Costs of Municipalizing

Wouldn’t it be expensive?
• There are three main cost components:
1. Purchasing the distribution system (poles, wires, transformers, substations, etc). This is a large amount but would be covered by bonds that are paid off from the revenue of the municipal utility, and not paid off by taxpayers. Boulder’s bond rating is AAA, so we could get an attractive rate. As noted above, Xcel customers are currently paying through their electric bills for Xcel’s bonds (at a higher interest rate with Xcel’s BBB+ bond rating). Xcel’s numbers and Boulder’s numbers are already fairly close on the cost of the distribution system.
2. Paying Xcel for “stranded assets.” “Stranded assets” means, essentially, the generation capacity and other hardware that Xcel built in anticipation of providing electricity to Boulder (in addition to the distribution system itself). Xcel claims this amount could be as high as $335 million. The City has strong legal arguments that it has no obligation to Xcel for stranded assets because Xcel has been on notice for years that the City was considering forming a municipal utility. Furthermore, Xcel is planning to renovate its coal plants in the near future and much of this renovation cost could be avoided if Boulder municipalized. It is in Xcel’s interest to make the “stranded assets” number seem big and scary. If the true number is too big, the City could take an off ramp.
3. Engineering and legal fees prior to running the utility. These are prudent expenses prior to starting a new business…similar to paying for a house inspection and title search before buying a house.
• The bottom line to all these cost components is really in the answer to the next question:
What would happen to my bill?
• Under best case and medium case scenarios, the impact should be minimal. If the impact seems unworkable, the City would choose not to issue the bonds and not to pursue municipalization.
• Here are the best projections currently available, from the preliminary modeling by a group of citizen experts, based on very conservative assumptions, with 68% CO2 reduction from Xcel’s current emissions and 39% renewables (vs. Xcel’s 18% renewables currently and its 2030+ commitment to 40% coal):

What if I already have solar? What about demand-side management (DSM)?
• The City would need to take over Xcel’s Solar Rewards and DSM programs with equivalent (or better) terms.