The City of Boulder’s plans to form its own utility saw a setback last week when the Colorado Supreme Court delivered a highly anticipated decision.
On June 18, the state Supreme Court ruled that Xcel’s challenge to a Boulder ordinance to create a public utility was timely and viable, which allows the company’s complaint to proceed in district court. In doing this, the high court reversed the district court’s dismissal of the company’s complaint. While saying nothing about the merits of Xcel’s claims, the court breathed new life into a dispute that complicates Boulder’s bid to establish an electric utility.
The Supreme Court agreed with Boulder that the Colorado Court of Appeals erred in finding Xcel’s claim against the city’s ordinances to be premature.
But more importantly it agreed with Xcel that the company “has stated a viable and timely declaratory judgment claim against Boulder regarding the Utility Ordinance,” according to the opinion issued by Justice Richard Gabriel.
In 2011, Boulder voters allowed the city to set up its own utility on the condition that it could verify that the utility could provide electricity at least as reliably and affordably as Xcel did. City employees and consultants put together an analysis of the proposed utility, and an independent expert who looked at the analysis verified that it could meet the Xcel-level metrics. The Boulder City Council passed Ordinance 7917 to certify the expert’s findings. Eight months later, the city passed another measure, Ordinance 7969, in May 2014 to establish the utility.
Xcel, however, challenged 7969 in Colorado district court within a month of its passage. Xcel claimed that because the city’s models overestimated the number of residents it would serve and underestimated the cost of separating and reconnecting Xcel’s power system, it never met the metrics requirement needed to establish the public utility with 7969. Therefore, Boulder violated its own charter with 7969, the company argued.
But Boulder contended that Xcel’s complaint was actually a challenge to Ordinance 7917 certifying the metrics. Being directed toward that older ordinance, the city argued, the challenge was untimely and should be dismissed. The district court sided with Boulder and tossed the suit.
The Court of Appeals vacated the judgment, reasoning that neither of the ordinances was final, so Xcel’s complaint was premature. Boulder petitioned for certiorari and argued to the Supreme Court that the ordinances were indeed final and the appellate court erred.
On that count, the Supreme Court agreed with Boulder. As the ordinance was a legislative and not a quasi-judicial act, the “Utility Ordinance was final for purposes of Xcel’s declaratory judgment claim.”
But the court ruled against Boulder’s assertion that Xcel’s claim was untimely. The district court and Court of Appeals assumed that Xcel’s challenge was a proceeding under Colorado Rule of Civil Procedure 106, which allows Colorado district courts to review municipal decisions provided there isn’t a more efficient remedy. The Supreme Court, however, sided with Xcel’s interpretation of its claim — that it was seeking a declaratory judgment under CRCP 57 challenging the Utility Ordinance, not a CRCP 106 claim for judicial review of the Metrics Ordinance.
“As we understand it, however, the complaint did not make these allegations in order to challenge the Metrics Ordinance,” the opinion said. “Indeed, Xcel concedes that it is not challenging that ordinance, and Xcel does not appear to dispute that such a challenge would be untimely. Rather, Xcel’s position is that notwithstanding the passage of the Metrics Ordinance, Boulder has not actually satisfied the Charter Metrics, and therefore, the passage of the Utility Ordinance violated the City Charter.”
The court concluded that because the claim is actually regarding the Utility Ordinance, which Xcel challenged within a month of its passage, it wasn’t untimely.
Xcel said the Supreme Court’s decision “allows the opportunity to have the case go forward.”
“Our position continues to be that the City’s 2014 formation of its electric utility was premature because it had not satisfied voter-imposed cost conditions and other requirements,” Xcel’s statement continued. “Regardless of the Court’s ruling, we are continuing discussions with the City that arose out of the Colorado Public Utilities Commission’s 2017 order.”
A spokesperson for the City of Boulder confirmed that the city is not commenting on the decision, as the litigation is still ongoing.
Aside from the legal challenge, Boulder and Xcel are still working through agreements they must file to the Public Utilities Commission. In September, the PUC granted the city permission to acquire Xcel utilities assets, but in several conditions that include certain agreements that the two parties must reach.
Currently, Boulder and Xcel are still negotiating what the city will pay Xcel for the costs the company will incur relating to the separation. They have requested a third extension for this filing, which this time would push the deadline to Aug. 24.
—Doug Chartier