Envisioning An Innovative Local Electric Utility – Episode 15 of Local Energy Rules Podcast

Date: 6 Feb 2014 | posted in: Energy, Energy Self Reliant States, Podcast | 0 Facebooktwitterredditmail
Laboring to keep more of its energy dollars at home, community members in Boulder, CO, decided that they needed some numbers behind their vision of a cleaner energy utility.  Listen in to the podcast to hear Ken Regelson describe how the remarkable results of Boulder’s citizen-driven energy model have given them power to stand up to the incumbent electric monopoly with a vision for a 21st century clean energy system. We interviewed Ken via Skype (apologies for the random construction noise) on Dec. 5, 2013.

Ken Regelson: We felt that we could tell a story to the public about an electric utility that could in fact be very innovative into the future.
John Farrell: This week, we learn how ordinary citizens can mount a sophisticated challenge to the energy status quo. Listen in and hear Ken Regelson of Boulder, Colorado explain the remarkable results of the citizen driven model for a clean energy system in his hometown and how the city is working to make this vision of a local innovative clean energy utility into reality. I’m John Farrell, and this is Local Energy Rules, a podcast sharing powerful stories of successful local, renewable energy and exposing the policy and practical barriers to its expansion.

Ken, I have to say, when I first saw the results of your energy modeling, I was blown away. Could you tell our listeners some of the bottom line conclusions of the remarkable model that you and other volunteers put together for Boulder?

Ken Regelson: The key elements of what we found were that we could do 50% renewable energy starting out on the new electric utility, and that we could do that at rates and reliability that were competitive with what we were being charged now. And this led to more than a 60% reduction in greenhouse gasses, in part because of the conversion of, Colorado, we have a lot of coal power right now, almost 60% and much of that would’ve been converted into natural gas. And then of course, by doing 50% renewables, we’ve got the other big part of the reduction. This allowed us to do things like meet the Kyoto protocol, all very early in the process. And that we felt that we could tell a story to the public about an electric utility that could in fact be very innovative into the future.
John Farrell: Now, tell me why is it that you would do a model for the city’s energy system? Boulder has done a lot of really impressive things with renewable energy and around climate change. Why do you need to model its electricity system in order to make any further progress?
Ken Regelson: I think the key issue for us came about in late 2010 and a small group of us that had been meeting for a number of years on the topic of how do we move forward in clean energy. A number of us had actually worked at public utilities commissions around renewable energy or around fossil fuels. And you know, when you’re at the public utilities commission, Xcel shows up with their experts and they say, well, our model says, and you know, you get a little while of that and you kind of get tired of it. And you say, well, I, we, because when Excel says our model says invest and such, you know, we can only do this much renewables. Well, it’d be nice if we could respond to that. And so then we said, you know, gee, there’s a lot of bright people in Boulder. What would happen if we got a number of people together and, and said, let’s try to do our own modeling?

And we ended up with about a core of about seven or eight people, and maybe as many as 25 other people that contributed in some way to both the technical modeling and the financial modeling, and many of them retired professors. And one case, we had a professor of accounting that worked with us on the financial modeling, to people that are in the field of renewables, wind, and solar, to other kinds of technical experts. We had a hydrologist working with us. It was a remarkable group of people. And then we found that there were some tools that we could for very reasonable money. And the key tool is Homer Energy System. So that’s kind of the background and the reason to do it is because you really wanna be credible when you stand up in front of a group of people and you say, well, we think we could do renewables. Well, you don’t sound very credible and you stand up and you show a graph and you say, our modeling shows that based on these assumptions that we can do 50% renewables at rate parity with Xcel. Then you have a very different discussion with people that made it so that when we talked, people could listen. That Xcel would say things and we could come back to them and say, no, that’s not what the modeling says. This is what the modeling says based on these assumptions.

John Farrell: So you have this remarkable model, as you mentioned, you know, a dramatic increase in renewable energy for a city owned utility over the electricity offered by the incumbent Xcel energy, a significant reduction in greenhouse gas emissions. Do you think Boulder will be able to follow through and create a city owned municipal utility that would in fact be able to achieve some of these remarkable results that have been shown in your model?
Ken Regelson: You know, the city really needed to take our modeling and using that as sort of a start. And they said, we need to do much better. And so they had far more resources than we had, they put together community groups where Boulder has all these incredible experts. We had a person that was retired from the public utilities commission, Warren Wendling. And he was the chief engineer of the public utilities commission for 30 years. And he was on our citizen community team that was looking into the technical modeling. We had a whole number of other people, international experts in liability that happened to live in Boulder and care about what Boulder is doing. Then there were the paid consultants and all these people put the system together. And then we had the actual modelers themselves using all of these assumptions that came from other experts.

So for wind, we went to the National Renewable Energy Laboratory, NREL, for wind data on what we thought wind prices were going to do. And we went to the wind industry. And when the city was asking these people, the city gets a lot different responses than just a citizen group. The final piece of the puzzle. Remember, we’re trying to say, can the city really do this? And can the city really acquire the system and do the renewables? And the city hired a third party independent reviewer. His name was Gregory Booth and he’s president of Power Services. And he made this presentation back after looking at absolutely everything that the city did, financial, legal and technical. And what he said is very interesting. This is a quote from him: “I’ve never seen anyone do an acquisition study in such detail and with as many components as Boulder has, as I have performed a billion dollars worth of successful acquisition pro projects. And I promise you that those models didn’t come anywhere near the level of study and risk assessment that Boulder’s does.” Put it another way: the city gets an a plus on their modeling effort from this independent reviewer.

John Farrell: So there are other cities that are considering this switch to a city owned utility, including Minneapolis, Minnesota, Santa Fe, New Mexico, they’ve already published a first cut feasibility study that includes some of this energy modeling around renewables. You know, you just mentioned that Boulder was able to do this A plus very rigorous effort. Do you think this is something that other cities are capable of doing, as you mentioned, there was this citizen led effort and you had some remarkable resources in terms of individuals that lived in the community and were committed to this and had expertise. Can it be replicated in other communities?
Ken Regelson: We think so. From the very start of our looking into clean energy, we knew that if we fix Boulder perfectly, if we got to zero carbon emissions, we didn’t do much. The city of Boulder’s about a hundred thousand people, about 45,000 electric meters. And yes, that would be great to have an example, but the more that we did that could be followed by others, the better off we would be in terms of what the world needs, which is a very fast switch to renewable energy. So we consciously documented as we went all of the parts of this. So we, in fact, the modeling tool that we use is called Homer Energy. We have a document that lists every single assumption and where we got that assumption from, and this is a citizen modeling group and the actual Homer file itself. So you get to start with that information to begin with.  This is a huge step up. We are very happy to provide our own time to other groups that are interested in doing this modeling. So that’s part of the answer.

The other thing that we learned is a little bit harder to understand when it comes down to it, the key issue that the modeling shows was that we could do a lot of renewables, but to do that, we had to not have base load power plants. And so this is a key issue. This is true, no matter where you are, renewables are variable. When the sun’s shining, you have solar and when the sun’s not shining, you don’t. And so in some ways, the fact that we’ve done this much extensive modeling, the way that somebody should look at it is to take our modeling and say, what has to be different? Not we have to start from the very beginning and then can people, well, yes, definitely. We did it. Yeah. We have some bright people, but every time I talk to other places to other cities, I have talked to people in Santa Fe and Minneapolis, both I’m incredibly impressed at how much people know about these topics already. Things that we didn’t know when we started. And so it is possible to do this and what we’re doing.

John Farrell: So you’ve put together a remarkable model and the city has gone a step further. Other cities like Santa Fe have already gotten some at least first cut modeling done. Is that good enough to win what has, politically speaking, become quite a battle against the incumbent and for profit utility monopoly?
Ken Regelson: Well, I think the answer is, yes, I’d say that with a little bit of reservation, because you never know exactly what’s gonna happen in the future. We’ve had now three political votes in Boulder. The first was in 2010 and there, we asked our citizens to replace the franchise fee. The franchise fee is a small fee. Not that the electric utility pays, but that everybody that writes a bill electric, it’s like a tax almost, you pay it to the electric company. The electric company pays it to the city. What is it for? Well, when you have an electric company inside the city, there are times that you use city services for the electric company. For example, if a power line goes down, it falls on a road. You need safety services, you need the police right there. Well, that costs money. Well, that’s the purpose of this money, but the utility doesn’t pay it.  The people of, in our case, Boulder pay that what we did is we said we don’t want to have a franchise. The franchise is a 20 year contract that commits us to Xcel energy. We wanted to have time to look at the possibility of a clean energy utility of the future. And to do that, we couldn’t sign the contract while our contract was due and we needed to replace the revenue for the city. So we replaced the franchise fee called it occupation tax, same money, just a different name on the bill. We actually passed two initiatives in 2011. One that said the city council is authorized to move forward with municipal electric utility. If we can show that we can do rates reliability that are competitive and renewables, that are better than our existing electric utility. And the second initiative was to say that we need a, a small, additional tax in order to pay for the studies that were done, cuz the studies, we wanted the studies to be as comprehensive as possible.

And both of those passed and their, Xcel energy outspent us 10 to one on that. They did not want these to pass. And then most recently now in 2013, Xcel energy placed onto the ballot by paying petitioners to come through and get signatures onto the ballot an issue that would’ve killed municipalization. And there we won with 69% of the vote, even though Xcel outspent us three to one in that campaign. So the answer is, is it enough to win? If you can tell a good enough story, not just the technical story, that’s what the modeling helps you with. And the financial story again, modeling helps you with that, but you also have to tell the story of how a city can run a utility and do very well at it. Most cities run their own water utilities and do extremely well. Why is an electric utility any different? So can we win? Well, we have been so far. Will we win for the future? That remains to be seen.

John Farrell: So Ken, you mentioned before that you have put together some resources from your experience doing the energy modeling that other people can happen to use. Where can folks go to learn more?
Ken Regelson: So for the specific question of municipalization, there is a website with actually very little detail on it, but we hope to put more information there in the future called muni101.org. So muni the numbers, one zero one, .org. On my website, energyshouldbe.org., there’s a tab for delve as in delve deeper to go deeper into the issue of modeling. And there you’ll find three videos, right at the top of that webpage that talk about modeling, how says, why do we model, what results did we get from the effort in Boulder? It actually shows part of the modeling team and one of the slides. Uh, and I think there are three videos and they add up to about 14 minutes. There’s another video that has more than 3000 views on it, which talks about this very specific issue of why base load coal and nuclear don’t with renewable.  The title is to allow lots of renewables, baseload coal and nuclear must go. So that’s a three minute video and then there’s a much longer video. That’s a video introduction to a spreadsheet that you can download from that energyshouldbe.org webpage. The delve deeper page, that talks about, sorry, the spreadsheet is a Microsoft Excel spreadsheet and it gives you modeling data actual how much electricity do we need to generate called load data and for Boulder, solar and wind data that you can manipulate to actually see what happens as you increase the amount of renewables in an electrical system over the course of a year.
John Farrell: That was Senior Researcher John Ferrell speaking with Ken Regelson, one of the leaders of the citizen led energy modeling effort in Boulder, Colorado. You can see the results of Boulder’s energy model and its potential to transform the local energy economy at ilsr.org. You can also learn more about the advantages of municipal utilities at muni1010.org or about the electricity system of the twenty first century at energyshouldbe.org. Until next time, keep your energy local and thanks for listening.

 


A Remarkable Clean Energy Opportunity

The story of Boulder’s quest for a cleaner electricity system and its fight for local control are becoming legend.  Listen to Episode 5 of Local Energy Rules to hear the story firsthand from Boulder’s former mayor, Susan Osborne. Ken’s tale begins mid-way, when the need for data became a paramount part of the local effort.

The results of Boulder’s new energy model are nothing short of transformational. The technical and financial model of a new energy system was projected to:

  • Offer lower rates to residential, commercial and industrial customers, not just on “day one” but over a 20-year time frame;
  • Maintain or exceed current levels of reliability, and future investments could enhance dependability;
  • Reduce greenhouse gas emissions by more than 50 percent from current levels and exceed the Kyoto Protocol goals within the first year;
  • Get 54 percent or more of its power from renewable resources, such as wind, hydro and solar;
  • Create a model public utility that would allow for innovation in everything from energy efficiency to customer service.The energy model allowed the citizens of Boulder to “tell a story to the public about an electric utility that could be very innovative into the future.” (1:30)

Why Model?

In late 2010, the grassroots advocates of a cleaner energy future in Boulder were tired of getting rolled by Xcel Energy at the state’s Public Utilities Commission. The utility would show up, and in response to the city’s request for more clean power development, respond with, “our model says…we can only do this much renewables.”

Ken and others formed a team of 20 or more individuals to create an alternative model.  The key was a modeling software tool called HOMER energy system, and it allowed the citizen-led effort to offer a credible alternative to Xcel’s intransigence.

“You want to be credible when you stand up in front of a group of people…when you stand up and show a graph and you say ‘our modeling shows that based on these assumptions we can do 50% renewables at rate parity with Xcel.’  Then you have a very different discussion with people.”

Is Their Energy Model Good?

At this point, it’s not just a citizen-driven effort.  The city of Boulder has invested its own resources in making the model more robust: challenging assumptions, refining numbers, etc.  They’ve had the original volunteers, but also experts like retired electrical engineers and former commissioners from the Public Utilities Commission.

The city also hired a third-party, independent reviewer – Gregory Booth – to review the legal, technical, and other aspects of Boulder’s model.  In his words: “I’ve never seen anyone do an acquisition study in such detail and with as many components as Boulder has.  I have performed $1 billion of worth of successful acquisition projects and I promise you that those models didn’t come anywhere near the level of study and risk assessment as Boulder does.

“Put another way,” says Regelson, “Boulder gets an A+ on their modeling efforts.”

Can Other Cities Do It?

We knew that if this only happened in Boulder it wouldn’t be enough, says Regelson, and that fighting climate change would be more.  That’s why they heavily documented their assumptions and their modeling process so that other cities could follow in their footsteps.

The other lesson, the key issue of modeling is that we can do a lot of renewables, but it’s the end of baseload power plants.

“Yeah, we have some bright people.  But every time I talk to other places, to other cities – I have talked to people in Santa Fe and Minneapolis both – I’m incredibly impressed by how much people know about these topics already, things that  we didn’t know when we started.”

Is a Good Model Enough to Win?

Boulder has already had three political votes that have ratified their interest in a cleaner utility future. In 2010, voters agreed to replace the franchise fee revenue from Xcel Energy with a utility “occupation tax,” basically just a different name for the same revenue, to allow the city to study municipalization.

In 2011, the citizens voted to authorize the city to proceed with municipalization, if it could meet benchmarks for renewable energy and cost-effectiveness.  Again they won, even though Xcel outspent them 10-to-1 in the campaign.

And in 2013, Xcel Energy paid petitioners to put a measure on the ballot to kill municipalization.  Again the city and its citizens won, this time with 69% of the vote, even though Xcel outspent them 3 to 1.

What’s the secret?  Ken explains, “If you can tell a good enough story, not just a technical story…a financial story…of how a city can run a utility and do very well at it.”

“Most cities run their own water utility and do extremely well.  Why is an electric utility any different?”

Resources

For more information on municipalization and the electricity system of the 21st Century, see:
EnergyShouldBe.org
Muni101.org

 

This is the 15th edition of Local Energy Rules, an ILSR podcast with Senior Researcher John Farrell that shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion. Other than his immediate family, the audience is primarily researchers, grassroots organizers, and grasstops policy wonks who want vivid examples of how local renewable energy can power local economies.

It is published twice monthly, on 1st and 3rd Thursday.  Click to subscribe to the podcast: iTunes or RSS/XML

Photo credit: Zane Selvans
Thanks to ILSR intern Jake Rounds for his audio editing of this podcast.
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John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.