Why 310 Matters to (970): A Tale of Two Votes

(Promoted by Colorado Pols)

Tuesday the latest political assault on Boulder, Initiative 310, will be decided.  I'm confident our Founding Fathers wouldn't be impressed – this isn't the way a democracy should function.  In 2011, a majority of Boulder residents voted to take back local control of their city electric utility – defeating Goliath, Xcel Energy, who spent $1 million in an effort to preserve their $34 million in annual profits they extract from the community.  Defeated but not deterred, the "Billion Dollar Bully" returned in 2013 (after initially denying any connection to the campaign)  with a vengeance and yet another ploy to reverse democracy.  And if the most current assault on the residents wasn't enough, the Colorado PUC has now weighed in with a decision that both sides agree will continue to make the local control of their utility increasingly difficult.

On the same day, northern Colorado secessionists head to the polls to decide on separating themselves from the state, often mentioning how "Boulder liberals" are negatively affecting their way of life.

There are no shortages of opinions on both issues by locals and non-locals, conservatives and liberals, clean energy advocates and coal apologists.  Those who characterize Boulder as "Twenty-Five Square Miles Surrounded by Reality" , others who see it as an epicenter of the energy transition already well-underway around the globe. Those who think Boulder should "negotiate"; others who understand that negotiating with this public entity if an exercise in futility.  Those who believe there is a War on Rural Colorado; those who see everyone as a participant in our state economy.

Boulder was the birthplace of Windsource, which later became a wildly successful, customer-supported green energy program at Xcel.  But not before they were scoffed at by utility executives and assured "no one in their right mind would pay a premium for green energy".  Boulder was the birthplace of the idea and political support for Amendment 37, the successful, 2004 citizens-initiated ballot that changed the trajectory of Colorado energy policy – and ultimately caused billions of dollars of investments in wind farms in rural Colorado.  But not before they were scoffed at by Xcel Energy,  Tri-State Generation and Transmission, the Colorado Rural Electric Association and Intermountain Rural Electric.

It shouldn't have to be this way. Xcel Energy enjoys a monopoly on the vast bulk of the Colorado energy load.  With the oversight of the Colorado Public Utilities Commission and supported by it's Office of Consumer Council, our state provides a framework intended to give Xcel the assurance of long-term service, recapture of their capital expenditures and guaranteed profits.  In return, at least in theory, the PUC determines the trajectory of the utility's activity and how it meets the expectations of the wishes of Coloradans.  And we are quite generous to Xcel's bottom line: nearly half of Xcel's profits from it's eight-state service region comes from Colorado rate payers.  I've never understood why Xcel's returns, paid for by Colorado rate payers, rise to levels of "Wall Street returns".  These returns generally indicate a level of risk associated with the activity.  Their returns are guaranteed; something those in the financial sector would suggest be treated more like a high-rated bond.

And I'm perpetually puzzled at our Public Utilities Commission's support of extending the asset life of the state's coal plants.  Put any environmental issues aside; this argument is about economics.  We're spending a quarter-of-a-billion dollars on upgrades to the Brush Pawnee coal plant alone.  A plant in an area drowning in natural gas and wind resources.  A plant dependent on what is now considered a dangerously overstated national coal supply. The future of a coal-based power sector looks bleak. Just a decade ago we believed coal would provide the majority of our energy supply for the foreseeable future, that we were running out of natural gas and that renewables would only play a minimal role in our energy diversity.  Today, every one of those predictions turned out to be dead wrong.  As the prominent, West Virginia  Charleston Gazette opined recently:

"As we've said before, West Virginia's leaders should lower their protests about pollution controls, and instead launch intelligent planning for the profound shift that is occurring in the Mountain State's economy."

And while we're busy spending hundreds of millions of dollars putting band-aids on the Xcel coal fleet, the un-regulated Tri-State Generation and Transmission Cooperative is busy buying coal mines and attempting to amend federal law via the Farm Bill to build what would likely be the last coal plant to be built in the United States. 

So why should a vote on Boulder's Initiative 310 matter to residents in my area code (970)? or (719)? Boulder's success will pave the way for current franchises to determine their own future.  Rural Colorado will be a direct beneficiary of a successful Boulder campaign.  In northeastern Colorado, rural electrics such as Highline Electric could forge new partnerships with area municipalities.  Sterling, currently an Xcel franchise city, could benefit from a new partnership with the rural electric that surrounds them.  Sterling transformed its economy and Junior College with the development of the Peetz Wind Farm – becoming a model, rural city electric could buoy their efforts to attract new industry to the area.  In the San Luis Valley, there is a similar opportunity with the City of Alamosa and Adams State College.  Again, an Xcel franchise city surrounded by the San Luis Valley REA service territory; an area drowning in solar resources and progressive farmers.

This Tuesday won't bring finality to either cause.  In Boulder's case, a victory will mean "next steps": condemnation, legal battles, and further modeling.  For a successful secessionists vote, a long, nearly impossible political journey and probable legal battles will ensue.  With either scenario, change is in the wind; the question remains whether it will be a headwind – or one more "beneath our wings".   And the opportunities for rural Colorado await.  Instead of scoffing at Boulder, we should be standing by their side.  Instead of scoffing at environmentalists, our rural legislators should be standing side-by-side with the conservation community to further increase our state standards – rural Colorado is the beneficiary.  Instead of scoffing at the the Denver-Boulder corridor as if it's an "Us v. Them", lets starting acting like the interdependent citizens that we are. 

What happens with 310 matters in area code 970.  And 719.  We aren't short on opportunities, but they won't happen in a political vacuum. Our state portfolio standard should be viewed as a floor, not a ceiling.  It's time to address a plan for stranded assets. It's time to encourage the cooperative use of infrastructure assets between the rural and non-rural communities.  It's time to recognize the value of distributed generation.   We've met our enemy.  It's not who you think it is.

 

 

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  1. DavidThi808DavidThi808 says:

    And for more info on the pros and cons for 310, please go here. I should have 4 – 6 paras from both sides up on that page tomorrow.

  2. DavidThi808DavidThi808 says:

    Michael – one problem you don't address at all is this – can Boulder competently manage a power company. Based on this, I think the answer is likely no.

    • MichaelBowmanMichaelBowman says:

      I didn't go down that road as I think the proponents will continue to have to make their case.  Defeating 310, I believe, will let that process play out in a better way.  I understand half-a-million dollars is a lot of money, but let's put it in context: Xcel pulls over $30 million in profits annually from the Boulder franchise, and they haven't demonstrated they are any better at managing money:  they blew $44 million on "Smart Grid City".  On top of that, nine price increases in seven years – in part to pay for the debacles like Commanche 3.  Boulder already has a history in running a billion-dollar infrastructure/enterprise pretty well: your water utility. 

      We are entering a phase in the utility world where drastic change needs to happen.  They delivered economies of scale under the old paradigm: central power.  The transformation of these infrastructures should mean the utilities will give us those same economies by the utilities providing system management – not centralized, electron generation.  In the perfect world Xcel would open up their grid and provide those services for a fee while they rapidly de-carbonize.  That's not happening.  We build billion-dollar-plus coal plants in Pueblo – we put bandaids on the legacy fleet.  While we drown in solar, wind and energy-efficiency resources that go unused.  And they're cheaper.

      Like any change, it may be messy.  So are all of the alternatives; so is business-as-usual.  I tend to believe Boulder could pull this off.

      • MADCO says:

        Of course a municipality can run the electric.

        If Lansing, MI and Cedar Falls, IA can do it, I think Boulder could too.  Hell, if need be, they can contract with a management company, say someone already in the biz (Not Excel). As long as they spend less than, oh, say, $30 million annual on the contract, it's still a win.  

        And yes, everyone will predict failure and waste.  But $33mm/yr is a fair margin of error, even without a source as awesome as Hetch Hetchy.  And even with some underused, misplaced rich guy parking spaces.

         

         

        • davebarnesdavebarnes says:

          Even the right-wing nutjobs in Colorado Springs believe in municipal ownership, https://www.csu.org. Socialism for everyone.

          • MichaelBowmanMichaelBowman says:

            There are a total of 29 municipal utilities in Colorado. Colorado Springs Utilities is the largest and serves 192,746 customers.  Just up the road from Boulder are three muncipal electrics: Fort Collins serves  64,694 customers; Longmont serves 36,683 customers and Loveland serves 30,911.  The proposed Boulder facility would serve approximately 48,000 customers.

            Lyons Municipal Light and Power was formed in 1974 and serves 1,056 customers.  

            The saddest municipal electric story in the state is the Lamar story.  But their problems stem from a set of decisions just the opposite of what is happening in Boulder: they took a natual gas plant and decided to convert it back to coal.  Their costs have quadrupled and they could arguably be facing the potential of bankrupting the utility. 

            It was a case of local control and a governing board seemingly incapable of understanding how the future was shifting beneath their feet.  A town that experienced a renaissance from being the hometown to Colorado Green, Colorado's first commerical-scaled wind farm – now with a bleak energy future because they went back  An area drowing in class 5 wind, solar and natural gas resources.  And dare I say, the result of a conservative ideology that dismissed the idea of renewable energy and a belief that human-induced climate change is a myth.

            • DavidThi808DavidThi808 says:

              For the 4 biggies, are utility rates lower and/or is their carbon footprint lower than Xcel in the same area?

              • MichaelBowmanMichaelBowman says:

                CoSprings has low rates but are facing the decision of whether to band-aid their 50-year old coal plant that sits downtown or retire it and move to renewables and efficiency. So for them – low costs, high carbon footprint. Fort Collins prides itself on its infrastructure (everything is buried) and low costs. They just implemented a feed-in-tariff program that sold out in the first week. I'm not sure on costs at Longmot -Loveland.  I suspect they have some WAPA allocations. If so, their footprint would look good.  I'm on my mobile and on the east coast right now so it's not terribly handy to search the info but happy to do it first thing in the morning 

              • MichaelBowmanMichaelBowman says:

                David – One of the best examples of a successful large, municipal electric is Citizens Public Service in San Antonio.  I was part of a group in 2011 that included the head of CPS, a retired CIA director, PanasonicUSA, two members of the DOD facilities in the area and myself [as a representative of the local company I was contracted to at the time] to pitch the "re-invention" of CoSprings as the energy innovation leader in the US – with San Antonio as a "sister city" in the partnership. 

                Unfortunately, the politics of the CoSprings area proved to be insurmountable to change.  They have a weak mayorship [not the person, the process.  The Mayor wanted a different outcome] and strong council.  One of the most vocal advesaries for continuing the operations of the old coal plant downtown was Bernie Herpin, the man recently elected to replace Senator Morse. 

                Bernie lives in the camp of "real mean burn coal".  And he is a man devoid of any capacity to grasp the opportunities the CoSprings area had before it.  If he is equally devoid of vision in his duties as one of our newest state senators, he'll keep the 2014 session very entertaining. 

      • DavidThi808DavidThi808 says:

        I agree that a lot of municipalities can run an electric grid. I just question if Boulder specifically can. But you do raise a good point, Xcel is pretty incompetent too. So maybe the question is which entity is the lesser fuck up.

        • DavidThi808DavidThi808 says:

          ps – Michael, I added your example of Xcel blowing 44 million to my page. Let the voters decide which is the lesser fuck up 🙂

          • MichaelBowmanMichaelBowman says:

            Thanks, Dave!  And there is a lot more to that story – enough to probably make it "diary worthy".  You may recall that the technology partner they picked was from out-of-state.  Missed by the ever-so-diligent Colorado press was the fact Xcel had the opportunity, but rejected, to use a Colorado partner in the project.  Spirae, a spin-off to Colorado State University, sat just up the road – and that technology is managing the Danish grid.  [both then, and as we speak].  And doing it sucessfully.  It's almost easier to make the case that they designed the project to fail.  They could then make the case that it was too early to transition.  It was easier to make the arguments for both the investments they recently chained us with [Commanche 3] and the case for bandaids to their exisitng fleet.  And unfortunately, as these experiment often go, there is absolutely zero accountability to managment or the shareholders for their decisions.  They can fiddle with the discount rates of coal and tout large supplies in to the future to make their case – and shackle us with ever-increasing costs with no consequence to them personally.  At least in the case of local control you could oust a board.  In the case of publicly-traded IOU's, they'd likely end up with a big bonus or a golden parachute.

            I'm an equal-opportunity consumer here, so the same goes for Tri-State.  They've blown a reported $70-90 million dollars on the Holcomb plant, and their purchase of the ColoWyo mine came with a laundry list of future obligations to our ratepayers that will be unkind to us.  I don't know how much they spent on that ridiculous War on Rural Colorado campaign, but again – it was a futile, useless attempt to fool John Q. Public. [it was reported to be near the $1 million mark, but I have no confirmation on that].

            That doesn't mean I don't trust them to physically manage the system well. It does, however, call in to question their ability to adapt to a rapidly changing landscape with technology and local, cooperative needs; who/what/where/diversity of supply issues seem to be out of their grasp of comprehension.

          • MichaelBowmanMichaelBowman says:

            Here's a study by Siemens that modeled an 80-megawatt, renewables-only test grid to determine whether Germany could, in fact, run on 100% renewables.  The answer was yes

  3. kwtreemamajama55 says:

    Solar brain-picking alert:

    Why weren't there any bidders on building solar plants on public lands in Colorado?

    The Bureau of Land Management was opening up the bidding, and nobody came. Why?

    a. Poor regulatory environment? (So conservatives AND the Solar Energy Industries Association)

    b. Hard to finance ?

    c. Uncertainty about how the towns around the proposed plants will react?

     

    San Luis Valley isn't that far away from me. Beautiful place, would be great for solar. Why isn't anyone biting?

     

     

    • MichaelBowmanMichaelBowman says:

      Part of the problem is lack of transmission out of the San Luis Valley; that is further complicated by the fact that the 800-pound gorilla in the room, Xcel Energy, is playing hardball with people wanting to put solar in the system.  They've achieved thier obligations under the renewable standards – and as I stated above, they [and the PUC] see our standards as ceilings and not floors.  Tri-State plays a complicated role in the SLV transmission, too.  It's hard to figure out whether we have an actual War on Rural Colorado because they don't need any more energy in their system – or whether they are deficit in their energy production and must build a coal plant in Kansas.  Two diametrically opposed positions .  Both of which…they hold.

      We should be focused first on maximizing roof-top solar across the state – that way we make the best use of infrastructure investments we've already made. We have a lot of room for development in that sector.  But, again, Xcel has for all practical purposes killed that program.

      If the PUC had rejected the notion that Xcel and Tri-State put bandaids on their legacy coal fleet and force the transition – we'd have all kinds of opportunity and activity right now.

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