Xcel franchise agreement
Boulder is in the process of trying to renegotiate its franchise agreement with Xcel. The whole renewal process — which happens every 20 years — typically doesn’t elicit much interest. But this year, renewable energy advocates have come to see it as a way to take some control of the mix of energy that’s delivered to Boulder. (Cities that own their own electric utilities, like Seattle and San Francisco, have a much easier time of “decarbonizing” their energy supplies.) So environmentalists are pushing the city to drive a hard bargain with Xcel during the franchise negotiation. Others say that the city should let the franchise expire and explore new energy supply options. Here’s a look a those possible choices:
Boulder’s energy supply options
Franchise agreement: Boulder residents now get their electricity from Xcel Energy, which has a franchise agreement with the city. This agreement gives Xcel access to the city’s rights-of-way so the company can sell and distribute gas and electricity to all residents. In return, Xcel pays Boulder about $3 million a year.
The 20-year agreement between Boulder and Xcel expires in August. Local renewable energy advocates have pushed the City Council to drive a hard bargain when negotiating the new agreement by demanding that a larger percentage of Boulder’s energy come from green sources. Opponents argue that the franchise agreement does not have the scope to accommodate those kinds of requests.
Municipalization: In 1970, in 1990 and again in the last several years, city officials have considered municipalizing Boulder’s electricity supply, which would have created a city-owned electric utility. About 2,000 cities in the country already own their utilities, but new municipal utilities are rarely created, with only 10 coming online over the last decade.
To municipalize its electricity, Boulder would essentially have to take over the grid from Xcel, purchasing the existing infrastructure and running the distribution system. In 1970 and 1990, the city chose not to pursue municipalization, and instead, officials entered into a new franchise agreement with Xcel.
In the spring of 2008, the City Council again decided to drop plans to municipalize.
Community choice aggregation: This structure allows a city to purchase energy directly from power producers — such as wind or solar farms — but allows that electricity to be delivered by the existing utility, which in Boulder’s case would be Xcel. This allows cities, or other “aggregated groups,” to buy electricity from sources that support their energy goals without requiring them to purchase, own and operate the existing utility’s distribution system.
This type of structure is not yet legal in Colorado, but many renewable energy advocates say they’re working to lobby the Legislature to change the rules.