Commentary: Mull Xcel Energy’s Partnership Offer Carefully, Boulder

Municipalization comes with many challenges, but I have a few words of advice for Boulder’s city leaders about their utility’s latest offer.

I’m no stranger to the struggle with Xcel for cleaner energy. At the invitation of local advocates, I came to Boulder in 2011 to explore the economic potential of accelerating clean, local energy development. I found it so inspiring that upon my return to Minneapolis, I worked with many others to form Minneapolis Energy Options, a 2013 campaign that, by putting municipalization on the table, drove the adoption of the first city-utility clean energy partnership in the country. The Minneapolis partnership is the model for the proposed one in Boulder, I expect, and as a first-mover in the political fight behind the one in Minneapolis, and as a member of the 15-citizen advisory committee, I have a few words of advice.

First, be skeptical.

The history of Boulder’s efforts for a cleaner and more economically rewarding electricity system spans more than 10 years. It includes Xcel’s Smart Grid City experiment that came in low on benefits and high on costs. It includes countless negotiations with the utility before and after the 2011 ballot measure. What makes you think this deal has any more meat behind it than ones before?

Fundamentally, the rules of the electricity marketplace do not encourage Xcel Energy to meet Boulder’s demands. Rather, they encourage the utility to build more infrastructure it can rate-base, and then sell as much electricity as they can to squeeze out maximum shareholder return within the bounds of state regulation. So whatever the utility may say, its prime objective is defined by the rules it lives by and the shareholders it answers to.

There’s a reason that, when Xcel finally made a commitment to partner with Minneapolis, then-mayor R.T. Rybak wrote in his public reply that it “gave me real hope that we can seize opportunities that have been missed in the past.”

Second, be persistent.

The first two years of Minneapolis’ partnership were largely defined by data-gathering about the scope and reach of existing utility programs. It took two-and-a-half years to get Xcel to offer a new renewable energy tariff to allow Minneapolis to green its energy purchases, but just for municipal operations, and only for up to 25 percent of its total use. And our city will have to pay a $95,000-per-year premium.

Our city also has a goal of retrofitting 75 percent of single- and multi-family properties by 2025, but we’ve so far only secured a two-neighborhood community engagement pilot and no financing tool that will reach folks without prime credit scores. Getting a partnership was only a baby step; will it deliver?

Third, weigh the costs carefully.

Boulder energy director Heather Bailey candidly admits that municipalization is costly. But so is trying to squeeze renewable energy from a utility that’s not intrinsically driven to do it. Xcel Minnesota recently completed a request for proposals for new wind power plants, receiving nearly 30 bids for projects willing to sell to the utility at 2.2 cents per kilowatt-hour or less. But the Renewable*Connect tariff providing Minneapolis renewable energy is a premium of 3.3 cents. Why? Owning your utility might cost something, but buying from Xcel may cost more.

Finally, consider the whole picture.

Minneapolis and Boulder share a goal of developing local energy resources because they will deliver greater economic benefits. A 1-megawatt solar array provides about $2.5 million in economic benefits for construction and operation, but an additional $5 million in local revenue if it’s locally owned. An Xcel partnership might get you utility-owned clean energy somewhere, but Boulder would miss the opportunity to capture the full economic opportunity of transitioning to clean power.

I’m not at the table with your City Council, but given my experience sitting at a similar table with Xcel in Minneapolis, I’d recommend you look twice before you leap into partnership. Few things in life are free, and municipalization may be the investment needed to ensure Boulder retains the power to chart its own energy future.

John Farrell is a member of the Energy Vision Advisory Committee to the Minneapolis Clean Energy Partnership, directs the Energy Democracy Initiative at the Minneapolis-based Institute for Local Self-Reliance, and is President of Community Power, the organization that led the Minneapolis Energy Options campaign in 2013.