BUSINESS NOVEMBER 3, 2011
Boulder Votes for Municipal Utility
By STEPHANIE SIMON
DENVER — Voters in Boulder, Colo., narrowly backed the creation of a municipal power authority to replace Xcel Energy Inc., the biggest electricity provider in Colorado.
In a related measure, voters on Tuesday also agreed to pay additional taxes, up to about $15 a household a year, to cover millions in expected legal and consulting costs.
The city can't cut all ties with Xcel right away. The shift to a municipal utility will take at least three years and could be derailed over issues such as how much Boulder will pay Xcel for its infrastructure.
The two sides enter negotiations far apart; Boulder officials have estimated the city could launch its own utility for less than $230 million, while Xcel suggests costs could top $1 billion. The final figure is likely to be settled in court.
"Although we are disappointed in the outcome, we know this is just the first step in a long process," said Ben Fowke, chairman and chief executive of Xcel. He said Boulder had underestimated its costs, and he expressed skepticism that the city would be able to match Xcel's rates.
Boulder city officials have said they would halt the switchover if costs grew too high.
Supporters of the move argue that a public utility would allow Boulder, a liberal college town, to embrace renewable energy and sharply reduce carbon emissions. Xcel relies heavily on coal-fired plants, though the company is converting some to natural gas and has committed to getting 30% of its energy from renewable sources by 2020.
Xcel spent nearly $1 million to try to defeat the Boulder ballot measures, outspending supporters about 10 to 1.
"People like a David-and-Goliath story, and that's absolutely what this is," said Ken Regelson, who led a community group supporting a public utility.
Nationwide, 16 new public power authorities have been formed in the last decade, including 13 that have taken over from private utilities. Nearly all serve communities of less than 10,000, said Ursula Schryver, a vice president of the American Public Power Association, a trade group. Boulder's population is nearly 100,000. The last large-scale municipalization took place in 1998, on New York's Long Island.
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