The city of Boulder, Colo., and Xcel Energy Inc. have reached a settlement over a lawsuit filed by Xcel over the city's drive to create a municipal electric utility.

In the 2014 lawsuit, Xcel Energy, which does business in the state as Public Service Co. of Colorado, asserted that the City Council's decision to form a public utility was premature and possibly in violation of city charter requirements. Since then the case has wended its way through the courts, and the Colorado Supreme Court eventually sent it back to district court. The two parties then settled.

In the settlement, Boulder agreed to repeal the ordinance that created a municipal utility in 2014. Boulder also agreed not to enact any ordinance creating a new municipal electric utility unless it complies with the city's charter and after a vote of the majority of city residents. Voters have already voted twice to approve municipalization of the city's electricity supply.

"This settlement reduces litigation costs and does not affect the city's plan for voters to determine in a future election whether the city will create a municipal electric utility," Boulder officials said in a press release.

Xcel Energy agreed to drop the lawsuit with prejudice and to not assert the lack of existence of the utility as a direct defense in possible condemnation proceedings brought by the city.

In April, Boulder offered Xcel $68.5 million for its utility assets, tens of millions of dollars below initial estimates.

Mark Stutz, spokesman for Xcel, said in an email: "The settlement is a positive outcome and we believe it was appropriate for the city to unwind what we have always thought was a prematurely formed utility because the city didn't know, and still doesn't yet know, if it can satisfy voter imposed charter metrics tied to cost, reliability and clean energy."

The settlement in Boulder follows a vote by the city of Pueblo, Colo., to move ahead with a feasibility study on a takeover electric service from Black Hills Energy, a subsidiary of Black Hills Corp. City councilors on May 20 voted 5-2 to hire a consulting firm to conduct a second feasibility study to determine if the city should proceed with municipalization, according to the Pueblo Chieftain. In January, the city of roughly 111,000 released a study showing it was "financially feasible" to create a public utility.