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Boulder It’s Time to Get Serious About Our Energy Situation – Call City Council

As many of you know,  Ballot Measure 2C, to “explore” municipalization, passed by 1.8% of the vote in November 2011.  The idea is that Boulder would investigate taking over responsibility for our energy needs and terminate the relationship with Xcel.

I can’t claim that I’m an expert on all such energy matters, but it sounded like a bad idea.  The notion that a town with less than 100,000 people would be able to efficiently provide electrical service (especially when service interruptions occur) seemed unlikely.  Of course the issue became more political than analytical quickly.

When the measure passed, City Council promised a publicly-available decision plan with decision “off-ramps” to terminate proceeding with municipalization.  These off ramps would be for things like financial feasibility, electric power rate equivalence, and equivalent reliability to existing Xcel service.

This Thursday, on November 15, 2012 the City Council will vote on these off ramp metrics.  In other words, this is the framework they will rely on to determine whether or not Boulder is going to go-it-alone on power.  And I feel these metrics are very flawed and bias the decision to separate, rather than unbiased to get us to the correct decision.  I’ve spent time with several folks in the community who are experts on these matters and who are spending their own time and money analyzing these metrics.  They are convinced they are flawed and I’m convinced their scientific method is sound.

Make no mistake about it.  If Boulder screws this up, the city probably goes bankrupt in my opinion.

From independent analysis and reference, the “off ramp” decision metrics currently proposed do not represent the financial risks, potential reliability impairments, or increases in electric power rates that would result from a city municipalization of Xcel’s assets.  Alternatives have been provided by knowledgable citizens, a city council member, and the Boulder Chamber of Commerce.

We seem to be speeding past the OFF RAMPS in the drive toward municipalization.  Backing up on this busy highway is unlikely.

What should you do?

Write your Boulder City Council an e-mail or letter stating that you do not support a vote for adequacy of the “off-ramp” decision metrics proposed by Heather Bailey (which are the current metrics).  They do not represent our risks of greatly increased electric rates, reduced reliability, and unsupportable bond debt due to creating a Boulder municipal power enterprise. 

Please vote NO on proceeding with inadequate decision criteria November 15.

council@bouldercolorado.gov

Call council members who have supported proceeding with the current recommendations:

Matt Appelbaum          303-499-8970  appelbaumm@bouldercolorado.gov  

KC Becker                  303-218-8814  beckerk@bouldercolorado.gov   

Macon Cowles            303-638-6884  CowlesM@bouldercolorado.gov   

Suzanne Jones           720-633-7388  joness@bouldercolorado.gov   

Lisa Morzel                 303-815-6723  morzell@bouldercolorado.gov   

Tim Plass                   720-299-4518  plasst@bouldercolorado.gov   

I remain convinced that we can achieve transparent governance and a rational outcome for the municipalization movement – but only if we get concerned citizens and businesses involved in our local democracy. This is worth taking time out of your day and making your voice heard.  

 

 

November 12th, 2012     Categories: Frustrations, General    
  • http://www.myrealnameismatt.com Matt Cullen

    Thanks for posting this. There has been far too little coverage given the importance of this decision.

    One note – the email address you have for Matt Appelbaum is incorrect. His address is:

    appelbaumm@bouldercolorado.gov

    • jasonmendelson

      Thanks!

      Sent from my iPad

  • http://www.facebook.com/serface Joel Serface

    Jason —

    Your intuition is consistent with others that have looked at other municipalization plans in the past — In short, the IOU has unlimited capital and PUC-allowed tools and actions to combat a municipalization plan that could take years and often the IOU wins. That being said, the question of offramps should be how much will it cost to win in order to even build our own utility. This alone will not bankrupt the city, but will put a burden on it.

    In terms of your other point — core competency — there are many cities that have successfully managed their own utilities, many times more effectively than their IOU counterparts, and have used the utility for economic development and other community building purposes while maintaining lower rates than other utilities in their respective states.

    Given where the market it going — where renewables and efficiency win over costly central generation with volatile and increasing fuel prices (effectively a new business model as a utility delivering quality of power rather than delivering electrons), I would think you would want to see the plan and the numbers before drawing a conclusion. This “innovative” business model could indeed deliver greater benefits to the city, its creative DNA, and support its values while delivering low cost renewable electricity that it is a winning plan. I haven’t seen this plan yet, but I am willing to hear what they have to offer. Given my recent experience in large scale renewable energy development, I truly believe there is an economic case in their favor if they can make the financing, timing, model, management, and governance work out — beyond winning the battle with Xcel.

    Cheers,
    Joel

    • jasonmendelson

      Thanks for the thoughtful response. I hope all is well with you.

      I don’t think that I’m smart enough to know what should be done, rather I know there should be a solid scientific process and I don’t feel like there is one here.

  • Tom

    Jason,

    You should be talking to both sides before sounding alarms. Have you talked to the city or proponents? Why do you seem to believe that they are happy to fail?

    You might notice that the opponents you have talked to claim there are better alternatives but don’t bother to make detailed proposals to the city with any of the information they insist the metrics proposed must have. The only proposals I have seen are vague one liners that the suggester wants the city to persue. They usually ignore state law and limitations the state regulatory system puts on the city unless the city has a municipal utility.

    The latest attempt to rewrite the democratically passed charter changes passed in 2C is this claim that new criteria must be added but the criteria were already debated in the election. The proposed metrics provide sufficient data for demonstrating whether or not charter requirements are met for proceeding past the first off ramp. Yes, 2C passed with 50.9% voting in favor but don’t forget the 10 to 1 spending to defeat it. Opponents certainly would have insisted they had a clear victory if they had won by this margin. So, if you believe in the democratic process, it is inappropriate to ignore the outcome of a well debated vote by Boulder citizens.

    • jasonmendelson

      Yes, I have talked to folks in the city, including city council members who feel the process is fundamentally flawed and will be proposing alternative metrics that are based in real science, not politics.

      Detailed proposals have been offered and will be further detailed at the meeting this week. I am not trying to overturn 2C. I think it was the wrong outcome, but I purposely said that I was no expert in my post. What I am an expert in is having a good scientific method and the current process doesn’t pass the test. I am not ignoring it, nor am I inappropriate.

      • Tom

        I do understand that you wish additional decision measures and requirements but how is that a “good scientific method”? I’m not trying to be difficult. I’m an engineer and I don’t understand your use of that term in this context. All the projects I worked on carefully chose the metrics appropriate for the task at hand. Since the task in this case is whether the charter requirements are likely to be met or not before we move on to the next step in the process, the metrics as proposed seem sufficient to me. I guess I am trying to understand what you are expecting additional metrics to do. I understand that you feel they will help avoid bankruptcy but that is not the question being considered at this point because that information won’t be available in this step so they seem political to me at this point.

    • Tom

      …continued

      The cities of Colorado Springs, Longmont and Fort Collins are near our size and have quite successful municipal utilities. In fact, there are 29 public power entities in Colorado and more than 2000 in the country. The power industry is changing quickly quickly while no one believes starting a utility is easy, it has been done successfully recently by other cities and counties.

      It is understandable to be vigilant in making sure this is a good idea but prejudging the process because we cannot get all the answers up front all at once, seems unreasonable to me. A failed utility helps no one. So, please engage all sides and voice your concerns but please don’t prejudge the result.

      • jasonmendelson

        I have engaged both sides. And the other cities successes or the amounts spent on 2C are irrelevant to my argument. If we screw this up, the city is bankrupt. End of story. We need to make sure that the metrics are well defined. That is all that I’m arguing about.

        • Tom

          You suggested that it was not appropriate for a city of our size to do this so I was giving you examples of cities that have.

          I was not saying you are inappropriate at all. I said that attempting to add requirements to the democratically passed charter requirements is inapropriate. The metrics need to serve the purpose of whether or not the charter requirements are likely to be met before we proceed to the next step to get the data needed to answer some of the issues you are concerned about. Insisting we have the data before we can get the data by adding metrics will not change that.

          Your concerns are important. No one wants this to fail, certainly not the proponents of doing the analysis. A bankrupt utility helps no one so constructive criticism is useful and well thought out alternatives are welcome too but not if the intent is to simply derail the municipalization analysis because the democratic result is unacceptable to some. I’m not suggesting you are doing this but some appear to be.

          You mentioned that alternatives would be presented. Do they provide all the information you feel should be included?

          • jasonmendelson

            I do feel what will be presented tomorrow / next are fair metrics to make a decision, yes.

          • Tom

            I was actually speaking of the alternatives to municipalization you mentioned, not the metrics. Will the proposed alternatives meet the same standards by measuring the metrics they will propose in the additional metrics?

          • jasonmendelson

            I’m only talking about the metrics for the off ramp. This isn’t a discussion about alternativest o municipalization.

  • PragmaticBob

    Jason,

    You say that the off ramps are inadequate/designed to force the city to municipalize regardless and you ask your readers to take your word for it and oppose the criteria being proposed. Do you really think this is a take their word for it vs take your word for it thing? The best thing you could do is post links to the arguments for and against and explain SPECIFICALLY why you’re against. Let people make up their own minds….

  • Fletcher Richman

    I sent an email out to the city council, and received the following response:

    Dear Fletcher,

    The City of Boulder supports a rigorous and well-rounded dialogue about whether the creation of a municipal electric utility is the best way to achieve our community’s energy goals. Over the past several months, I have made numerous presentations and met with community members who have a wide range of perspectives on this important issue. I have been impressed by the depth of knowledge and the questions from both those who support municipalization and those who oppose it. We are working with industry experts and stakeholder teams to conduct the detailed analyses necessary to be able to answer questions at the level of detail we have received.

    Earlier this week, however, a community member gave a presentation that included several incorrect assumptions and assertions. This presentation has been widely circulated and resulted in some passionate letters to City Council. I would like to provide my perspective in advance of a council discussion this Thursday evening.

    First, I would like to address the concern that the set of metrics the city team is recommending to council is inadequate to fully assess the risks associated with this possible path. It is important to remember that City Council and a majority of voters already approved a baseline set of metrics, which was included in the Charter language. According to the Charter, City Council would have the authority to issue bonds if the following criteria were met:

    · Rates cannot exceed Xcel’s rates at the time of acquisition.

    · Revenues must be sufficient to pay for operations and debt, plus an amount equal to 25% of debt payments.

    · System reliability must be ensured.

    · The city must have a plan to show it can reduce greenhouse gas emissions and increase renewable energy sources.

    · The city’s information must be verified by an independent, third-party analyst.

    While some supporters advocated after the election that these were sufficient for the city’s exploration moving forward, I believed it necessary to seek more specificity and community consensus about how we would measure any strategy’s ability to achieve each of these points. Through a series of public discussions over the past several months, it has become clear to me that we need to answer two separate questions:

    · Can the city create a municipal utility based on the Charter criteria; and

    · Should the city create a municipal utility?

    The “should” question is critically important because both City Council and potential customers of a city electric utility have a right to know what extra value a city utility would bring to the community’s goals of increasing renewable and other sources of clean energy, stabilizing rates, and maintaining or improving reliability. We also need to be able to articulate how long it would take before a city utility could achieve the progress the community seeks. No one wants to spend money to simply recreate the system that Xcel Energy currently operates.

    The set of metrics staff is proposing would result in detailed data to answer fully the question about whether the city “can” municipalize. But the analysis will not stop there. When city staff presents its recommendations to council in February and March 2013, we are planning to include 20-year projections that take into account rates, reliability and the resource mix that could be achieved over this period of time. It is during this level of review that I anticipate your questions will be addressed.

    Some questions have been raised about how these proposed metrics were developed and how public they have been. In early August, the city convened a diverse focus group of large utility customers, representatives of the Boulder Chamber and several activists to discuss possible measurements and vet proposals. The group agreed upon the metrics that are coming before council. The metrics have been shared on the project website (www.BoulderEnergyFuture.com), in the Energy Future Today monthly newsletter, and with more than 450 community members who have signed up for e-mail updates about this effort. In addition, I have discussed them at several well-attended public presentations, and council received information about them at public meetings on July 24, Aug. 28, Oct. 9 and Oct. 16.

    I have the utmost respect for the community members who participated in the process to develop the metrics. As we continue to conduct the critically important parts of our analysis, we have invited individuals with specialized knowledge and expertise (as well as diverse views about municipalization) to help vet assumptions and define the data we need. Specifically, we have formed four working groups: Financial, Reliability, Resource Modeling and Communications and Outreach. We will be providing bios of the working group participants in a memo to council in advance of a study session scheduled for Dec. 11. I think you will share my enthusiasm about the collective experience and wisdom we have at the table. In the spirit of transparency, the work these groups produce will be made available to the public on our website.

    In closing, I want to assure you that a vote about these metrics is NOT a decision point on whether to proceed with municipalization. The first actual decision point is expected in March 2013, after our more detailed analysis is done. The city’s study is taking time because Xcel Energy is not providing data that could assist with our efforts and because we are striving to reach the specificity necessary to answer both of the key questions before us as a community.

    If council gives a go ahead in March to continue with the exploration of municipalization, the city would work to formalize its legal plan and ask potential witness consultants to prepare written reports of their findings. This plan would be presented to council during the third quarter of 2013.

    In the meantime, I welcome your continued communication. Let us know if there are additional questions you want to see addressed as we seek to explore whether a city utility would offer additional value to Boulder. Please provide comments and questions using the online form provided at http://www.BoulderEnergyFuture.com. All feedback received through this forum is being shared with the staff team, as well as City Council.

    Thank you.

    Sincerely,
    Heather Bailey
    Executive Director of Energy Strategy and Electric Utility Development

    • jasonmendelson

      Yes, this is political spin to the max. Note that her job is essentially to move us off grid I think.

      Sent from my iPad

      • Fletcher Richman

        And then I got this:

        Fletcher,

        As an electrical engineer with 40 years of experience and a council member for the past five years, I share your concern with the metrics for municipalization as drafted by staff.

        I have proposed a set of five amendments that would add significant clarity and transparency to the business case that staff will prepare over the next few months. Council will make a go/no-go decision in March on municipalization. I think we need a great deal more information than we have and I am doing what I can to assure that we get it.

        I am very skeptical that Boulder could make a municipal utility work. I don’t think it is economically viable. And I don’t want the city to spend the next five to ten years fighting Xcel in legal proceedings to condemn their grid. We will be wasting time and money and causing uncertainty in the business community.

        Our businesses live on electricity. We need better reliability than we have gotten in the past, not uncertain reliability from a startup power company. We also need surety of electricity rates for businesses. What would a Boulder City Council of the future do to your electricity rates? Who knows.

        Ken Wilson

        Council Member and Bell Labs systems engineer, retired

        • jasonmendelson

          This is legit.

          Sent from my iPad

  • http://www.ideapete.com/ pete baston

    Hi Jason

    Now I have a heck of a lot of respect for you and Brad
    but you need to do some of the same due diligence in this project as you do with your investments.

    This Boulder initiative is a simple numbers problem about raising the bar

    For every 100 electrons that is generated at a power plant 1 yes thats right, one gets to the end user so we have 99% inertia rate no matter what your energy base is . Most power
    companies including Xcel rarely perform at better than 4 on a scale of 10 and 50 / 60 % efficiency is unheard of in the industry thats based on waste and they get paid on that through PRC mandate. Its not really their fault its how they where created. As the infamous
    FUD presentation by Roger points out quite correctly Boulders primary service grid is woefully designed mainly meant to be a transmission onward waypoint area. If you think that ugly plants like Valmont and spaghetti wires stir the soul then my friend I worry about you ( solutions here maybe http://smartenergyportal.net/article/power-ugliness-our-industry )

    Micro-grid Smart-grid is coming no matter what Xcel and its sister companies do with their strum and drang dance and you would be amazed at the amount of their employees who want in on this and have offered their support to this project. The recent smart-grid debacle shows whats wrong with large based utilities trying to upgrade as they move
    into the future. For Christs sake they where trying to capture the same data specifics that Edison and Insull called standard in 1888 but no matter how much money they threw at it it they failed and now blame technology thats standard usage in Europe to ramp up efficiency.

    Boulder is basically trying to see if they can get efficiency up to 6 or 7 if they make 8 all doable, then companies like yours get a bonanza, which will also create a formidable boost to the economy. I conduct due diligence on energy companies across the US and I can tell you their team is putting together one of the best I have seen in a long long time and its being looked at with great interest by other utilities, who have also offered help, some way bigger then Xcel .

    Due diligence and transparency , well some of the tech company support is looking at this
    in a very different way from the utilities normal historical transparency of the future will look like this http://www.ideapete.com/BEconcept.html right now.

    So my challenge to you is simple , > You and Brad have awesome reach at foundry so
    why not jump in the water and develop some real time best practice
    metrics and mirror them in real time over the project see what its really doing. Make that work, before we do, and you will have an elephant size company . If you want a real big picture outline of where all this goes its here http://www.ideapete.com/risonanza.html

    Be well and best to you both for the festive season.

    ( : ( : pete


    ————————————–
    Pete Baston
    IDEAS. id est: People Processes Technology
    http://www.ideapete.com
    http://bonaqualitatis.blogspot.com/
    Tell: 303-578-0886
    Mailto:pete@ideapete.com

    • jasonmendelson

      Pete, I think you are missing the picture.

      You are arguing why 2c should have passed. I’m not debating that. I realize that our current energy delivery system has many issues.

      I’m worried that Boulder City Council is not creating an accountable framework for deciding if going off grid is the right decision for our community. Getting this answer wrong means we are bankrupt.

      Too many engineers, whom I trust, are telling us that the qualifications for the off ramp are not well thought. Also, not a single Boulder council person responded to our inquiry, as the relied on Heather Bailey who appears to have the job of moving us off grid, not determining what is the correct decision.

      We simply want metrics that appear to be transparent and scientifically sound. From what I’ve seen so far, I’m not impressed.

      • http://www.ideapete.com/ pete baston

        Jason , Reminds me of the infamous film Cool Hand Luke and the great saying “What we have here is a failure to communicate ”

        Big picture lets see In my profession, we work with world class utilities to do just that not only current ( pun ) but future 10 / 20 years which is difficult for a management with yearly financial focus and explain in detail the risk and reward synopsis. . The big picture is the supply system on how energy is delivered and whats wasted and when Boulder examined its franchise and asked Xcel to undertake a major process of improvement initiative the answer was a blunt NO.

        The relationship under that franchise was purely command control with the city being at the bottom of the heap and what the city wanted and still wants is a partner partner relationship with whatever energy company they deal with and yes there are more that the local one available..

        The primary opposition to any discussion on this was the unfortunate position that the ex CEO took in that “If we do that with Boulder we have to do that with everyone so it isn’t going happen ” Rather sad as opportunities abound. But thats now history with senior management shift and a new world awaits.

        At every meeting I have attended a regular conversation is ” How can we develop a partner partner relationship with Xcel ( or any utility ) and many other muni ventures have done.

        If you think Heather is focused on just one directive you are sadly misinformed and she is like myself regularly reach out to our energy partner municipality friends ( including Xcel ) and discus how to improve the supply chain of energy especially with Boulder as a real test case and what the primary best decision goals need to be so you obviously have not met her.. Heck even major class German companies have offered support as they do what Boulder wants every week ..

        Rather that go into the whole misinformation bit about why Micro – Smart Grid is not off the grid lets set us a meeting at your place with some of your concerned engineer friends ( maybe even some from Xcel ) and Ill get Heather and a a few other utility and risk people and lets as you say bring some transparency to this. ( Reply to my email on this if you want or call me )

        Totally agree on the metrics and we are working on that every day and any info or requirement ideas to improve the quality of life for all in Boulder is more than welcome . Hint we are getting great, do it right, metrics from out off state utility muni partner progarms . Send their concerns to me and Ill get them addressed and forwarded , This is what came out of one committee idea http://www.ideapete.com/BEconcept.html and we can slot them into that or build a separate website or base-camp and bring them to light.

        Be well

        ( : ( : pete