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Appeals court clears Xcel Energy to continue challenge to Boulder's utility efforts

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Appeals court clears Xcel Energy to continue challenge to Boulder's utility efforts

Xcel EnergyInc. has the right to challenge whether Boulder, Colo., legallycreated a municipal utility in 2014, the Colorado Court of Appeals has ruled.

The appellate court on Sept. 22 overruled a lower court decision that the utility'schallenge of the city's plans had come too late. The decision allows XcelEnergy to continue raising questions about the legal and financial viability ofthe city's utility formation.

While Boulder continues its efforts to acquire Xcel Energy'sassets within the city under a state law that allows municipalization ofutility services, the investor-owned utility will remain the sole electricprovider there unless and until legal, regulatory and financial issues areresolved.

The Boulder County District Court had ruled that the time forXcel Energy to challenge the city's municipal utility ordinances had expired,so the utility did not have a case. Colorado Rules of Civil Procedure requireany challenge to a local ordinance to be filed in district court no later than28 days after the ordinance becomes final.

Xcel Energy met the 28-day deadline when it an ordinance the City Councilpassed on May 6, 2014, to establish an electric utility, but Boulder filed fordismissal, arguing that the utility was really seeking to challenge an earlierAug. 20, 2013, ordinance in which the council deciding charter requirements forestablishing a utility had been met.

The appeals court, however, said neither of the ordinancesBoulder passed to establish a municipal utility were finalized, so the 28-dayrule does not apply.

"[N]either ordinance establishes a final utility plan norresolves the issues related to the preconditions necessary to establish such aplan," the court said.

While the second ordinance purported to establish that thecharter conditions had been satisfied, that ordinance also said furtherrefinement of plans was needed and deferred creation of the utility for laterlegislative action, the appeals court noted. The court pointed out that thecity has not yet shown it can meet the charter's requirements for limitingcosts and rates of the municipal utility, especially since the "conditionsprecedent" referenced in the first ordinance involved calculations thatproved inapplicable.

The calculations cannot be counted because they included XcelEnergy customers outside of Boulder, but the Public Utilities Commission hasruled that Boulder cannot acquire such customers. Further, there has been nodemonstration that the charter's requirements can be met if the utility islimited to Boulder residents, the court noted. "Such ongoing assessmentsleave much more to be done. Therefore, the first ordinance was not a finalaction," the court continued.

The second ordinance, which authorized the utility, relies onthe first ordinance, so it lacks finality as well, the court concluded.

In response, Xcel Energy stated by email, "The court'sdecision confirms Boulder's premature formation of its electric utility andhighlights the fact that 'There remain significant unresolved issues as to thefinancial viability and reliability of the utility.' The order preserves therights of Xcel Energy's customers in Boulder and throughout Colorado."

Boulder released its own statement in response to the appealscourt decision, saying, "The court did not strike down either Ordinance7917, which accepted the third-party review, or Ordinance 7969, which formedthe utility. We are still analyzing any impacts as we continue down parallelpaths."

Xcel Energy subsidiary Public Service Co. of Colorado filed the complaint onJune 3, 2015, naming the city, the Boulder City Council and Mayor MatthewAppelbaum as defendants.