Boulder, Xcel Dispute Reaches Colorado Supreme Court

Supreme Court oral arguments focus on finality of utility ordinances

Last week, the City of Boulder cleared another hurdle in its efforts to secure permission to operate its own utility company. The Colorado Supreme Court heard oral arguments in the case brought against the city by Xcel subsidiary Public Service Company of Colorado.

The move by the city to create an independent power and light utility began in November 2011. Boulder voters amended the Boulder Home Rule Charter to create the utility. The amendment was contingent upon the city demonstrating that it wouldn’t charge higher rates than incumbent Xcel and would be able to acquire the existing electrical distribution system in the city. 

During oral arguments, the parties discussed the two ordinances passed by the city — ordinances 7917 and 7969 —  to determine the validity of the Court of Appeals ruling that the ordinances were not final. The first ordinance, 7917, required an independent third party to ensure the city could meet the requirements, and the second, 7969, established the city’s rights in creating a utility. The Court of Appeals ruling noted that additional revisions were made after the passage and that there are “significant unresolved issues as to the financial viability and reliability of the utility.”

Several justices pushed back on this point of changing conditions after the passage of the ordinance. 

“Is it your position that the city could have in the first ordinance just approved whatever assumptions it wanted, then completely change every assumption once it created the utility?” Justice Richard Gabriel asked. “[Xcel’s] argument is that the conditions precedent you approved on 7917 are not the same conditions that you’re now going forward on.” 

Boulder City Attorney Thomas Carr argued that the city did not make any assumptions when it created the utility. Carr contended that Xcel did not make a timely challenge to a quasi-judicial ordinance.

“This court has said the power to decide is also the power to reconsider, and it’s not appropriate for the court to step in and say, ‘City Council you must reconsider based on a partial view of the facts only presented by one side,” Carr said. “That would be an extraordinary departure from the general separation of powers.”

Carr argued that the city has spent three years before the Colorado Public Services Commission to prove reliability and transfer of assets and that Xcel previously had the opportunity to challenge the issues but failed to do so in a timely manner. The PUC issued a ruling in September granting permission to the city to acquire assets on three conditions: that the city and Xcel file an agreement on permanent rights to the utility inside city limits and details on payment to Xcel for separation costs and that the city file a revised list of assets. 

Other elements of Boulder’s proposed plan, like the sharing of facilities and requiring Xcel be financially responsible for building and separating the network were rejected. 

“The city wants to look at the metrics ordinance in a vacuum, rather than acknowledging how it fits into the admittedly overall legislative scheme leading up to the formation of the utility,” counsel for Xcel Jack Sperber said. Sperber said that during hearings, the PUC acknowledged that certain metrics projections and plans by the city were not feasible for the commission to manage but that Xcel’s challenge focuses on the creation of the utility.

Ordinance 7969 was passed on the condition that the city proved the utility could meet the criteria a result of 7917. Sperber argued that changing conditions show it cannot. 

“Xcel knew at the time of the passage of 7917 that challenges had already been filed in PUC you were arguing already that those metrics couldn’t ever be met,” Justice Melissa Hart asked. “Why didn’t you challenge 7917?”

Sperber said Xcel filed a challenge with the PUC, but the PUC had not yet ruled and at that time “there was no indication that this was actually going to harm us.” He said the company viewed the ordinance as an “interim step” because the language did not actually form the utility at that time, but was rather based on modeling. Sperber’s argument primarily focused on the changing conditions between when the ordinance passed and when the utility was actually formed.

In November, Boulder voters saw three measures on the ballot concerning funding and strategy to form the utility contingent upon the Supreme Court ruling. Initiative 2L asked voters for a tax increase through the end of 2022, which would raise about $17 million. 

Question 2P proposed the city be able to hold executive sessions about legal strategy for the utility. Initiative 2O stipulated that voter approval is a necessary prerequisite before the city can incur debt to build a separate system. Voters passed 2L and 2O, but did not approve 2P. Though 2O passed, another vote by citizens will be required in coming years before the city considers taking on more debt.

“The people of the city of Boulder have been trying to do this for seven years, they voted repeatedly to do this,” Carr concluded in his rebuttal, asking the court to reverse the lower ruling. “The tactics, the delay, have prevented anybody from creating a municipal utility for over 50 years.”

— Kaley LaQuea

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