The Public Utilities Commission's chief engineer recommends the commission deny Boulder's pending application to acquire certain Xcel Energy assets and form a municipal electric utility.

In testimony filed late Friday, Gene Camp wrote on behalf of PUC staff that the city's latest proposal — an application supplemental to one partially dismissed just over a year ago — "lacks sufficient detail" and cast doubt on several key aspects of Boulder's plan.

It was one in a series of testimonials filed Friday, many of which are confidential. But among those available to the public were filings from the state Office of Consumer Counsel, the local branch of the International Brotherhood of Electrical Engineers and IBM — all of which are also skeptical of Boulder's municipalization plan.

Arguments before the PUC will be held starting in April, with a ruling expected late this summer.

While Boulder has technically created a municipal utility, it needs approval of a "separation plan" that would allow service to customers within city limits, in order to actually begin operating the utility and serving customers. Boulder's proposed plan would involve filing, in district court, for acquisition of Xcel assets the PUC may or may not approve for transfer.

The city has proposed a five-year wholesale contract in which Boulder leases the Xcel facilities it hopes to acquire back to Xcel starting on the first day of the potential municipal utility's operation. Boulder wants to buy power from the company for those five years while building out city power generation assets.

Camp took issue with this part of the plan, writing that there is "no clearly established Commission authority to order (Xcel) to enter into a commercial contract to lease the (p)roperty after it is acquired by Boulder."

If the commissioners concur with that view on the "transition" aspect of the application, Camp continued, "Boulder will not be able to provide retail electric distribution service to the electric customers located within the (c)ity until such time that it is able to do so independently" from Xcel.

Camp did recommend, however, that the commission recognize Boulder's "right to municipalize" and offer the city direction for a different path. David Eves, president of Xcel Energy-Colorado, wrote in his own filing that the utility agrees the city should resubmit another plan.

Spokeswoman Michelle Aguayo said in a statement Monday that Xcel believes "Boulder's proposal to the PUC presents significant practical and legal risks.

"We still believe that a settlement with Boulder is the optimal path for success," the statement added. "(B)y working together we can provide customers with options that take advantage of our mutual strengths."

Boulder and Xcel have been engaged in talks on a possible settlement for months, and if one is reached, the municipalization bid would end and the incumbent utility would continue serving local ratepayers — albeit, presumably, under a different set of negotiated guidelines more favorable to the city's climate and consumer choice goals.

City spokeswoman Sarah Huntley said on Friday that Boulder staff would need at least a week to review the testimony and determine a response.

But in its own testimony filed Friday, Boulder argued that the PUC does, in fact, have authority to OK the city's proposed leasing of potentially acquired Xcel distribution facilities.

The city seeks to reduce its electrical demand on the Xcel fleet gradually, under a yet-to-be-negotiated schedule. Camp wrote that Boulder "cannot provide certainty" as to how and whether it will acquire the property needed to make what is called the "Gradual Departure Plan" work, because cost figures won't be known until condemnation proceedings begin — if they ever do.

The debt-funded condemnation proceedings, combined with debt-funded construction costs, could run the city as much as $267 million, according to estimates included in the application to the PUC.

Boulder's filing acknowledged that the commission can't require the proposed Gradual Departure Plan be enacted, but argued that the commission can still issue findings on the concept, and take into account "corresponding willingness" by Xcel to participate, should a mutually agreeable plan emerge.

The now six-year-old city municipalization bid is not expected to involve any transaction related to Xcel assets until at least 2019.

Meanwhile, the Office of Consumer Counsel — which represents the public interest in cases before to PUC, courts and other agencies — has also taken the position that the commission needs more information before it can sign off on the city's plan.

"The OCC believes the sequence of events needs to change," the Counsel's testimony reads. "As it presently stands, the Commission is being asked to approve the transfer of certain assets with no clear description of those assets and with no proposed values of those assets."

IBM, a longtime local cornerstone employer, wrote through attorneys that Boulder has failed to show that it can provide "adequate service" so as to be as effective, reliable and safe to satisfy the fact that "IBM has no risk tolerance."

When the city and the University of Colorado announced an agreement in which CU would buy power from a potential city utility, Boulder said it would also consider negotiating deals with other large institutions in the area, including IBM.

But the tech giant asked the PUC to exclude IBM's campus at 6300 Diagonal Hwy. from any separation plan the commission may approve.

Alex Burness: 303-473-1389, burnessa@dailycamera.com or twitter.com/alex_burness

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