneuvering continues. In 2013, Xcel's Director of
IT Infrastructure and Smart Grid maintained “that Smart Grid City was completed
successfully, but he acknowledged how the company failed to educate its customers”
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