A piece largely referencing Boulder, talking about cities trying to wrest control of their electricity systems from major utilities. At this point I think I’ll probably find any media coverage of this process hopelessly one dimensional, but still, it’s nice to know they care.
Minneapolis is Xcel’s home town, and a much bigger market than Boulder. The city is now talking about allowing their franchise agreement to lapse, in order to pursue more aggressive renewable energy policies than state law will allow if they’re served by the monopoly utility. The article gives a nod to Boulder’s votes over the last two years to explore the alternatives to franchise agreements, including the formation of a municipal utility. It’s great to see another much larger city looking at its options, and as far as pushing the overall utility business model to change, it’s great to see this happening within Xcel’s service territory. There’s a threshold out there somewhere, beyond which the current arrangement is no longer stable, and even the utility will start begging for something different. The faster we can get there, the better.
Arizona has decided to include externalized costs like water use and pollution in their utility resource planning process, with the predictable result that they’ve selected a resource portfolio heavy on renewables and energy efficiency, and light on coal. Hopefully other states will follow their lead!
Yale Environment 360 has an interview with the CEO of NRG Energy, a fossil fuel based, nationwide independent power producer (IPP) that sells their 22GW of generation into the wholesale market. He’s bullish on solar PV, much less so on wind. No mention of solar thermal. He believes storage will be vehicle batteries. Net metering policies and pricing will be key to broad adoption. Given the lack of forecast energy demand increase, he sees different sources of energy (esp. coal, gas, solar, wind) having to compete for market share for the first time. It’s important to note that as an IPP his position and incentives are much different from those of regulated utilities like Xcel, who certainly do not want to “keep [their] rates to [their] consumers down and get these electrons onto its grid at a very cheap price”. And I think regulated utilities still make up a large majority of electrical generation in the US.
Ringmaster John Tayer (center) introduces the municipalization contenders. From left to right: Bellemare and Miller (against), Weaver and Regelson (for).
Plan Boulder County put on a well structured, and well attended debate of the utility municipalization question Monday night. The forum pitted Ken Regelson and Sam Weaver from Renewables YES! against David Miller, representing the Boulder Smart Energy Coalition (which recently sent out a glossy Fear, Uncertainty and Doubt leaflet to many Boulder residents) and Bob Bellemare of UtiliPoint International — a consultant hired by Xcel Energy.
First each side got to make a 10 minute introductory statement or presentation, followed by a series of pre-submitted questions, posed by the moderator. Finally, written questions from the audience were vetted by someone from Plan Boulder and passed on.
Ken and Sam’s intro attempted to get across the basic results of the citizens modeling effort their organization has put together. Among them:
- We can achieve rate parity with Xcel while reducing CO2 emissions by 67%, using natural gas and a 40% renewables mix, if we assume startup costs of $250M to $400M.
- Coal and renewables simply can’t play well together on the same grid. The renewables get curtailed because coal fired power takes a long time to turn on and off.
- Xcel’s business model, based on large existing investments in coal, can at most accommodate a 15% reduction in CO2 emissions.
David Miller was supportive of meeting our Climate Action Plan goals, but seemed unsure whether going after the emissions due to power generation was the best strategy, suggesting we might instead focus on demand side management, energy efficiency, and the use of RECs. As with the flyer circulated by his organization, most of the points he made focused on cultivating uncertainty. He was apparently choosing to ignore, or unwilling to accept the conclusions of the City’s consultants and the citizen modeling effort. Two points he made which I thought did warrant real concern:
- About 75% of Boulder’s energy consumption is commercial/industrial, and that constituency isn’t directly represented in the voting public.
- It is important that we not let the municipal utility’s revenues get entangled with the City’s general funding, as it sets up all kinds of poor incentives for the organization, and leads to an opaque city revenue scheme.
All in all Miller seemed earnest, but less informed than he ought to have been. Maybe that’s not his fault — based on the Plan Boulder flyer, it looks like Craig Eicher, Xcel’s community affairs manager for Boulder, was supposed to be sitting in his seat.
Bob Bellemare on the other hand seemed like a more practiced, more active disinformer, mostly trying to seed doubt in the minds of listeners. Among his recurring points:
- Hardly anybody ever succeeds in this process. Maybe one city every decade nationwide.
- Once you vote in November to begin, it will be very difficult to actually stop the process, regardless of what “off ramps” you’ve supposedly put in place. The only way it ever seems to happen is by voting in a new city council.
- Your cost estimates are wildly wrong. It will be much more expensive, and take much longer than you think. You will probably lose money.
- There’s no reason to think that your local monopoly (the municipal utility) will be any less monopolistic than Xcel.
The point about stopping the process often requiring the voting in of a new council seemed like a thinly veiled political threat.
Often the debate became one side asserting some number, and the other simply claiming it was wrong. Stranded costs, separation costs, fuel costs, interest rates, etc. At some point Bellemare claimed that Xcel was going to be shutting down half its coal plants, which got shocked and appalled looks from both Ken and Sam. Half? Really? Their counter claim was that generation was dropping from 2400MW to 2000MW of coal (a 1/6 reduction, not 1/2). When quantitative issues become he-said, she-said, all you can do is get someone to go look at the calculations or data. In this sense, I think the proponents of municipalization have a big advantage. Their models are all public. They’re willing to have you examine their assumptions and check their work. Xcel on the other hand has been very cagy with their data, and are unwilling to give detailed background on where their estimates are coming from (it took months just to get the city’s power consumption profile… and only happened after we’d gotten similar data from Ft. Collins). All you get the end result and a “Trust Us…” which unsurprisingly makes municipalization look like a lousy deal.
Some of the audience questions were actually quite good. Somebody requested that each debater disclose how much they were being paid (if anything) to participate, and by whom. Weaver and Regelson (and the Plan Boulder moderator) are volunteering their time without pay. Miller received a few hundred dollars from the Boulder Smart Energy Coalition. Bellemare is a paid consultant working for Xcel and “[his] financial arrangements are not a matter of public information.”
At some point near the end of the debate, it became clear that the proponents of municipalization were winning pretty unambiguously in terms of both information and eloquence, and they became a bit more aggressive. Miller claimed that obviously our rates would have to go up in a less carbon intensive scenario, as renewables are simply more expensive — just look at all the renewables assessments on our bills. Weaver took almost violent objection to this point, noting that wind is already the same price as coal, we just can’t take advantage of it with the coal fired grid we’ve got today because of the baseload/curtailment issue. He further noted that while solar is more expensive today, it’s dropped 40-50% in cost over the last 5 years to around $5.15 per installed watt, and if/when it gets to $2.75, it will be cheaper than grid power. At which point, he envisions an explosion of distributed generation, “behind the meter” i.e. outside of Xcel’s control, which he believes will prove disruptive to Xcel’s business model. It came off as being somewhere between a warning and a threat.
The final question, which came directly from the moderator, was on the larger consequences of the decisions being made, both for other communities watching the process, and for the future Boulder 10, 20 or even 50 years on. The proponents of municipalization clearly felt that we are attempting to set an example for others, of creating a scalable, replicable, financially and climatically responsible power system. One which a few decades hence they also expect Boulder ratepayers to be thankful for, due to much lower exposure to high and volatile fossil fuel prices.
Miller held out hope that we would find a “third way” to achieve our goals, also setting an example for other communities, though he didn’t lay out in any detail what such a third way would look like, and how it could work from within the confines of the Xcel energy system.
Bellemare felt that regardless of the outcome of the election it would have little effect more broadly. Every franchise agreement is different, state regulations are different, what you learn in one place doesn’t really transfer well to others. (Nobody’s watching. What you’re doing doesn’t really matter.) Should the ballot measure succeed, he expected 5 years of wrangling to get the utility set up, and another 5 years before we really figured out how to run it. Twenty or fifty years on? Well, who knows… If the ballot measure fails, he expects Xcel and Boulder to keep on working together as they have for years, continuing to build one of the nation’s best energy efficiency programs.
This inspired a pretty loud response from Ken… who noted that yes, we do have one of the best efficiency and renewables programs in the nation for an investor owned utility, but several municipal utilities do far better, Austin, TX and Sacramento, CA were mentioned as examples.
Based on their overall performance, it seemed pretty clear to me that the proponents of municipalization can win if they’re given a fair forum. It’s less clear to me how they will fare in the decidedly unfair landscape of full page newspaper ads, push polling, semi-anonymous glossy mailers, radio sound bites and yard signs. In those fora, money talks much louder than good information, and Xcel has a lot more money at their disposal than we do. We need to change that.
Last night I went to a presentation by the Renewables Yes technical and financial modeling team. They’ve put up a bunch of information about their modeling efforts on the web site. I’ve organized nine short videos of a previous iteration of the presentation into a single 90 minute playlist here if you want to see it yourself. It’s definitely worth watching if you use electricity in Boulder! This post is my attempt to digest and rephrase their conclusions.