B&M Strong, Smart Sustainable - Modernizing the Grid

Colorado Conditionally Allows Boulder to Proceed with Planned Purchase of Xcel Assets

Describing its decision as providing the City of Boulder with a “path forward” in the city’s quest to offer municipally provided electric service within its corporate boundaries, the Colorado Public Utilities Commission has ruled that, contingent on three particular conditions, the municipality may go ahead with its plans to seek an order of condemnation through which to acquire certain electric distribution facilities from Public Service Company of Colorado (a subsidiary of Xcel Energy). 

Boulder’s first attempt at municipalization came several years ago, after the city embraced new energy and environmental policies calling for clean, green electric supply. Alleging that Xcel’s current generation portfolio did not include enough renewable energy to satisfy the city’s goals, Boulder embarked on a mission to acquire Xcel’s plant and facilities in and around the city, so that the municipality could be guaranteed that its target for renewables could be achieved. 

As part of its municipalization effort, the Boulder City Council had conducted were designed to facilitate a takeover of Xcel’s in-city electric service. Notably, however, when Boulder formally approached the commission for authorization to acquire the Xcel assets, the list included more than just the utility’s distribution facilities located in the city proper. 

Rather, Boulder asked for permission to take certain assets outside of city limits in unincorporated portions of Boulder County. The municipality also indicated that it wanted not only all overhead and underground distribution lines, but also distribution transformers; all secondary and service conductors; fiber optic and other communications equipment; meters; easements and other associated property rights; and streetlighting systems, among other plant and appurtenances. 

Not surprisingly, Boulder’s plan met with strong resistance from Xcel. The utility argued that to be required to transfer facilities located beyond city limits would interfere with the company’s territorial rights as conferred under the state’s doctrine of regulated monopoly service. In an initial ruling in late 2015, the commission sided with the utility on that point, holding that Boulder was not entitled to any Xcel assets used by the utility for the sole purpose of providing service to customers outside of city limits. 

The commission ruled that under state law, a certificated utility cannot be compelled to sell its assets to a municipality pursuant to eminent domain, only to then be required to pay the municipal utility to wheel power using the same facilities so that the utility can still serve those customers it was retaining. The commission further found Colorado’s joint use statute to be applicable. 

The commission said that that law is aimed at assuring that one utility may share in the use of another utility’s plant and system, rather than construct duplicative facilities of its own, if such sharing is found to be in the public interest. It determined that Boulder’s municipalization initiative met the criteria for such shared use. 

After the 2015 ruling, Boulder and Xcel continued to disagree on the extent of the assets and facilities that the city could purchase. In May of this year, however, the municipality submitted a revised plan of acquisition to the commission. After weighing the options presented, the commission ultimately approved the city’s plan, but only in part and subject to several conditions. 

In particular, the commission rejected Boulder’s request for authorization to assume ownership of Xcel’s substations and all equipment and property located inside such substations. The commission said that in the interests of security and reliability, it would be inappropriate and premature at the present time to allow the city to purchase the substations. 

Instead, the commission told the municipality that the only distribution assets it could purchase from Xcel were those located outside of the substations. And even then, the commission said, Boulder must meet three prerequisites: 

  1. Reaching of an agreement with Xcel as to permanent rights of the utility to place and access facilities in Boulder when necessary for continued utility service to the company’s customers; 
  2. Filing of a complete, accurate, and detailed list of the actual assets to be acquired; and 
  3. Development and submission of an agreement setting forth the terms of payment from Boulder to Xcel during the separation process. 

Despite the commission’s decision granting conditional approval of Boulder’s municipalization plan, the commission emphasized that it had not accepted all aspects of the city’s plan. The commission stated that it was denying a city proposal that Xcel be ordered to finance and construct the associated separation work. The commission said it had similarly declined to require colocation of facilities at Xcel’s substations or to mandate joint use of electric poles. Re City of Boulder, Colorado, Proceeding No. 15A- 0589E, Decision No. C17-0750, Sept. 14, 2017 (Colo.P.U.C.).