Boulder application for PUC approval of Xcel asset transfer

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO

* * * * * IN THE MATTER OF THE APPLICATION OF THE CITY OF BOULDER, COLORADO FOR APPROVAL OF THE PROPOSED TRANSFER OF ASSETS FROM PUBLIC SERVICE COMPANY OF COLORADO TO THE CITY AND ASSOCIATED AUTHORIZATIONS AND RELIEF

VERIFIED APPLICATION

OF THE CITY OF BOULDER

PROCEEDING NO. 15A-____E JULY 7, 2015

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BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO

* * * * * IN THE MATTER OF THE APPLICATION OF THE CITY OF BOULDER, COLORADO FOR APPROVAL OF THE PROPOSED TRANSFER OF ASSETS FROM PUBLIC SERVICE COMPANY OF COLORADO TO THE CITY AND ASSOCIATED AUTHORIZATIONS AND RELIEF

) ) ) ) ) ) ) )

PROCEEDING NO. 15A-____E

VERIFIED APPLICATION

OF THE CITY OF BOULDER, COLORADO

The City of Boulder, Colorado (the City or Boulder), pursuant to 40-5-101(b) and

40-5-105, Colorado Revised Statutes and Commission Rule 4 CCR 723-3-3104, respectfully

submits this application to the Colorado Public Utilities Commission (the PUC or

Commission) for approval of the transfer of certain assets owned by Public Service Company

of Colorado (PSCo) to the City which are necessary for the operation of a municipal electric

utility pursuant to Article XIII of the Boulder Home Rule Charter and Article XX, Sections 1 and

6 of the Colorado Constitution, and for associated authorizations and relief described in this

Verified Application.

I. SUMMARY OF APPLICATION

Boulder is asking the Commission to approve the transfer of distribution assets necessary

for the operation of the Citys municipally-owned electric utility. As part of this request,

Boulder is not seeking the transfer of generation assets or major transmission assets. Rather,

Boulders request includes the electric facilities within the buffer created by Boulders purchase

Application for Approval of the Proposed Transfer of Assets City of Boulder

July 7, 2015 Page 2 of 34

of open space. The Citys proposed transfer includes PSCo facilities necessary for the City to

create the utility of the future in the near term.

Electric distribution systems are not designed to respect municipal boundaries. Rather,

they are designed to serve electric load in an efficient manner. In the Boulder area, that load is

nearly entirely inside the buffer created by the thousands of acres of open space that now ring the

City. Because Boulder has purchased surrounding open space over the past 50 years, Boulder

may be in the unique position of being one of the few cities on Colorados densely populated

Front Range that is able to fairly cleanly separate from its current electric utility provider.

Consequently, when Boulder examined PSCos existing distribution system to determine

the technically optimal location to separate ownership between a municipal electric system and

PSCos system, the Citys engineers recommended that Boulder take ownership of the facilities

within the open space buffers. This includes distribution feeders that cross enclaves within

Boulder (i.e., pockets of land that have not been incorporated into the City) and weave back and

forth across the jagged municipal boundaries at the Citys perimeter.

The Acquisition Area, inside which Boulder seeks Commission approval for the

transfer of assets from PSCo to the City, is described and depicted in the Direct Testimony of

Boulder witness Tom Ghidossi, P.E. of Exponential Engineering Company. As Mr. Ghidossi

describes, this plan for separating ownership at the Acquisition Area boundary follows industry

standards and good engineering practices, and incorporates the same terms of facility sharing that

Boulder and PSCo previously negotiated for their shared presence at the Citys Boulder Canyon

Hydroelectric Plant. This plan maintains operation of the system as it is currently operated

today, which maintains reliability as it exists today. It sets clear boundaries between the two

systems, and clearly delineates responsibility for outage management and customer service



responsibilities, protecting the safety of line workers and the general public. The plan also

minimizes the number of interconnections between the two systems, a key factor in maintaining

reliability.

It is both commonplace and straight-forward for one utility to rely on another utilitys

facilities to, in part, deliver electricity to its customers. Co-locating facilities in substations,

sharing poles, and wheeling power over another utilitys lines, as Boulder is proposing in this

Application, are all done everyday across the country, including Colorado.

Recognizing PSCos right to serve its customers located outside the Citys boundaries,

Boulder is proposing that PSCo wheel electricity across Boulders distribution facilities to

serve those PSCo customers located within the Acquisition Area, but outside the Citys

jurisdictional limits (PSCo Customers in the Acquisition Area). The Citys proposed PUC-

jurisdictional wheeling arrangement is designed to ensure cost comparability in terms of the cost

for PSCo to serve the PSCo Customers in the Acquisition Area using PSCo-owned facilities, as

compared to the cost for PSCo to serve those same customers over the same facilities when

owned by the City. When implemented, the cost of wheeling service to these customers should

result in distribution charges to PSCo, presumably to be passed on to its customers, that are

comparable to the current PSCo charges for distribution across the very same lines. Further,

PSCo will receive compensation from the City in the future when Boulder acquires these

distribution facilities through negotiation or condemnation and will no longer have the expense

of maintaining those lines.

The City is also proposing a distribution wheeling arrangement to the Points of

Interconnection (those nine points at which the Citys system would be connected to the PSCo



system) that would be governed by a tariff that meets the reciprocity requirement under the PSCo

Open Access Transmission Tariff (OATT), as determined by the FERC.

A critical component of Boulders acquisition plan is ensuring that the safety and

reliability of the system that serves PSCo Customers in the Acquisition Area will not fall below

the levels those customers currently enjoy. To that end, Boulders plan recognizes that how

outages will be handled, how meters will be read and how billing data will be shared with PSCo

must be addressed through a transition plan. Further, to enable PSCo to provide reliable service

to PSCo Customers in the Acquisition Area and assure the Commission of the Citys

commitment to service quality, the City is willing to commit that the ongoing reliability of the

distribution wheeling service the City provides PSCo will be the same as or better than the

reliability those customers currently enjoy. The City proposes that the particulars of this

commitment be resolved in negotiations between PSCo and the City or, if necessary, by the

Commission as part of a transition plan filing or separate rate filing.

For several years now, Boulder has advised the Commission of its desire to form its own

electric utility, and has expressly recognized the importance of ensuring PSCos other ratepayers

would not be negatively affected by Boulders departure. This is particularly true in the area of

generation. In this Application, Boulder proposes a transitional power supply arrangement with

PSCo for a designated period of time. Initially, Boulder proposes to enter into a wholesale

power supply agreement with PSCo to serve all of the Citys energy and capacity requirements.

Then, over time, Boulder proposes to leave the PSCo system gradually, while simultaneously

allowing PSCos non-Boulder native load to absorb, in increasing blocks, the capacity that was

previously dedicated to meet the Citys electric demand in lieu of paying for the construction of

new facilities or the costs of new power supply contracts. As contemplated, this simultaneous



exchange will take place in a time frame consistent with PSCos forecasted future resource

needs. This approach not only helps ease the transition of Boulders departure from the PSCo

system, but it also helps to protect PSCo and its customers by promoting a least cost approach

that avoids unnecessary investment in duplicative facilities or contracted generating capacity.

Boulder is requesting the Commissions endorsement of this plan, as presented in greater detail

in the Citys prayer for relief.

Finally, Boulder has been working for quite some time to develop a transition plan that

would make the transfer of assets and the start up of the new municipal electric utility as

seamless as possible for customers inside and outside the City. In the testimony provided in

support of this Application, Boulders witnesses explain the work that has been done and will

continue to be done until Boulder is actually operating the new electric utility, Boulder Light &

Power. At the conclusion of this proceeding, Boulder will attempt to work with PSCo to develop

a joint transition plan that is beneficial to the Citys and PSCos respective customers. Boulder

will return to the Commission for approval of a joint transition plan or, if agreement with PSCo

is not possible, Boulders transition plan. Boulder is requesting the Commission to encourage

PSCo to work with the City to develop a joint plan.

Boulders objective in forming a municipal electric utility is greater local control and

self-determination over its electric delivery system and supply. This includes the Citys goals of

democratization, decentralization and decarbonization of its power supply.

Boulder acknowledges the Commissions role in ensuring that the transition is as

seamless and minimally disruptive as possible for customers. The City further acknowledges

and appreciates the Commissions guidance in ensuring the Citys Application is not contrary to

the public interest through its review of safety, reliability and service quality issues. For all the



reasons provided in its Application and accompanying testimony, Boulder maintains that the

Application is not contrary to the public interest when considering the interests of customers,

whether inside or outside Boulders city boundaries.

II. BOULDERS ENERGY STORY

The City of Boulder is located 35 miles northwest of Denver and has a population of just

over 100,000 residents. Nestled at the base of the Flatirons, the City has a strong and

longstanding commitment to environmental stewardshipto creating a community reflective of

its idyllic setting. The Citys legacy in conserving its lands stretches back to 1898, when

forward-thinking community members voted to purchase and preserve property that is now home

to the historic Colorado Chautauqua. Around the same time, the City first considered forming its

own electric utility.

Boulders legacy is the 65 square miles of City-owned open space that create a buffer

between it and other cities, but the communitys dedication to sustainability has evolved beyond

maintaining diverse ecosystems and creating well-traveled public trails. The community is home

to climate scientists, progressive activists, and outdoors enthusiasts, all of whom drove the City

to take action related to climate change. Boulder is home to the University of Colorado at

Boulder and its more than 30,000 students, faculty and staff, as well as several federal

laboratories, including the National Center for Atmospheric Research, National Institute for

Standards and Technology, and the National Oceanic and Atmospheric Administration. These

institutions contribute to a vibrant local economy, with significant industry clusters in clean

tech, natural and organic foods, and active living and recreation.

In 2002, the City became one of the first cities in the nation to pass a resolution

supporting the Kyoto Protocol, establishing a goal of reducing greenhouse gas emissions



(GHGs) by seven percent below 1990 levels by 2012. The community voted its support,

funding programs and ordinances designed to increase energy efficiency and investments in local

solar through the nations first carbon tax: the Climate Action Plan Tax (CAP Tax). The CAP

Tax is assessed on a customers electricity consumption and is included on customers electric

bills. Consumption of electricity is the single largest source of GHGs attributable to the Boulder

community, making efficient and renewable electricity use the focus of Boulders climate action

efforts.

Boulder is a leading community in environmental awareness and action. In 2006, the

City became one of the first communities to adopt a residential green building code and, in 2010,

Boulder adopted a rental housing energy efficiency ordinance. In 2011, Boulder piloted an

energy advising service called Two Techs and a Truck, designed in collaboration with

community volunteers. This service is now being implemented as EnergySmart through Boulder

County and the City and County of Denver, and is funded by a $25 million American Recovery

and Reinvestment Act grant. With as many as 70 percent of homeowners who participate in the

program installing one or more energy efficiency measure, the program is a national model of

success.

The Citys franchise with PSCo expired at the end of 2010. Years of analysis and

community outreach drove the City, and the community, to ask PSCo for a stronger commitment

to green its electricity supply and offer more innovative, collaborative, services.

Unfortunately, PSCo felt it was unable to provide the City with what it wanted, pleading that the

restrictions of traditional utility regulation prevented it from providing Boulder with anything it

did not offer to other communities. As with most franchise agreements, the PSCo franchise with



the City anticipated the Citys departure from the system and its right to construct, purchase or

condemn the public works and ways of PSCo.

In 2010, the City Council also adopted Energy Future goals that established the basis for

defining and evaluating energy options using community input on values and a vision for clean

energy. Not only do the values envision a low-carbon future, but one that connects a vibrant

private sector market with individual customers to create a dynamic, clean energy economy.

In 2011, Boulder voters supported a utility occupation tax that took the place of the

former electric franchise fee, but they also approved putting aside a portion of that funding to

study whether the City should form a local electric utility. This was not the first time Boulder

considered such an effort. However, while municipal utilities have historically been formed to

ensure low rates and high reliability, Boulders utility would have an additional, new impetus: a

clean energy supply delivered through a utility of the future that was responsive to local

conditions, resilient in the face of natural disasters, and as innovative as a community full of

start-ups, scientists, and educators could desire.

The City Council developed, and voters approved, a series of conditions that must be met

to determine whether this innovative local utility could be formed. These conditions, which are

in the City Charter, are:

Rates must be equal or less than those offered by PSCo at the time of acquisition.

The utility must have sufficient revenue to cover operating costs and debt, plus carry a

reserve of 25% of the debt payment, referred to as Debt Service Coverage Ratio.

Reliability must remain comparable to that being offered by PSCo.

There must be a plan to increase renewables.

There must be a plan to decrease greenhouse gas emissions.



Article XIII of the Boulder Home Rule Charter is provided as Attachment 1 to this Application.

Nearly 100 community volunteers, many with deep subject matter expertise, have helped

Boulder explore the creation of a municipal electric utility over the past five years. Moreover,

extensive engineering analyses were conducted to understand the age and condition of the

system, and to forecast the kinds of investments that must be made to meet the communitys

objectives. This exploration has shown that a local utility could provide the community with

opportunities to decarbonizes its energy source, increase citizen participation in democratic

decision-making regarding their use of electricity, and decentralize its energy source through

expanded distributed generation.

Having survived the September 2013 flood, Boulder seeks to develop its own resilient

electric utility that meets the needs of its citizens. Weather patterns and natural disasters have

intensified, largely as a result of climate change. The City intends to operate its utilities in a

manner that can adapt to that new reality. A resilient utility will enable the City to both avoid

adding to climate change and deal with the effects of the changing climate.

Further, the energy industry itself is evolving. The City Council voted to pursue

acquisition of PSCos electric utility assetsviewing it as a step toward local self-determination

in a quickly changing energy environment.

III. BOULDERS QUALIFICATIONS

A. Overview of Boulder City Government

Boulder was incorporated on November 4, 1871. It is a Colorado home rule

municipality, established pursuant to Article XX of the Colorado Constitution. The Charter of

the City of Boulder, Colorado, adopted by a vote of the electorate on October 30, 1917, serves as

the source of the Citys authority and can only be amended by a vote of the Boulder electorate.


July 7, 2015 Page 10 of 34

Under both the state constitution and the Boulder Home Rule Charter, the City has the authority

to, among other things, acquire, maintain, and operate light plants, power plants, and any other

public utilities or works local in use and extent. See Colorado Constitution, Art. XX, 1 and 6,

and Boulder Home Rule Charter Section 2(d), provided as Attachments 2 and 3, for the full

text.

1. City Council

Boulder has a Council-Manager form of government, which has been in continuous

operation since January 1918. Under this form of government, the elected City Council sets the

policies for the operation of the Boulder government. The administrative responsibility of the

City rests with the City Manager, who is appointed by the City Council. The City Council

consists of nine members. The Mayor and Mayor Pro Tem are selected by the council members.

The current Mayor is Matt Appelbaum. The current Mayor Pro Tem is Suzanne Jones. Other

council members include Macon Cowles, George Karakehian, Tim Plass, Lisa Morzel, Andrew

Shoemaker, Sam Weaver and Mary Young.

Boulder conducts its general elections on the first Tuesday in November of odd

numbered years. All City elections are administered by the City Clerk.

Nine council members are elected at-large on a non-partisan basis for two- and four-year

terms. After each election, council members select one of their members to serve a two-year

term as mayor. Every two years (odd-numbered years), five council members are elected to

office. The four receiving the most votes serve four-year terms and the fifth person, receiving

the least number of votes, serves a two-year term.

City council appoints and sets salaries for its three direct reports, the City Manager, the

City Attorney and the municipal judge.


July 7, 2015 Page 11 of 34

Council meets regularly on the first and third Tuesday of each month at 6 p.m. in the

Council Chambers of the Municipal Building. All council meetings are open to the public.

2. City Manager

The City Manager is hired by council to handle the affairs of the City in accordance with

the policies set by City Council. The position is structured so all department heads are directly

or indirectly (through the Assistant City Manager or Deputy City Manager) responsible to the

City Manager. The City Manager is the Citys Chief administrative officer. The current City

Manager is Jane S. Brautigam. There are separate departments within the City, administered by

department heads who are hired by the City Manager. The Citys current organization chart is

provided as Attachment 4.

3. Boards and Commissions

Boulder has 23 boards and commissions. The members of these boards and

commissions advise the City Council with regard to a variety of matters including planning,

historic preservation, liquor licensing, human relations, environmental matters, the Citys

libraries, water resources and transportation.

B. Management and Employees

Boulder employs 1420 standard and temporary employees and another 747 seasonal

employees. Of those, 680 are members of collective bargaining units. The following unions

negotiate contracts on behalf of those collective bargaining units: Boulder Municipal

Employees Association, the International Association of Fire Fighters, and the Boulder Police

Officers Association.


July 7, 2015 Page 12 of 34

C. Financial Strength

According to the Citys most recent audited financials, total primary government assets

(including current and other assets and capital assets) for the City totaled $1.29 billion. Total

revenues, excluding transfers and extraordinary items, increased from 2012 to 2013 by $2.3

million, or 1%, to $271.6 million. Sales and use tax revenues constituted 45% of the Citys

General Fund. The assessed valuation for property within the City was $2.567 billion in 2013.

The General Fund is the primary operating fund of the City. At the end of 2013, the

unrestricted fund balance of the General Fund as $39.1 million, while the total fund balance

was $42.4 million. Unrestricted fund balance includes fund balance committed by City

Council, assigned by City management, and unassigned fund balance as disclosed in the

Governmental Fund Balance Sheet. As a measure of the General Funds liquidity, it is useful

to compare unassigned fund balance to total fund expenditures and transfers out. For 2013,

unassigned fund balance of $28.2 million represents 24% of total General Fund expenditures

and transfer out of $119.2 million.

As of December 31, 2013, the unrestricted net position of the Water Utility Fund was

$29.4 million, the Wastewater Utility Fund was $11.8 million, the Stormwater and Flood

Management Fund was $16.2 million, the Downtown Commercial District Fund was $5.1

million, the non-major enterprise funds were $1.2 million. The total increase in net position for

the proprietary funds was $11.1 million.

During 2013, the Citys general obligation credit ratings were established as Aa1 by

Moodys Investors Service and AAA by Standard & Poors. The primary reasons cited in the

past for these high rating levels have been the general strength of the Boulder economy, its


July 7, 2015 Page 13 of 34

distinctiveness from the general Denver metropolitan economy, and the lesser reliance of the

Citys General Fund on sales taxes when compared with other Colorado municipalities.

IV. DESCRIPTION OF ASSETS TO BE ACQUIRED

AND PLAN FOR INTERCONNECTION

The City seeks the transfer of all facilities serving Boulder customers within the

boundaries of the Acquisition Area, and the property interests associated with those facilities.

Specifically, the City requests the Commission approve the transfer of all PSCo distribution

facilities within the Acquisition Area including:

a. Overhead and underground distribution lines;

b. Distribution transformers (pole and pad mount);

c. Overhead and underground secondary and service conductors;

d. Fiber optic and other communications equipment associated with the

distribution system;

e. Meters and other equipment;

f. Easements and associated property rights for the electric distribution

system;

g. Streetlights and traffic signal lights owned by PSCo within the City limits;

and,

h. Secondary conductors serving streetlights within the Acquisition Area, but

outside the City limits, up to the load side of the Point of Delivery, as

defined in PSCos PUC-approved electric tariff.

Each of these items are identified and described more specifically in the Direct

Testimony of Thomas A. Ghidossi, P.E., which supports this Application. Mr. Ghidossi has


July 7, 2015 Page 14 of 34

prepared a list of assets to be transferred based on the best information available to him as of the

date of this filing. That list is as attached to the Direct Testimony of Mr. Ghidossi as

Confidential TAG-8, at PSCos request.

Mr. Ghidossis Direct Testimony also explains Boulders proposal with regard to the

interconnection of City and PSCo facilities. Because Boulder has dense development at its core,

and is surrounded by tens of thousands of acres of open space that create a buffer of land around

the City that cannot be developed, the electrical system has naturally developed to be technically

and geographically isolated from surrounding areas. As a result, Mr. Ghidossi determined that

only nine points of distribution system interconnection would be required to separate the electric

facilities serving Boulder from the portion of the PSCo system that serves other areas.

Separating the system in this way, and using practices common in the industry for shared

facilities, avoids the need for duplicate facilities and maintains the operation of the system as it is

operated by PSCo today. Because the system will continue to be operated after separation as it

was designed and is currently operated, the Citys plan for separating the ownership of the

system is not contrary to the public interest. Customers of both utilities will continue to enjoy

reliable service without losing any of the existing redundancy or capacity built into the system.

V. POWER WHEELING AND THE DISTRIBUTION ARRANGEMENT

The Citys requested transfer of assets from PSCo, if approved by the Commission, will

result in the City owning all of the electric distribution facilities within the Acquisition Area.

However, Boulder is proposing that, despite Boulders ownership of the distribution facilities,

PSCo continue to serve at retail the PSCo Customers in the Acquisition Area. Under this

proposal, PSCo would wheel power to those customers over Boulder-owned facilities - the same

facilities PSCo uses today.


July 7, 2015 Page 15 of 34

Boulder witness Mark Beauchamp presents the Citys approach and methodology for

entering into a wheeling arrangement with PSCo. This wheeling arrangement will enable PSCo

to continue to serve the PSCo Customers in the Acquisition Area. Mr. Beauchamp explains that

wheeling arrangements can be a cost-effective and efficient means of providing electric service

to customers. Wheeling, such as is proposed here, avoids needless duplication of electric

infrastructure and, as a result, provides additional cost benefits for customers in the form of

lower operation and maintenance (O&M) costs due to a reduced number of lines, lower

depreciation expense, and lower return on overall investment. This is particularly so,

considering that the Citys proposed wheeling arrangement is designed to ensure cost

comparability in terms of the cost for PSCo to serve the PSCo Customers in the Acquisition Area

using PSCo-owned facilities, as compared to the cost for PSCo to serve those same customers

over the same facilities when owned by the City. Mr. Beauchamp explains the Citys proposal to

charge PSCo a regulated, cost-based rate for wheeling distribution service comparable in design

to rates PSCo currently charges its customers for PSCos self-provisioned distribution service.

Mr. Beauchamp will show that the rates that the City intends to charge PSCo, which

presumably will be passed on to PSCos customers, are comparable to PSCos current cost to

serve these customers. As a result, Mr. Beauchamp testifies that if the Citys approach is

adopted, PSCo customers throughout the state, including PSCos Customers in the Acquisition

Area, will be unharmed by the approval of Boulders proposed transfer of assets, and may

actually enjoy certain cost benefits and advantages from the wheeling arrangement that are not

available to them today.

Boulder has not yet developed an initial rate or a formula by which to calculate this rate

for several reasons. First, the City must still negotiate the terms and conditions of its wheeling


July 7, 2015 Page 16 of 34

arrangements with PSCo. Second, Boulder has not finalized its acquisition of the facilities

located within the City, and thus has not finalized the corresponding debt service levels. As a

result, a final budget has not been (and cannot be) established at this stage to allow proper

determination of revenue requirements. Third, the City is unable to calculate the rate because it

lacks some specific information that PSCo possesses with respect to the facilities to be

transferred as well as usage information for all the customers. Once this information is known,

and once the above-referenced wheeling arrangements are negotiated, the City can calculate its

initial formula rate for wheeling distribution service and set the formula for changes to that rate

going forward. Of course, given PSCos role in negotiating and providing pertinent cost

information, a cooperative and collaborative approach with PSCo would help Boulders efforts

to develop a reasonable rate. Having said that, if negotiations are unsuccessful, the City would

intend to file a tariff for this wheeling service with the Commission to set the applicable rates,

terms, and conditions. Either way, the City will seek Commission approval before this charge is

implemented.

VI. THE CITYS COMMITMENT TO SERVICE QUALITY,

SAFETY AND RELIABILITY

The City has developed a plan for the Startup, Transition and Ongoing Operations

periods (each defined in the Direct Testimony of Boulder witness Robert J. Harberg). This plan

identifies the key tasks necessary to prepare the City to operate the electric distribution system.

It continues to evolve as circumstances change and more information becomes available. The

plan was developed based on the requirements of Article XIII of the Boulder Home Rule

Charter, which states:


July 7, 2015 Page 17 of 34

The utilitys foremost responsibilities will be to provide electric power that is high quality and dependable, support economic vitality, prevent service outages, and respond promptly to any service outage.

The plan, however, is not being presented to the Commission for approval at this time.

Boulder hopes to successfully negotiate the terms of a transition plan with PSCo. If the plan is

successfully negotiated with PSCo, the plan will be submitted to the Commission for its

approval. If negotiation is not possible, the City intends to submit its own transition plan to the

Commission for review and approval prior to the conclusion of a condemnation case.

Boulder intends to employ a combination of in-house resources and personnel, along with

contracted resources and personnel, to perform the tasks needed during Startup, the Transition

Period and Ongoing Operations. This is common practice with all utilities. Mr. Harberg

describes just some of the Citys existing capabilities that can be leveraged and extended to

Boulder Light & Power.

The City is committed to providing reliable and safe electric service. Mr. Harberg

explains the reliability measurements that Boulder Light & Power will use to measure the

performance of the system: total duration of interruption during the year (SAIDI), frequency of

outages during the year (SAIFI) and average time required to restore service (CAIDI), and the

metrics the City will use to determine whether its goal of providing safe, reliable electric service

has been met. Mr. Harberg also discusses the Citys focus on resilience, its emergency

management capabilities and its plan to enter into mutual aid agreements with neighboring

utilities. He further provides evidence that municipal utilities can provide service that is at least

as good as the service provided by PSCo.

The City is particularly concerned with reliability when providing distribution wheeling

service to PSCo for the PSCo Customers in the Acquisition Area. To allow PSCo to satisfy its


July 7, 2015 Page 18 of 34

Quality of Service Plan obligations to PSCos Customers in the Acquisition Area and assure the

Commission of the Citys commitment to service quality, the City is willing to commit that the

ongoing reliability of the distribution wheeling service the City provides PSCo for its continued

provision of retail service to the PSCo Customers in the Acquisition Area will be the same as or

better that the reliability those customers currently enjoy. The City proposes that the particulars

of this commitment be resolved in negotiations between PSCo and the City or, if necessary, by

the Commission as part of the transition plan filing or separate rate filing.

Boulder witness Dennis Eastman specifically discusses service to the PSCo Customers in

the Acquisition Area. Mr. Eastman concludes, based on his review of Boulders plan, that once

Boulder Light & Power is up and running, both Boulder Light & Power customers and PSCos

customers in the Acquisition Area will experience service quality, reliability and safety that

meets or exceeds the service they presently receive from PSCo.

Mr. Eastman explains that most municipal utilities have a successful track record of

providing high quality service to their customers and that most meet or exceed the service quality

provided by investor-owned utilities. Given Boulders focus on safety, reliability and service

quality, along with the work it has already done to prepare to operate an electric distribution

utility, Mr. Eastmans opinion is that Boulders plan will, at the very least, maintain the current

level of safety, reliability and service quality of the distribution system. As Mr. Eastman

concludes, it is more likely that Boulder will improve upon that system to the benefit of all

customers within the Acquisition Area.


July 7, 2015 Page 19 of 34

VII. TRANSITIONAL POWER SUPPLY ARRANGEMENT

Boulder has developed a plan for acquiring power as a municipal electric utility that is

not only not contrary to the public interest, but could benefit both PSCo and its ratepayers

outside of Boulder financially and environmentally.

Boulder proposes to depart from the PSCo system in a gradual manner, designed to

minimize any burden on PSCos customers. Specifically, Boulder plans to reduce its demand on

the PSCo generation system over time, and pursuant to a negotiated wholesale power supply

agreement with PSCo for a designated period of time, would continue to purchase power that

PSCo acquired in part to serve Boulder. Boulder would release the energy and capacity it

currently uses back to PSCo as that energy and capacity becomes needed elsewhere on PSCos

system in a manner that is coincident with PSCos stated future resource need. This approach

helps to protect PSCo and its customers by promoting a least cost approach that avoids

unnecessary investment in duplicative facilities or contracted generating capacity. If this plan is

approved by the Commission, Boulder would remain a wholesale customer of PSCo until such

time and to the extent forecasted increases in PSCos native load, or projected resource needs

related to power purchase agreements that are terminating, require PSCo to acquire or invest in

additional generation sources.

By gradually departing from the PSCo system, Boulder absorbs the excess capacity that

could result from its complete, immediate departure. This approach protects against added costs

for other ratepayers and ensures that PSCos capacity remains used, useful and of value to its

ratepayers. Boulder developed this transitional power supply plan to avoid unfairly shifting

Boulders share of the carrying costs for existing PSCo generation to its other non-Boulder

customers.


July 7, 2015 Page 20 of 34

According to PSCos 2014 Progress Report submitted in connection with its 2011

Electric Resource Plan, PSCo does not anticipate needing any additional capacity to meet its

project resource need until 2020. In that year, PSCos resource need will grow by a modest 34

MWs. PSCos projections indicate resource need of 104 MW in 2021 and 435 MW in 2022. In

2022, Boulders retail peak demand is estimated to be 262 MW. In the testimony of Boulder

witness Jonathan Koehn, Boulder proposes a mechanism to determine when and to what extent

the City may depart from the PSCo system as PSCos need for additional capacity is forecast to

increase over time. Boulders proposed mechanism relies on forecasts that are as accurate as

possible, while providing both PSCo and the City with information about how much capacity

each utility needs to acquire to serve their respective customers resource needs and sufficient

lead time for both utilities to acquire any needed capacity at costs and under terms that are

reasonable.

Boulder is requesting an order from the Commission finding that it is appropriate for

PSCo to use electric energy and capacity released by Boulder on a schedule that aligns with and

accommodates increases in PSCos native load or projected resource needs require PSCo to

acquire additional generation sources, as presented in greater detail in the Citys prayer for

relief.

VIII. INFORMATION REQUIRED BY RULE 3104

(I) The information required in rules 3002(b) and 3002(c), as pertinent to each party to the

transaction.

Please see the information provided below.


July 7, 2015 Page 21 of 34

(II) A statement showing accounting entries, under the Uniform System of Accounts,

including any plant acquisition adjustment, gain, or loss proposed on the books by each party

before and after the transaction which is the subject of the application.

The City is unable to provide this information until the negotiated acquisition terms are

known or the condemnation action in Boulder District Court has been completed.

(III) Copies of any agreement for merger, sales agreement, or contract of sale pertinent to the

transaction which is the subject of the application.

There is no contract for sale of assets between the City and PSCo.

(IV) Facts showing that the transaction which is the subject of the application is not contrary

to the public interest.

Please see Section X. below, as well as the Testimony and Attachments of the witnesses

filed on behalf of the City in support of this Application.

(V) An evaluation of the benefits and detriments to the customers of each party and to all

other persons who will be affected by the transaction which is the subject of the application.

Please see the Testimony and Attachments of the witnesses filed on behalf of the City in

support of this Application. Further, the City notes that it does not, at this time, possess all of the

information required to perform this evaluation.

(VI) A comparison of the kinds and costs of service rendered before and after the transaction

which is the subject of the application.

Please see the Testimony and Attachments of the witnesses filed on behalf of the City in

support of this Application. Further, the City notes that it does not, at this time, possess all of the

information required to perform this comparison.


July 7, 2015 Page 22 of 34

(c) An application to transfer a certificate of public convenience and necessity, an application to

transfer assets subject to the jurisdiction of the Commission, or an application to transfer or

obtain control of the utility may be made by joint or separate application of the transferor and

the transferee.

The City is not seeking to serve customers outside its jurisdictional boundaries. Upon the

completion of the Citys acquisition of the assets proposed for transfer, PSCo and/or the City will

file an application to amend the PSCo service territory to exclude service within Boulder.

(d) When control of a utility is transferred to another entity, or the utilitys name is changed, the

utility which will afterwards operate under the certificate of public convenience and necessity

shall file with the Commission a tariff adoption notice, shall post the tariff adoption notice in a

prominent public place in each local office and principal place of business of the utility, and

shall have the tariff adoption notice available for public inspection at each local office and

principal place of business. Adoption notice forms are available from the Commission. The tariff

adoption notice shall contain all of the following information:

(I) The name, phone number, and complete address of the adopting utility.

(II) The name of the previous utility.

(III) The number of the tariff adopted and the description or title of the tariff adopted.

(IV) The number of the tariff after adoption and the description or title of the tariff after

adoption. Code of Colorado Regulations 25

Because control of a utility is not being transferred to another entity, this provision is not

applicable.

(V) Unless otherwise requested by the applying utility in its application, a statement

that the adopting utility is adopting as its own all rates, rules, terms, conditions,


July 7, 2015 Page 23 of 34

agreements, concurrences, instruments, and all other provisions that have been filed or

adopted by the previous utility.

This provision is not applicable to the City since it is not an adopting utility.

IX. Information Required by Rule 3002(b)

(b) In addition to the requirements of specific rules, all applications shall include, in the

following order and specifically identified, the following information, either in the application or

in appropriately identified attached exhibits:

(I) Name and Address of Applying Utility

Boulder Light & Power 1777 Broadway Boulder, CO 80302

(II) Name under which the applying utility is, or will be, providing service in

Colorado.

Boulder Light & Power

(III) The name, address, telephone number, facsimile number and email address of the

applying utilitys representative to whom all inquiries concerning the application

should be made.

Heather Bailey, Executive Director, Energy Strategy and Electric Utility Development 1101 Arapahoe Avenue Boulder, CO 80302 303.441.1923 (phone) [email protected]

(IV) A statement that the applying utility agrees to answer all questions propounded by

the Commission or its Staff concerning the application.

Please see the statement in response to (VII), below.


July 7, 2015 Page 24 of 34

(V) A statement that the applying utility shall permit the Commission or any member

of its Staff to inspect the applying utility's books and records as part of the

investigation into the application.


(VI) A statement that the applying utility understands that, if any portion of the

application is found to be false or to contain material misrepresentations, any

authorities granted pursuant to the application may be revoked upon Commission

order.


(VII) In lieu of the separate statements required by subparagraphs (b)(IV) through

(VI) of this rule, a utility may include a statement that it has read, and agrees to

abide by, the provisions of subparagraphs (b)(IV) through (VI) of this rule.

Boulder has read and agrees to abide by the provisions of subparagraphs

(b)(IV) through (VI) of Commission Rule 3002.

(VIII) A statement describing the applying utilitys existing operations and general

service area in Colorado.

Boulder does not currently operate an electric utility within the state of

Colorado. Boulders proposed service area is coterminous with its jurisdictional

boundaries.

(IX) For applications listed in subparagraphs (a)(I), (II), (III), (V), and (VI) of this

rule, a copy of the applying utility's or parent companys and consolidated

subsidiaries most recent audited balance sheet, income statement, statement of


July 7, 2015 Page 25 of 34

retained earnings, and statement of cash flows so long as they provide Colorado

specific financial information.

The titles of government financial statements differ from the financial

statements of private entities. The following chart explains these differences:

Financial Statement Titles Type of Statement Type of Fund Name of Statement Balance Sheet Government-Wide Statement of Net Position

Governmental Funds Balance Sheet

Proprietary Funds Statement of Net Position

Income Statement Government-Wide Statement of Activities

Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance

Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position

Statement of Retained Earnings *NA see above Income Statements

Statement of Cash Flows Government-Wide **NA

Governmental Funds **NA

Proprietary Funds Statement of Cash Flows

*NA Governmental entities do not have retained earnings. The fund equity is referred to as fund balance for Governmental Funds and Net Position for Proprietary Funds. The statement of changes in these financial statement elements are accounted for in the preceding income statements. **NA In accordance with GAAP, governmental funds do not prepare a cash flows statement nor is a government wide cash flow statement prepared. Proprietary Funds do prepare a Statement of Cash Flows as required by GAAP.

With this Application, Boulder is providing the following documents:

Statement of Net Position; Statement of Activities; Net (Expense) Revenue and

Changes in Net Assets; Balance Sheet, Governmental Funds; Statement of


July 7, 2015 Page 26 of 34

Revenues, Expenditures and Changes in Fund Balances, Governmental Funds;

Statement of Net Position, Proprietary Funds; Statement of Revenues, Expenses

and Changes in Fund Net Position, Proprietary Funds; Statement of Cash Flows,

Proprietary Funds. These documents are provided in a consolidated fashion as

Attachment 5. They are excerpted from Attachment 6, the Citys

Comprehensive Annual Financial Report for the fiscal year ended December 31,

2013.

(X) A statement indicating the town or city, and any alternative town or city, in

which the applying utility prefers any hearings be held.

Boulder prefers that hearings are held in either the Commissions

hearing room in Denver, Colorado, or in Boulder, Colorado.

(XI) Acknowledgment that, by signing the application, the applying utility

understands that:

(A) The filing of the application does not by itself constitute approval of

theapplication.

(B) If the application is granted, the applying utility shall not commence the

requested action until the applying utility complies with applicable

Commission rules and any conditions established by Commission order

granting the application.

(C) If a hearing is held, the applying utility must present evidence at the hearing

to establish its qualifications to undertake, and its right to undertake, the

requested action.


July 7, 2015 Page 27 of 34

(D) In lieu of the statements contained in subparagraphs (b)(XI)(A) through (C)

of this rule, an applying utility may include a statement that it has read, and

agrees to abide by, the provisions of subparagraphs (b)(XI)(A) through (C) of

this rule.

Please see the attestation at the conclusion of this application.

(XII) An attestation which is made under penalty of perjury; which is signed by an

officer, a partner, an owner, an employee of, an agent for, or an attorney for the

applying utility, as appropriate, who is authorized to act on behalf of the

applying utility; and which states that the contents of the application are true,

accurate, and correct. The application shall contain the title and the complete

address of the affiant.

Please see the attestation at the conclusion of this application.

(c) In addition to the requirements of specific rules, all applications shall include the

information listed in subparagraphs (a)(I) through (V) of rule 1310. Applying utilities

may either include the information in the application itself, or incorporate the

information by reference to the miscellaneous docket created under rule 1310.

1310. Information Regarding Regulated Entities.

(a) A regulated entity may maintain information regarding the regulated entity in an

administrative proceeding created for that purpose. A regulated entity may incorporate by

reference, in any application, petition, or motion, the information maintained in such an

administrative proceeding, provided that the regulated entity also attests that the most current

information is on file. In the application, petition, or motion, the regulated entity shall state the

date the incorporated information was last filed with the Commission. If a regulated entity


July 7, 2015 Page 28 of 34

chooses to maintain information in an administrative proceeding, the following information may

be filed:

(I) a copy of the regulated entitys applicable organizational documents (e.g., Articles of

Incorporation, Partnership Agreements, Articles of Organization);

(II) if the regulated entity is not organized in Colorado, a current copy of the certificate

issued by the Colorado Secretary of State authorizing the regulated entity to transact

business in Colorado;

(III) the name, business address, and title of each officer, director, and partner;

(IV) the names and addresses of affiliated companies that conduct business with the

regulated entity; and

(V) the name and address of the regulated entitys Colorado agent for service of process.

(b) If the information regarding the regulated entity changes, the regulated entity shall make a

subsequent filing within a reasonable time to update the information previously filed.

Boulder is a Colorado home rule municipality that intends to operate a municipal

electric utility. Neither home rule cities nor municipal electric utilities are regulated entities

pursuant to Title 40 of the Colorado Revised Statutes.

X. BOULDERS PROPOSALS ARE NOT CONTRARY

TO THE PUBLIC INTEREST

Boulder is requesting that the Commission approve the transfer of assets identified in

this Application and the method proposed by the City that will allow Boulder Light & Power

and PSCo to be interconnected in such a way as to ensure continuity of reliable service in a safe

manner. Boulder has the authority under both the Colorado Constitution and the Boulder

Home Rule Charter to create a municipal electric utility and to acquire the assets necessary for


July 7, 2015 Page 29 of 34

the operation of that utility. Boulder has created a plan for interconnection that it believes will

maintain the level of safety, reliability and service quality that both Boulder Light & Power and

PSCo customers presently enjoy. As such, Boulders request for the transfer of assets and its

interconnection plan are not contrary to the public interest.

Because Boulder is not seeking to provide retail electric service to PSCo Customers in

the Acquisition Area, Boulder is proposing that PSCo wheel power across Boulders distribution

facilities to the PSCo Customers in the Acquisition Area. This is a common practice in the

utility industry. Boulder further proposes to develop in the future a Commission-approved

distribution wheeling agreement that will include a charge for wheeling services that is designed

to ensure cost comparability with rates PSCo currently charges its customers for PSCos self-

provisioned distribution service. If the Citys approach is adopted, PSCo customers throughout

the state, including PSCos Customers in the Acquisition Area, will be unharmed by the approval

of Boulders proposed transfer of assets, and may actually enjoy certain cost benefits and

advantages from the wheeling arrangement that are not available to them today. This approach is

not contrary to the public interest.

Boulder has developed, and continues to refine, a transition plan that will permit a

seamless transition for Boulder customers and for PSCos customers within the Acquisition

Area. Boulder would like to work with PSCo to develop a full, comprehensive transition plan

and asks the Commission to order PSCo to work with the City to this effect. Certainly, the more

seamless and transparent the transition can be for customers, the better. In this regard, Boulders

plan is not contrary to the public interest.

Finally, in keeping with the proposals Boulder has been making during Commission

proceedings for several years, Boulder is proposing that it gradually reduce the energy and


July 7, 2015 Page 30 of 34

capacity it takes from PSCo, linking that reduction to increases in PSCos native load elsewhere

on its system and PSCos need for additional resources. By forming a new electric utility and

being responsible for meeting its own energy and capacity needs, Boulder will be mitigating the

need for PSCo to acquire new sources of energy and capacity to serve its non-City native load

customers as well. It is even possible that the Citys departure from the PSCo system will reduce

the overall cost of the pool of new resources that PSCo must acquire in order to serve its non-

City native load customers. As such, the Citys proposal will have a minimal, and potentially

beneficial, impact on PSCos non-Boulder native load customers and will not be contrary to the

public interest.

XI. CONCLUSION

It has become increasingly clear that the existing energy system is undergoing a historic

transition. Various innovations and challenges have begun to shift the local and global energy

landscape, including the expanding use of distributed generation, the increasing frequency of

extreme weather events, and emerging clean technologies that have the potential to remake our

energy system. Efficiency, conservation, and local generation have begun to undercut utility

revenue and rooftop solar is eroding electricity demand right at the source.

Harnessing innovation and addressing Boulders challenges requires a flexible approach

and an understanding that success takes time. Here in Boulder, and around the globe, there is a

rapidly growing discussion about the utility of the future and the role of end-users. This

energy system transformation has been guiding Boulders activities, including the role its electric

utility plays in our climate commitment and drive to design a more resilient energy system.

This means that the utility of the future cannot look like the utility of the past or present,

but must take a new form to remain relevant in a democratized system. For example, the present


July 7, 2015 Page 31 of 34

regulatory system was designed with the assumption that customer energy usage is inelastic and

that the most efficient system is one that is almost entirely dependent on large, central station

power plants. Today, that is no longer the case. While central power plants and the transmission

network are and will remain the vital backbone of our electric system, technology has

significantly advanced and prices of distributed solutions are rapidly declining, enabling greater

control and ownership opportunities for customers and communities. The energy utility of the

next century will implement strategies to:

Improve energy affordability;

Provide a more resilient and flexible power grid;

Give customers more control over their energy use;

Significantly reduce energy consumption through efficiency and conservation;

Significantly reduce emissions through a switch from fossil fuels to renewable energy;

Increase grid efficiency via a two-way networked smart system that uses demand

response, local generation and other local resources;

Increase grid flexibility to integrate large quantities of variable (distributed and utility-

scale) renewable energy; and,

Facilitate a coordinated energy plan that delivers electricity, heat, water, communication,

land-use, and transportation systems.

Under todays regulations, not all of these can be pursued at a local level. For example, if

a group of customers wanted to be served by a local generation resource, like a backup generator

and be connected via a micro grid, to insure a higher level of reliability while minimizing cost, it

would be prohibited under current regulation unless owned by the utility.


July 7, 2015 Page 32 of 34

In contrast to these regulatory restrictions, many utilities, regulators, communities and

even customers across the US are beginning to adapt to the new energy paradigm. Boulders

efforts have illustrated that in addition to providing reliable and affordable electricity to its

customers, the utility of the future must be just one part of an energy system that is innovative,

sustainable, and reliable. This evolution will take into account advances in energy technology

and market changes, and will allow communities and individual customers a higher level of

engagement and choice. Under a local electric utility, this might include more flexible options

for customers to sell and receive power.

XII. HEARING, VERIFICATION, AND REQUEST FOR RELIEF

If there are no protests or interventions, or if such protests or interventions do not

properly request a hearing, Boulder requests that the Commission decide this matter pursuant to

its modified procedures, without a hearing, in accordance with Rule 1403 of the Commissions

Rules of Practice and Procedure, 4 C.C.R. 723-1-1403.

In the event that the Commission deems a hearing necessary, Boulder will present

competent evidence at the hearing to demonstrate that the relief requested isnot contrary to the

public interest and to justify granting this Application.

This application is verified by the attached affidavit of Heather Bailey, Executive

Director of Energy Strategy and Electric Utility Development for the city of Boulder.

WHEREFORE, Boulder respectfully requests that the Commission enter an Order

granting this Application and providing the following specific relief:

a. Approving the transfer of the facilities and properties described in this

Application and the supporting testimony from PSCo to the City;


July 7, 2015 Page 33 of 34

b. Authorizing the methodology proposed by the City in this Application and the

supporting testimony that will allow Boulder Light & Power and PSCo to be

interconnected in such a way as to ensure continuity of safe and reliable service;

c. Ordering PSCo to work with Boulder to develop a PUC-jurisdictional distribution

wheeling agreement applying a formula rate for the delivery of electricity to PSCos

customers within the Acquisition Area over facilities owned by Boulder;

d. Ordering PSCo to work with Boulder to develop a transition plan that will permit

a seamless transition for Boulder customers and for those PSCo customers who will be

served over Boulders distribution lines; and

e. Finding it is appropriate for PSCo to (1) use the electric capacity released by

Boulder over time to serve PSCo remaining native load customers load growth and

capacity needs, (2) sell such capacity released from Boulder to PSCos remaining native

load customers at PSCos then-authorized retail rate, and (3), in future rate cases and in

lieu of incurring costs for additional new resources, seek to recover from its non-Boulder

native load customers the costs associated with the capacity that was once used to serve

Boulder but which will, in the future, be used to serve PSCos remaining native load

customers. The findings requested in this subpart (e) may be used to inform anticipated

decisions on stranded costs.

ATTESTATIONS

I, Heather Bailey, as Executive Director for Energy Strategy and Electric Utility

Development, having read subparagraphs (b)(XI)(A) through (C) of Commission Rule 3002, do

hereby represent that the city of Boulder agrees to abide by the provisions of subparagraphs

(b)(XI)(A) through (C) of that rule.

I, Heather Bailey, as the Executive Director for Energy Strategy and Electric Utility

Development for the city of Boulder, and under penalty of perjury, attest that I am authorized to

act on behalf of the city of Boulder and do hereby state that the contents of this application are

true, accurate and correct.

ARTICLE XIII. - LIGHT AND POWER UTILITY

FOOTNOTE(S):

--- (16) ---

Further amended by Ordinance 7838 (2012).

--- (17) ---

On November 1, 2011, voters approved amending the Charter to change "qualified electors" to

"registered electors" under Ordinance 7801.Further amended by Ordinance 7838 (2012).Further

amended by Ordinance 7975 (2014)

Sec. 178. - Creation, purpose and intent.

(a) The city council, at such time as it deems appropriate, subject to the conditions herein, is

authorized to establish, by ordinance, a public utility under the authority in the state

constitution and the city charter to create light plants, power plants, and any other public

utilities or works or ways local in use and extent for the provision of electric power. The city

council shall establish a light and power utility only if it can demonstrate, with verification

by a third-party independent expert, that the utility can acquire the electrical distribution

system in Boulder and charge rates that do not exceed those rates charged by Xcel Energy at

the time of acquisition and that such rates will produce revenues sufficient to pay for

operating expenses and debt payments, plus an amount equal to twenty-five percent (25%)

of the debt payments, and with reliability comparable to Xcel Energy and a plan for reduced

greenhouse gas emissions and other pollutants and increased renewable energy; and

(b) The governing body of the electric utility enterprise shall be the city council. The council

may, by ordinance, delegate responsibility to the electric utilities board or the city manager

as appropriate.

(c) The people of Boulder seek electric power supplied in a reliable, fiscally sound, and

environmentally responsible manner. Therefore, the utility will be operated according to the

following guiding principles.

(1) Reliable Energy: Community safety, convenience, and prosperity all depend on the

reliable delivery of electric power. The utility will deliver reliable electric power. The

utility's foremost responsibilities will be to provide electric power that is high quality

and dependable, support economic vitality, prevent service outages, and respond

promptly to any service outage.

(2) Fiscal Responsibility: The cost of electric power is a significant portion of business and

household budgets. The utility will operate in a fiscally responsible manner, always

being mindful that every expenditure will be reflected in customers' rates and will affect

household budgets and business profitability. The utility will, while always honoring its

Application for Transfer of Assets Attachment A-1

Page 1 of 10Co

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Syst

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obligations to bondholders, strive to maintain rate parity with any investor-owned utility

whose service area would include the City of Boulder.

(3) Clean Energy: Climate change and diminishing fossil fuel supplies, combined with the

high cost of those fuels, are significant factors leading to the creation of the utility. The

utility will strive to reduce reliance on fossil fuels, focus on sustainable alternatives, and

seek new opportunities for producing clean energy.

(4) Ratepayer Equity: The utility will direct its efforts to promote ratepayer equity in all

aspects of its operations. Rates charged by the utility will be designed to create a fair

and equitable distribution among all users of the costs, replacement, maintenance,

expansion, operations of facilities, energy, and energy conservation programs for the

safe and efficient delivery of electric power to city residents and other customers. The

utility will consider the effects of its programs, policies, and rates in the development of

programs for low-income customers.

(5) Environmental Stewardship: Preserving and protecting our natural environment goes

well beyond producing clean energy. The utility will be a good environmental steward

by working to reduce the environmental impact of its operations, including working to

reduce the demand for electricity. Energy and power that is produced in an

environmentally responsible manner requires that the city balance environmental factors

as an integral component of planning, design, construction, and operational decisions.

(6) Enterprise: The city will deliver electric power services by means of an enterprise, as

that term is defined by Colorado law. The city further declares its intent that the city's

electric utility enterprise be operated and maintained so as to exclude its activities from

the application of Article X, Section 20 of the Colorado Constitution. (Added by Ord.

No. 7804 (2011), 2, adopted by electorate on November 1, 2011.)

Sec. 179. - Definitions.

Unless the context specifically indicates otherwise, the following words and phrases shall

have the following meanings as used in this article:

(a) "Electric Utility Activity" includes, but is not limited to, the provision of electric power to

customers within its service area.

(b) "Electric Utility Enterprise" means the electric utility business now or hereafter owned by

the city, which business receives under ten percent (10%) of its annual revenues in grants

from all Colorado state and local governments combined and which is authorized to issue its

own revenue bonds pursuant to this article or other applicable law.

(c) "Electric Utility Facilities" means all real and personal property utilized by the city in

connection with the generation, transmission, provision, distribution and conservation of

energy, electricity, light and power for the city, now or hereafter owned or operated by the

city.

(d) "Grant" means any direct cash subsidy or other direct contribution of money from the state

or any local government in Colorado which is not required to be repaid. "Grant" does not

include:


Page 2 of 10

(1) any indirect benefit conferred upon the electric utility enterprise from the state or any

local government in Colorado;

(2) any revenues resulting from rates, fees, assessments, or other charges imposed by the

electric utility enterprise for the provision of goods or services by such enterprise; or

(3) any federal funds, regardless of whether such federal funds pass through the state or any

local government in Colorado prior to receipt by the electric utility enterprise. (Added

by Ord. No. 7804 (2011), 2, adopted by electorate on November 1, 2011.)

Sec. 180. - Powers of the electric utility enterprise.

In addition to any of the powers it may have by virtue of any of the applicable provisions of

state law, this Charter, and the Code, the electric utility enterprise shall have the power under this

article:

(a) to acquire by gift, purchase, lease, or exercise of the right of eminent domain, to construct,

to reconstruct, to improve, to better and to extend electric utility facilities, wholly within or

wholly without or partially within and partially without the territorial boundaries of the city,

and to acquire in the name of the city by gift, purchase, or the exercise of the right of

eminent domain lands, easements, and rights in land in connection therewith;

(b) to operate and maintain electric utility facilities for its or the city's own use and for the use

of public and private consumers and users within and without the territorial boundaries of

the city;

(c) to accept federal funds under any federal law in force to aid in financing the cost of

engineering, architectural, environmental, or economic investigations or studies, surveys,

designs, plans, working drawings, specifications, procedures, or other action preliminary to

the construction, operation or remediation of electric utility facilities;

(d) to accept federal funds under any federal law in force for the construction, operation or

remediation of electric utility facilities;

(e) to prescribe, revise, and collect in advance or otherwise, from any consumer served by a

electric utility activity, rates, fees, and charges or any combination thereof for the services

furnished by, or the direct or indirect connection with, the electric utility facilities; and in

anticipation of the collection of revenues of such electric utility facilities, to issue revenue

bonds to finance in whole or in part the cost of acquisition, construction, reconstruction,

improvement, betterment, or extension of the electric utility facilities; and to issue

temporary bonds until permanent bonds and any coupons appertaining thereto have been

printed and exchanged for the temporary bonds;

(f) to pledge to the punctual payment of said bonds and interest thereon all or any part of the

revenues of the electric utility facilities;

(g) to make all contracts, execute all instruments, and do all things necessary or convenient in

the exercise of the powers granted in this section or elsewhere in state law, the Charter, or

the Code, or in the performance of its covenants or duties, or in order to secure the payment

of its bonds if no encumbrance, mortgage, or other pledge of property, excluding any

pledged revenues, of the electric utility enterprise or city is recreated thereby, and if no

property, other than money, of the electric utility enterprise or city is liable to be forfeited or


Page 3 of 10

taken in payment of said bonds, and if no debt on the credit of the electric utility enterprise

or city is thereby incurred in any manner for any purpose;

(h) to issue refunding bonds pursuant to this article or other applicable law to refund, pay, or

discharge all or any part of its outstanding revenue bonds issued under this article or under

any other law, including any interest thereon in arrears or about to become due, or for the

purpose of reducing interest costs, effecting a change in any particular year or years in the

principal and interest payable thereon or effecting other economies, or modifying or

eliminating restrictive contractual limitations appertaining to the issuance of additional

bonds or to any electric utility facilities; and

(i) to begin operations of the municipal utility at such time as the city council may by ordinance

provide.

(j) Any ballot measure related to the light and power utility, including without limitation

measures related to debt, may be placed on a ballot at any election, including without

limitation a special election, a general municipal election or a special municipal election.

(k) The light and power utility's service area may include customers outside of the city to the

extent that such a service area shall assist with the provision of a safe and reliable system for

service to the utility's customers. (Added by Ord. No. 7804 (2011), 2, adopted by

electorate on November 1, 2011. Amended by Ord. No. 7920 (2013), 3, adopted by

electorate on November 5, 2013.)

Sec. 181. - Revenue bonds.

(a) In accordance with and through the provisions of this section, the electric utility enterprise,

through its governing body, is authorized to issue bonds or other obligations payable solely

from the revenues derived or to be derived from the functions, services, benefits or facilities

of such enterprise or from any other available funds of such enterprise. Such bonds or other

obligations shall be authorized by ordinance, adopted by the governing body of the electric

utility enterprise in the same manner as other ordinances of the city. Such bonds or other

obligations may be issued without voter approval, notwithstanding the provisions of Section

2(d) of the charter, provided that, during the fiscal year of the city preceding the year in

which the bonds or other obligations are authorized, the electric utility enterprise received

under ten percent (10%) of its annual revenue in grants or, during the current fiscal year of

the city, it is reasonably anticipated that such enterprise will receive under ten percent (10%)

of its revenue in grants.

(b) The terms, conditions, and details of said bonds, or other obligations, and the procedures

related thereto shall be set forth in the ordinance authorizing said bonds or other obligations

and said bonds, or other obligations may be sold in accordance with the provisions of the

charter. Each bond, note, or other obligation issued under this section shall recite in

substance that said bond, note, or other obligation, including the interest thereon, is payable

from the revenues and other available funds of the electric utility enterprise pledged for the

payment thereof. Notwithstanding any other provision of law to the contrary, such bonds, or

other obligations may be issued to mature at such times as are authorized by the charter,

shall bear interest at such rates, and shall be sold at or above the principal amount thereof,

all as shall be determined by the governing body of the electric utility enterprise.

Notwithstanding anything in this section to the contrary, in the case of short-term notes or


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other obligations maturing not later than one year after the date of issuance thereof, the

governing body of the electric utility enterprise may authorize enterprise officials to fix

principal amounts, maturity dates, interest rates, and purchase prices of any particular issue

of such short-term notes or obligations, subject to such limitations as to maximum term,

maximum principal amount outstanding, and maximum net effective interest rates as the

governing body of the electric utility enterprise shall prescribe. Refunding bonds of the

electric utility enterprise shall be issued as provided in Part 1 of Article 56 of Title 11,

C.R.S. The powers provided in this section to issue bonds, or other obligations are in

addition and supplemental to, and not in substitution for, the powers conferred by any other

law, and the powers provided in this section shall not modify, limit, or affect the powers

conferred by any other law either directly or indirectly. Bonds, notes, or other obligations

may be issued pursuant to this section without regard to the provisions of any other law.

Insofar as the provisions of this section are inconsistent with the provisions of any other law,

the provisions of this section shall control with regard to any bonds lawfully issued pursuant

to this section.

(c) Any pledge of revenue or other funds of the electric utility enterprise shall be subject to any

limitation on future pledges thereof contained in any ordinance of the governing body of the

electric utility enterprise or of the city authorizing the issuance of any outstanding bonds or

other obligations of the electric utility enterprise or the city payable from the same source or

sources. Bonds or other obligations, separately issued by the city and the electric utility

enterprise, but secured by the same revenues or other funds shall be treated as having the

same obligor and as being payable in whole or in part from the same source or sources.

(Added by Ord. No. 7804 (2011), 2, adopted by electorate on November 1, 2011.)

Sec. 182. - Utility service standards.

(a) Customer Benefit: The utility shall conduct its business and affairs for the benefit of its

customers and the city.

(b) Cost Effective Service: The utility will provide the electric power requirements of the

customers within the service areas in a reliable, cost-effective, and environmentally

responsible manner.

(c) Energy, Energy Efficiency and Renewable Energy: The utility will engage in business

activities related to the provision of electric power services, which may include but are not

limited to investment in conventional electric generation, generation using renewable

resources, energy efficiency measures, demand side management, and associated

communication systems.

(d) Rates: The council will by ordinance fix, establish, maintain, and provide for the collection

of such rates, classes of rates, fees, or charges for electric service and other utility services

furnished by the city. Prior to changing rates, classes of rates, fees, or charges, the utility

advisory board will review changes and provide a recommendation to the council, based on

the criteria in this section. The council will consider the following factors when setting

utility rates:

(1) The utility will produce revenues at least sufficient to pay the cost of operation and

maintenance of said utilities in good repair and working order; to pay the principal of

and interest on all bonds of the city payable from the revenues of the utility;


Page 5 of 10

(2) The utility will provide and maintain an adequate fund for replacement of depreciated

or obsolescent property, and for the extension, improvement, enlargement, and

betterment of the utility; to pay the interest on, and the principal of, any bonds issued by

the city to extend or improve the utilities;

(3) The utility will consider electricity rates of surrounding and similarly situated

communities and use best efforts to set competitive utility rates; and

(4) The council will fix rates for which electric service will be furnished for all purposes,

and rates shall be as low as good service will permit, consistent with the guiding

principles set forth in section 178 (c)(1) - (6).

(e) Budget and Appropriations: The council, by ordinance, will approve the budget and

appropriations as required by Charter Art. VI.

(f) Accounting Standards: All revenues and expenditures of the city's electric system will be

considered revenues and expenditures of the utility and shall be audited and accounted for in

a manner that is consistent with charter 127.

(g) No Free Service: No free energy or power shall be given to any person, firm, corporation, or

institution whatsoever.

(h) Payments in Lieu of Taxes and for Services Rendered - City: The utility may only transfer

funds for another governmental purpose within the city if:

(1) a service is provided to the utility by another department within the city; or

(2) in lieu of tax or franchise fee payments that a similarly situated private utility would

have been required to pay taxes to the city. The maximum payment in lieu of taxes shall

be limited by an estimated amount of property, sales or use tax, and a payment in lieu of

a franchise fee not to exceed four percent of annual revenues.

(i) Payments in Lieu of Taxes and for Services Rendered - Other Governmental Entities: The

utility shall annually transfer funds to the Boulder Valley School District in an amount the

city council determines will approximate property taxes that a private utility would have

paid to the School District on property owned by the electric utility enterprise. The utility

may transfer funds to other governmental entities in lieu of property taxes that would have

been paid if a similarly situated private utility would have been required to pay property

taxes to the other governmental entity or for up to the value of a service rendered.

(j) Preferences Prohibited: The utility shall not make or grant any preference or advantage to

any corporation or person or subject any corporation or person to any prejudice or

disadvantage as to rates, charges, service, or facilities, or in any other respect including

without limitation whether the customer is inside or outside the city limits.

(k) Advantages Prohibited: The utility shall not establish or maintain any unreasonable

differences or undue preferences as to rates, charges, service, facilities, or any respect as

between any class of services including without limitation whether the customer is inside or

outside the city li

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Boulder application for PUC approval of Xcel asset transfer

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