Download - Jan 06 slides_1_old
BOULDER’S ENERGY FUTURECitizens’ Action Committees
Technical/Financial Analysis Group
and Public Education/Mobilization Group
January 6, 2011
Why Are We Here?
• Xcel's 20 year franchise with the City expired on 12/31/10, providing new options.
• We want to create the best energy future for the City (in the middle of a rapidly changing energy market and global climate conditions).
The Next Step: Analyze Options
• Option “A": Do a new, different and short term Xcel agreement (if Xcel proposes an acceptable one)
• Option "B": Do our own municipal power system (similar to our water and sewer systems)
Goals for This Analysis• Identify the best financial plan
• Keep power rates stable
• Maintain energy system reliability
• Achieve a higher percentage of clean energy (solar, wind, hydro) in our overall power supply
• Create a more flexible clean energy implementation process (different than Xcel's current monopoly power)
Process For This Year
• Xcel proposal “A" by Apr 2011
• City proposal "B" in progress Jan through Jun 2011 (with several RFPs and reports)
• Council decision on the language for a ballot issue by Aug 2011
• Public vote on ballot issue in November 2011
Technical/Financial Agenda
• (10 min.) Brief Introductions - Who are you? - Why are you here?
• (5 min.) The Technical/Financial Working Group’s purpose and overview
• (20 min.) R.W. Beck’s 2005 Preliminary Municipalization Study Presentations
• (15 min.) Discussion/Q and A on questions that need to be answered. Summarize/pick topics for future meetings then rejoin main meeting
Municipalization
• Is there an option other than Xcel?• Yes, there is:
Buy the distribution systemContract for operation and maintenanceBuy power from independent power
producers
RW Beck Preliminary Municipalization Feasibility Study of Boulder’s Electric Power System
2005
Overview
1. Determine Total Cost = Value of Xcel’s distribution assets +
cost of separation.Now imagine that Boulder has municipalized and
do a free cash flow analysis ….2. Revenue – Costs = Free Cash Flow (for debt
payments)3. Total debt payments over 20-30 years4. Present value (PV) of principal of total debt
payments
Big Question
Is PV greater than the Total Cost?
If YES (by a reasonable margin), then municipalization is financially feasible.
Separation Costs
• Severance costs: $5 million
• Stranded cost: $20 million
(Boulder revenue stream (annual) – competitive value of Boulder market (annual)) x number of years
Value of Xcel’s Assets
• Purchase price of distribution system
OCLD (original cost less depreciation)RCNLD (replacement cost new less depreciation)
Beck estimate: Between $93 and $123 million*
*Does not include Smart Grid City. Favorable PUC ruling on Jan 5, 2011.
Conclusion
Beck:“The study suggests that there is a reasonable expectation that the City could acquire the Xcel distribution facilities within the City.”
Other observations
• “Much of the information provided [by Xcel] was incomplete or unreliable.”
• “The City should limit its municipalization efforts only to the electric distribution system.”
• “The City should exclude generation and transmission assets from this municipalization effort.”
• “All of the overhead construction observed appeared to be in very good condition with signs of continuing maintenance.”