Susan Osborne and Boulder’s Clean Energy Takeover – Episode 5 of Local Energy Rules Podcast

Date: 22 Mar 2013 | posted in: Energy, Energy Self Reliant States, Podcast | 1 Facebooktwitterredditmail

In this episode of Local Energy Rules, John Farrell and Wade Underwood talk with Susan Osborne, the former Mayor of Boulder, CO, about that city’s effort to take control of its energy future. Thanks to Susan’s leadership and the vision of Boulder’s citizens, the city adopted a ballot measure in the fall of 2011 to break free from its incumbent utility, Xcel Energy, to pursue cleaner, local power on its own terms. As Susan tells us, Boulder didn’t set out to “blaze a trail,” but for a growing number of cities across America considering municipalization, there’s a lot to learn from their remarkable story.

Wade Underwood: Welcome to Local Energy Rules, a podcast about people putting together great community, renewable energy projects and examining how energy policies help or hurt the development of clean, local power. My name is Wade Underwood this week, John Farrell and I catch up with former mayor of Boulder, Colorado: Susan Osborne. Thanks to Susan’s leadership and the efforts of Boulder citizens, the city broke free from its franchise agreement with Xcel energy. In 2010, we asked Susan to recount the campaign with and talk about Boulder’s vision to produce clean local power. Here’s John and Susan now.
John Farrell: Well, thanks again for joining us. I’ve written a lot about Boulder on my blog and about the really interesting experience that you went through in particular during your time as mayor, but the city in general, you know, for folks who aren’t familiar with what’s been going on in Boulder, you’ve had a long term commitment in that city to tackling the challenges of climate change. And maybe you could sort of tell us, you know, where you were at as a city back when you came into office as mayor. I believe it was in 2007, if I’m not mistaken.
Susan Osborne: Right, right. That’s right, John. Well, we, I think as a city for at least a decade, if not longer have been looking for opportunities to really reduce our carbon footprint and do our little part to affect climate change. And, you know, while we know that there’s absolutely nothing that we could do in Boulder that will, in a significant way affect global climate change, we do know that we have an opportunity to be, to model some things and to try things and to be on the forefront of cities that are doing their part in reducing carbon.

So we had already adopted a climate action plan. We had a number of city programs, both in city buildings and in supporting efforts that businesses and individuals might take to reduce energy use in their homes and businesses. We had adopted Kyoto protocol and began doing the metrics as, as good as we could to track our reduction in carbon. Our electricity provider is Xcel energy, as I think it is in Minneapolis as well. We were looking at a renewal of our franchise agreement, something that only comes along every 20 years and had begun a study, looking had what our options might be, to renewing the franchise a year before I was elected to counsel, but actually concluding shortly after I got on council, was an opportunity to be Xcel smart grid city. And, the condition that gave to the city was that we drop looking at options to leave Xcel and instead, to become partners with them in a smart grid experiment right here in town. And we were promised a lot of things and I think both Xcel and the city appreciate that we were… things were probably overpromised to us. But we agreed and we dropped for the work on municipalization as, as we call it, looking to municipalize, our energy supply in favor of becoming smart city. So about 2007, right at the time I was on council, the council agreed to put on the back burner efforts at municipalization and work with Xcel on smart city.

John Farrell: Now, maybe you could just take a minute to explain, well, for those who don’t know, a franchise agreement is usually kind of a long term bilateral contract between a city and its utility. In Minneapolis, at least it, it governs the use of city right of way, usually in exchange for a fee. And I’d imagine it’s similar.
Susan Osborne: It’s the same, it’s the same here, John.
John Farrell: Very good. And, and you know, what maybe, maybe what would be useful for folks is to understand why was this city looking at municipalization as an option before this smart grid experiment with Xcel and, and I guess, you know, why did the city need to pick that up again? Without getting into too much detail, I think you could probably tell us how that experiment went.
Susan Osborne: Well, let me just back up and say, um, for every 20 years going back to, I believe 19 70, 19, and then 2010, we had franchise agree. We had these discussions internally to the city and also externally in the city about whether or not it was time to look at leaving Xcel or, or at least looking at what options did we have for looking at Xcel. And with each 20 year period, there were different issues that drove the discussion. In 2010 it certainly was climate change. And the fact that at least in Colorado, Xcel’s electric electricity supply is predominantly coal. And, over the strong objections of our most active citizens, Xcel went ahead and commissioned a brand new, large coal burning plant in Southern Colorado just a couple of years ago. In fact, it just got went online, I think in 2007.

And so there was a feeling that this was a company that didn’t share our values and was heading in a different direction. In earlier years was the thought that we could perhaps, by getting out of an investor owned utility, run a more efficient and, run a more efficient operation and have lower cost for our electrical energy. So, so there’s a whole history here of using our 20 year franchise agreement as an opportunity to look at what our agreement is with, with Xcel and whether or not we could do better ourselves. This in, 2008, 2009, 2010, both political figures and city council, as well as majority of our population came to a decision that it was the time to really get serious about exploring municipalization. And so that’s kind of how we got to where we got. But it is a 20 year opportunity to look at what are your options.

John Farrell: And, you know, getting back to the smart grid thing, Xcel essentially tried to say, let’s, let’s get you guys to put that aside for a minute and let’s try the smart grid thing kind of hoping maybe that it at you to forget about it, this.
Susan Osborne: Exactly well, exactly. And I think we were, the promises that were made were pretty enticing. And, if those of us that follow innovations in electric distribution understand that the whole promise of smart grid is, is pretty enticing. And, um, and we were really excited to be kind of a learning lab for this large utility, but it didn’t work out very well honestly. And I, I don’t think either Xcel or certainly not the city would, um, look at this experiment as a success, as Xcel ran into roadblocks and we’re not even sure what they were exactly because communication really broke down and got to be so difficult with them. As we struggle to understand what was happening with smart grid, we weren’t getting, we weren’t getting answers back from them.

And I think as the months went on and our citizens were expecting more and we were getting not much information, I think it really fired the whole look serious look at municipalization. And at some point I think we sort of just gave up on the smart grid and realized that it wasn’t gonna be a great benefit for either businesses or homeowners red in Boulder from a consumer point of view. There really is just about no benefit from, from smart grids. So what that did was drive us again to look seriously at municipalization and we did that and, how had a couple of citizen votes and, as of 2011, the citizens voted to proceed to look seriously at separating from Xcel.

John Farrell: Now you, I have to take issue with the act that you’ve sort of glossed over what in my mind is one of the most exciting parts of the story, which was, you know, you sort of with the stink of the smart grid experiment still fresh in the air in 2011, there was a big mobilization in Boulder to get this municipalization option on the ballot and a fairly big campaign around this whole issue. You know, you’re outspent by Xcel 10 to one, they dropped a million dollars trying to take this option off the table.
Susan Osborne: Yes.
John Farrell: Right. And I, you know, there were also, you know, you mentioned communication, you know, there was efforts by Xcel to try to give the city an alternative to municipalization, but then they were only willing to dangle that out if there had status quo was on the table. But finally it kind of all wrapped up in this, this vote in November 2011, a very narrow victory for Xcel.
Susan Osborne: Very narrow victory. But on the other hand, we were so outspent and the campaign itself was so hard fought on both sides, on Xcel’s part, on our part. But anyway, it was, it was a very exciting year and a lot going on, a lot going on. Including some fairly wild internet ads. And every time we turned around there was, when it’s kind of, when cost is no object, we really felt like it was a David and Goliath campaign.
John Farrell: I do have to, I do have to put in a plug for folks who are listening that Googling and finding Xcel’s ads from that campaign is a five minutes well spent and quite entertaining.
Susan Osborne: Yeah. Yeah. Yeah. And in some cases, the ads really backfired cuz they were so ridiculous that it got people pretty angry with Xcel. But in the end, what we put on the ballot was some very specific language defining narrowly what the conditions would have to be in order for us to proceed to municipalization. And, and they were things like that the rates at the time, that we would acquire the distribution system and the, we couldn’t exceed Xcel’s rates at the time. There was, were conditions about the revenue in addition to paying the debt, that there needed to be a, an amount, I think 25% above the debt payment that would be available for improvements to the system. We needed a plan to show how we could have a, a more green energy supply. And, and that was actually part of the ballot issue. So it was a very complicated ballot and I give great credit to our citizens for sticking with us on this and understanding what we were trying to do. But in the end, the idea was to make sure and to give citizens the assurity that we weren’t gonna go off the deep end and do something foolish and, and buy a distribution system that we couldn’t afford to maintain at the same level of reliability that we get from Xcel or better.
John Farrell: Now, speaking of the deep end, the city has been deeply investigating, you know, whether or not it could meet those requirements. And if I’m not mistaken, it was last Friday that they actually published a memo or a report, saying some rather positive things about what the city could accomplish by becoming municipal.
Susan Osborne: John, did you, did you take a peak?
John Farrell: I admit that I did.
Susan Osborne: Yeah. Yeah. So tonight there is a study session. You know, we imagined that there were, as we proceeded to study whether or not we could, we could municipalize and meet the charter requirements, in our charter requirements, that there would be some off ramps. And we are looking at the first opportunity for council to make a go, no go decision in April. And the memo that was released on Friday for the study session tonight is, looks, it does a lot of, of different possible options for a utility of the future. And it includes, there’s a baseline, but it also includes the possibility of working with Xcel. We’ve included in the memo, I think is a fairly obvious challenge to Xcel. We’ve asked them to give us some proposals of how we might work with them in a different sort of way in the future. And we haven’t gotten anything back from them and we’re hoping we will.
John Farrell: I have to quote from the, the Boulder daily camera story that I found, they highlighted five key points from the report. And I think they’re worth mentioning in, in the context of where Boulder’s trying to go. That one, it could offer lower rates. Over a 20 year timeframe, a municipal utility could maintain or exceed current levels of reliability, reduce greenhouse gas emissions by more than 50% from current levels and exceed the Kyoto goals within the first year, get 54% or more of its power from renewable resources and essentially create a model public utility that it would allow for innovation, everything from energy efficiency to customer service. I, I think that’s a pretty positive, that’s a pretty remarkable outcome from that report, frankly. And I think it’s, you know, you mentioned not getting a response from Xcel about reaching out to them. And I, I remember thinking, or I, my first thought there was how disappointing, because there’s a similar effort to what happened in going on in Minneapolis, a campaign called Minneapolis Energy Options. And I think folks here are looking for solutions, you know, up to and including municipalization, but it would really be interesting to see if Xcel could come to the table, not only in Boulder, but in Minneapolis and instead of making this some sort of confrontation again, an opportunity to create a model public utility that doesn’t involve kicking out the incumbent.
Susan Osborne: You know, and I think there are a lot of us that are really, um, really anxious to see if this is a possibility, in many respects. I mean, what, what one buys in, I mean is, is the distribution system, the local distribution system. We still assume that we would be buying power, probably buying some power, if not all, power from Xcel. Um, and you know, it’s a cost that you would love to not have to make. You could achieve your goals in another way. And, and I think that’s where a lot of our thoughts are, but we can’t. I mean, we need Xcel to tell us what they would do. We can’t, you know, anticipate what they might come up with, but it’s a very exciting report. And a lot of the citizens, we have a, a, a couple of different citizen organizations, from their perspective, the city has used very conservative assumptions and still the result seems positive. I mean, we know we spend a hundred million dollars a year or so in our relatively small town, small compared to Minneapolis, for sure. And so we spend about a hundred million, we know, somewhere around 15 million to possibly up to 20 million, our profits. And I think it’s that piece of the revenue that without municipal control, no longer an investor owned utility, we would be free to invest in the city and in cleaner energy and move forward into the future that way.
John Farrell: And Susan, what would you say to other cities that are looking to move forward on climate change?
Susan Osborne: We, we didn’t start out on this effort wanting to blaze a trail, but, to the extent that at, we blazed the trail at this point, you know, we’re, we are, we’re doing that and hopefully it’ll make it easier for other cities to find a path to look at whether or not municipalization is an option. And to begin to open up this discussion about, you know, can the current electric, investor-owned utilities change their business model enough so that cities don’t have to look at municipalization? I mean, I think we, right now are feeling like we’re blazing a path, and I think, you know, it takes courage and it citizens who are, both have information and, um are kind of up to the challenge of trying to figure this all out, along with the city government. But it’s been amazing so far and it’s been an educational experience for our citizens and has really hardened, people’s determination to be, become a place where we really are pushing what can be, um, cleaner energy, energy system in the future.
John Farrell: So Susan tell us that, you know, are you still involved in this effort? Obviously you’re up to speed at least as much as I am on what’s happening in Boulder, despite not maybe spending your time in nerd land like I do, reading about everything local power, but, how are you staying involved?
Susan Osborne: Yeah, well, I am involved with Clean Energy Action, which is a citizen group that is doing a lot of the educating of citizens. They did a lot of work, along with the city government, prior to the election and it goes on and has a lot of meetings every month. I typically read everything and go to meetings and talk to people and, and still very much an advocate for our municipalization effort.
John Farrell: Now, is there any chance we, you may not be aware, but the Minneapolis city council is up for, the entire council is up for election this fall. Is there any chance you’d consider relocating to Minnesota and, and bringing your vast experience of this issue to the campaign here?
Susan Osborne: Well, I don’t think so. Although I have to say it’s snowing here and cold and it probably is nice out in Minneapolis today, weather wise and here.
John Farrell: That’s something you can’t say all that often though, frankly.
Susan Osborne: Anyway. Well, when does Minneapolis’s franchise come up for vote?
John Farrell: Well in Minneapolis, we’re actually, the campaign here is looking at both the gas and electric utility franchises, Xcel’s franchise. They are the same, electric utility here is up in 2014 at the end of the year. And the Center Point Energy gas franchise is up at the end of 2015. So we’re, we’re ahead of the curve as, just as we need to be for this kind of conversation, which is great.
Susan Osborne: Yeah, you are, although it is something that takes a long time and franchise agreements. Anyway. I mean, it’s the once in every 20 year opportunity to make whatever changes a local government wants to make in their agreement with utilities. So it’s a big, it’s a big deal and deserves to be taken seriously, and I’m sure Minneapolis is doing that.
John Farrell: We are, and we’re doing our best. Well, Susan, thank you so much for being with us today. We really appreciate it.
Susan Osborne: You’re welcome, John.
John Farrell: Keep up the great work in Boulder. We’re always gonna be here in admiration of what’s been done and what’s going to be.
Susan Osborne: Come visit, come and visit sometime.
John Farrell: I certainly will.
Susan Osborne: Okay, bye John. Bye bye.
Wade Underwood: That was John Farrell, Wade Underwood, and Susan Osborne. Susan was the mayor of Boulder, Colorado, and currently works with clean energy action to advocate for municipalization in Boulder. For questions or comments, please email jfarrell@ilsr.org with local energy rules podcast in the subject. John’s Twitter handle is @johnffarrell. This podcast was published on March 21st, 2013. Thanks for tuning in.

 


The process started in 2003 when Boulder resumed studying the option to create a municipal utility.  With a climate-action plan already in place, and a local carbon tax already financing conservation and clean energy, the once nascent issue became a serious option in Boulder. Creating a municipal utility would allow for more control over the grid, reductions in greenhouse gas emissions and an increase in clean energy production. Xcel forestalled the city’s investigation when it offered to pilot its Smart Grid City in Boulder – a program that deployed advanced meters and fiber optic cables to improve information flow on the local electricity grid.

Unfortunately, the smart grid pilot came in over budget and underwhelming for the city’s residents. Despite further efforts to negotiate with Xcel to secure a lower carbon energy future, the city’s franchise contract with Xcel wasn’t renewed, and citizens replaced the lost revenue with an electricity tax to give the city time to study alternatives.  Municipalization was back on the table.

By 2011, it became clear that Xcel wasn’t willing to give the city what it wanted (a last-ditch offer was stymied when Xcel insisted that the status quo also be placed on the ballot).  The city put municipalization on the ballot in 2011 and the campaign began.  Xcel spent over $1 million dollars in a failed attempt to kill the ballot initiative, outspending local energy advocates 10-to-1.  In the end, Boulder citizens voted in November 2011 to part ways with Xcel, voting to form a municipal electric utility and to tax themselves to fund the investigation of whether this new utility could meet ambitious clean energy targets.

The effort continues, with city officials still talking to Xcel about options.  But the release of a recent report on municipalization suggests that the city can significantly increase renewable energy, reduce emissions, lower costs, and improve reliability. In other words, there seems little reason to settle for the status quo.

Like hearing from Susan Osborne?  Check out this video of her talking to Minneapolis citizens about Boulder’s efforts for clean, local energy.

This is the 5th edition of Local Energy Rules, a new ILSR podcast that is published twice monthly, on 1st and 3rd Thursday.  In this podcast series, ILSR Senior Researcher John Farrell talks with people putting together great community renewable energy projects and examining how energy policies help or hurt the development of clean, local power.  

Click to subscribe to the podcast: iTunes or RSS/XML, sign up for new podcast notifications and weekly email updates from the energy program!

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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.