Municipalizing energy may be just as difficult as it sounds, expert tells Boulder audience
Friday, January 28, 2011 at 6:51 am
Boulder – Last year, Boulder City Council gave Xcel Energy the cold shoulder and rejected a renewal of a franchise agreement while the city explores cleaner options for its energy supply. Currently, the city is in the process of deciding if they want to move forward with Xcel to achieve their clean energy goals – or if they want to buy the power supply and infrastructure and run a municipal utility.
While the city completes a study exploring the feasibility of a municipal utility versus working with Xcel, concerned residents of Boulder are also taking part in the public debate.
On Thursday evening, Clean Energy Action hosted a community discussion where the director of wholesale energy for Municipal Energy Agency of Nebraska (MEAN) Kevin Gaden spelled out the complicated reality of municipal utility supply.
Nebraska is the only state in the country that can claim completely public ownership of its electricity grid.
MEAN is a political subdivision of the Nebraska’s state public utility service and provides electricity to hundreds of rural towns in Nebraska and neighboring states – including Boulder’s northern neighbor Lyons, CO.
While Gaden touched upon the opportunities and benefits a municipal utility could offer the city, he spent most of his presentation explaining an extensive laundry list of complications the municipalization would incur.
Acquisition of the power supply and infrastructure would present the first problem, as the city would have to find investors to buy bonds to finance the project.
Then the city would have to engage in the business of power supply and delivery in order to ensure safe, reliable and reasonably priced electricity for Boulder electricity consumers. According to Gaden, this means hiring an “energy czar”, training staff and lawyers and forming management boards to run the municipal utility. He said this could potentially add another 200 employees to the city payroll.
“Boulder is an educated city but you’re still going to need energy experts to run the show,” said Gaden.
Gaden also outlined the problems that peak demand optimization presents for utility providers. Power suppliers in the West fall under regulation from the Western Electricity Coordinating Council (WECC) and are required to fulfill energy demands of customer at all times and failure to do so means the supplier must make up shortages by buying power at extremely expensive rates from neighboring power providers.
“The electric power business is a very complicated business and it’s becoming more complex,” said Gaden.
In addition to outlining the challenges, Gaden also presented the benefits that municipal utilities could offer the city.
Private energy providers generally achieve a 10 percent profit margin and so if the a non-profit municipal utility is run efficiently and effectively, then the rates will be lower for customers.
The city would also have increased localized control and freedom in choosing what resources would supply Boulder with electricity.
However, the tension in the air was palpable as Gaden knocked proposed goals set by ambitious citizen groups in Boulder of 80 percent renewable energy by 2035.
“Eighty percent renewables is like shooting past the moon,” said Gaden,
Still with all the drawbacks, Gaden told the audience that he was confident that the city can create a municipal utility if it has the will.
“You bet I think you can do it,” said Gaden. “But it will require you to take the driver’s seat and it won’t be easy.”
Clean energy advocate Allison Burchell told the audience that in addition to the philosophical questions, it is important to critically examine all the practical questions a municipal utility would present. “We must look at all aspects of the puzzle, not just the aspects we wish to look at.”
Reactions in the audience to Gaden’s presentation were mixed.
Former city council member Steve Pomerance said he left the discussion more convinced than ever that municipalization presents the best path forward for the city. “By looking at the other municipal utility models, it’s clear that Boulder also could achieve our goals in an efficient and cost competitive manner if we work at it.”
Boulder resident Thomas Moore, after listening to Gaden, was not convinced that a municipal utility would be a practical step forward for Boulder. “The undertaking seems too complicated to be feasible. If I were in charge I’d scrap the idea of a municipal utility and start working seriously with Xcel to achieve our goals.”