Power Struggle: Who Should Own Boulder’s Grid and Electricity? 0

Brian Thomas | Wed Sep 21 2011 |

A green-leaning town of 94,000 citizens, Boulder, Colorado is engaged in an exciting debate about how to operate and distribute the city’s electricity while cutting greenhouse gas emissions. Some citizens want Boulder’s power to come from a publicly owned company, not a private firm like its current provider, Xcel Energy. Municipal power supplies are well known in Colorado, where 29 cities and towns own and operate their own electrical systems.

The debate has taken some surprising turns. One came in 2008 when Xcel announced “SmartGridCity,” an ambitious plan to roll out an intelligent electricity distribution system. But if Xcel sought to lessen the appeal of municipalization through a grid upgrade, the plan has not worked. SmartGridCity has been overtaken by acrimony about higher than anticipated costs and accusations of poor management. In the words of municipalization advocate Leslie Glustrom, a biochemist and the founder of Clean Energy Action in Boulder, “For the smart grid, there was overpromising and underdelivering both within Xcel and within Boulder.”

The high cost of smart grids

Cost overruns have bedeviled the project. In studying Xcel’s request to pass along the expenses to ratepayers, the Colorado Public Utility Commission said that the original $15.3 million budgeted has mushroomed to $44.8 million due to higher costs of permits, tree trimming, software and negotiations, and drilling through rock to install fiber optic lines. Former Boulder city councilman Steve Pomerance declares, “The dedicated fiber optics system was wildly overbuilt for the little data that it carries.”

Moreover, most customers with smart meters still can’t get near real-time data or operate in-home energy control devices. They can only check their energy use online in 15-minute intervals from the day before [i]—not nearly fast enough to change individual energy consumption. Glustrom notes, “The concept of getting the data out to people seemed to get lost along the way.”

Some of the advantages of SmartGridCity today are more visible to the utility than its consumers.

Renewable energy consultant Ken Regelson says, “It would have made more sense to install smart meters in Boulder businesses, where fewer meters are needed and the customers are more motivated to cut energy costs.” A team member of Citizens for Boulder’s Clean Energy Future, he points out that the number of meters is a big cost driver.

Some of the advantages of SmartGridCity today are more visible to the utility than its consumers. Xcel can now spot and respond to outages much more quickly, routing power around line breaks. “We can even anticipate outages to a much greater degree than before,” according to Xcel spokesperson Michelle Aguayo.

Not everyone has been a critic. For example, in May 2011 a visiting IBM team studying smart grids nationwide declared the cable a worthwhile investment on the whole, noting that that it is “extremely robust” and will be a valuable infrastructure for a long time. [ii] Regelson acknowledges the value, but adds, “At what cost? Part of prudent management is to make sure you get what you need at a reasonable price.”

The trouble with baseloads

For municipalization advocates, Boulder’s cleantech effort should focus on promoting low-carbon renewable energy. “Part of the problem is baseload power,” Regelson explains. A coal or nuclear power plant provides steady power as long as they’re operating—hence the term “baseload”—but they cannot be quickly turned off and on. Wind and solar are notoriously variable and intermittent. The crunch comes when a wind plant is providing more electricity than a utility can handle at a given moment; the utility has to pay the wind provider “curtailment costs” because they cannot turn off their baseload plants. Regelson notes that in 2009, Xcel’s curtailment costs were only $120,000, but in 2010 they ballooned to $3.8 million because of more wind power online. In a significant way, Regelson says, “baseload is anti-variable and anti-renewable.” A utility with coal plants, like Xcel, can only afford a relatively small portion of renewables—not nearly enough to bring down greenhouse gas emissions.

“A municipal utility is non-profit; excess revenues go to benefit the ratepayers.”

Regelson says, “Based on our modeling work, we think as a municipal utility we can get to 40 percent renewables with a two-thirds reduction in greenhouse gases, and still have rates equal to or lower than Xcel.” He foresees using wind and solar supplemented with natural gas-fired CCG turbines (a reliable, well-understood technology with about half the greenhouse gas emissions of coal).

Pomerance draws attention to the for-profit nature of utilities like Xcel: “Investor-owned utilities focus on adding to their ‘rate base,’ or invested capital, on which they made outrageous almost-risk-free rates of return on equity (in 2010, Xcel’s was 10.23 percent per year.) A municipal utility is non-profit; excess revenues go to benefit the ratepayers.”

Glustrom says, “Xcel Energy has done many good things, and we honor them for the things they’ve done right. We credit them for trying to move away from fossil fuels.” But the municipalization movement in Boulder clearly believes that much more needs to be done.

Xcel’s response to municipalization is summarized by Michelle Aguayo: “Xcel’s Boulder business is not for sale. We value our Boulder customers.”

[i] Laura Snider, ” IBM team gives results of Boulder smart grid study,” The Boulder Daily Camera, May 27, 2011

[ii] Snider, op. cit.

Illustration by Next Studio