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Boulder files new plan to take Xcel Energy's assets in city for municipal utility

The City ofBoulder, Colo., filed a new application with state regulatorsasking for approval to take ownership of Xcel Energy Inc.'s electric distribution assets in thecity so it can operate a municipal electric utility.

An application filed by Boulder in July 2015 sought toinclude transmission assets beyond the city limits, but the Colorado PublicUtilities Commission ruled that Boulder cannot take assets Xcel Energy uses toserve its own customers outside the city. Boulder accordingly wastold in December 2015 to submit a plan that did not require Xcel Energysubsidiary Public Service Co. ofColorado to share facilities that exclusively serve out-of-citycustomers with a new city-owned electric utility.

The new application is in response to that PUC order. Thefiling, referred to as a "second supplemental application," proposesa separation plan that Boulder said will allow the city to provide reliableservice to all customers within the city limits while maintaining Xcel Energy'sability to serve customers in unincorporated Boulder County, Boulder said in apress release.

Boulder said it obtained information through a PUC-ordereddiscovery process that had not been previously available to the city. Bouldersaid it used that information to conduct an analysis that resulted in thecurrent, much more technically detailed application.

"Boulder is asking the commission to approve thetransfer of distribution assets needed to operate the city's newmunicipally-owned electric utility. Boulder is not seeking the transfer ofgeneration assets or transmission assets nor is Boulder seeking to acquireassets used exclusively to serve PSCo ... customers," the application said.

However, noting that some of the property needed to servecustomers within the city is located outside city limits, Boulder said it isseeking the commission's approval for transfer of those assets as well.

"These are not facilities or real property intereststhat Xcel Energy will use to serve its customers who are located outside thecity once the two distribution systems are separated," Boulder said.

Further, the new plan does not include any distributioninterconnection between Xcel Energy's system and Boulder's proposed city-owneddistribution network, the application said. To that end, the separation planincludes significant new construction at the city's expense.

The application described Boulder's plan to take atransitional approach by starting as a wholesale customer of Xcel Energy for alimited time. The city proposed to gradually reduce its demand for power fromthe utility in coordination with Xcel Energy's needs to serve the growingdemand of customers outside Boulder.

The resources released by Boulder could instead providepower to other customers, thereby allowing Xcel Energy to avoid the expense ofdeveloping new energy supplies, the city said.

"We believe the new application will fully comply withthe PUC direction we received in December and maintain important safety andreliability standards for all customers, whether they take service from a newmunicipal electric utility in Boulder or live outside Boulder and continue totake service from Xcel Energy," said Heather Bailey, Boulder's executivedirector of energy strategy and electric utility development.

Xcel Energy has repeatedly said its assets are not for sale.However, Boulder said if negotiations between the parties are not fruitful, itwill file a condemnation action in district court to acquire the property,assuming the PUC approves the distribution system transfer.

In its application, the city said all distributionfacilities serving city customers will continue to be integrated with XcelEnergy's system until the two distribution systems are completely separated.Consequently, Xcel Energy will continue to operate the system during atransition period to ensure customers in and outside the city continue to getreliable service. During this interim period, Boulder proposes to lease theproperty it acquires back to Xcel Energy at no cost until the physicalseparation of the two systems can be accomplished.

Meanwhile, Boulder said it is working with Xcel Energy toreach a settlement that could result in a partnership to achieve their jointenergy and climate goals. A negotiating team has been meeting regularly sinceJanuary and has made progress on a wide range of issues, Boulder said.