Are There Risks in Municipalizing?

What are the risks of pursuing the municipalization path?
• To have invested a lot of up-front money on engineering studies and legal fees and then not complete the municipalization process that would repay the effort.

What are the risks of NOT municipalizing?
• Dependence on Dirty Coal. Xcel is committed to over 1800 MW of coal-fired electricity for the foreseeable future—50% coal even in 2020. With this much coal, there are times when wind energy is “curtailed” – that means turning off the wind in order to burn coal. Xcel’s customers have to pay not only for the coal electricity generated but also pay the wind farm owners for the time that their turbines are shut down.
• Global Warming. The large CO2 footprint of coal power plants is a major cause of global warming with all of its risks.
• Costs.
o The inevitable price increases in coal (going up at about 10% per year; rates went up 7% in the first 6 months of 2011 alone).
o In the coming years Xcel plans to spend almost $400 million to refurbish its coal plants. If we don’t municipalize we would have to help pay for this.
o Also, Xcel is planning an additional $4 billion in capital investments in Colorado. This is likely to lead to future rate increases.
o Any carbon tax would add a further burden.
• Control Out of Our Hands. Xcel is regulated by the Public Utilities Commission (PUC), a group of three unelected officials. The PUC awarded Xcel about two-thirds of the money they spent on the failed SmartGridCity, even though the cost was three times what Xcel projected.
• Paying for Profit. Xcel is a for-profit monopoly; its number-one priority is making money for its shareholders. We also pay for Minnesota-based Xcel’s corporate overhead.
• Business Risks. It doesn’t make good business sense to agree by default to a long-term contract with Xcel that gives us essentially no control, especially when energy technology is changing so rapidly. We would miss the opportunity to take advantage of competitive bidding to supply us with energy and management services.
• Lost Opportunity. The opportunity to municipalize will not occur again for at least a decade, and realistically not for 20 years. Remember: A “No” vote terminates the process.
• Not taking advantage of the benefits described above in “Why municipalize?”