[bouldercouncilhotline] Hotline: Questions for the City Attorney on the FERC ruling

[cmosupport at bouldercolorado.gov]

Sender: Wilson, Ken

I have a couple of questions regarding the recent decision by the Federal Energy Regulatory Commission (FERC) in its order denying Boulder's petition for a declaratory order.
 
First, my reading of the plain text of the FERC order denies Boulder's petition for a declaratory judgment in the case.  Am I missing something there?  The City's analysis seems to say that FERC agreed with the City, but the order is a denial, not a confirmation,
 that stranded costs can be avoided.  The City has maintained for over two years that it would owe no stranded costs to Xcel.  Xcel has maintained that stranded costs would apply, though Xcel never said that some of the stranded costs could not be mitigated
 if the city purchases power from Xcel.  Doesn't the FERC decision refute the city's claim that no stranded costs will be owed?
 
My second question is along the same line.  FERC seems to be saying that the city could mitigate some of the stranded costs if it purchases power from Xcel for a period of time.  In the South Daytona, FL case, which the City was using as the basis for its
 petition, Florida Power and Light filed a case with FERC to recover ten years of stranded costs from South Daytona (which wanted to municipalize).  In its response, South Daytona said they would enter into a full services contract with FPL for ten years, effectively
 agreeing to buy all their power for ten years from FPL.  FERC then said that if that agreement held between the parties there would be no stranded costs.  Boulder was asking for a much broader ruling that essentially asked for stranded costs to be waived if
 any amount of power was purchased for any time period.  The FERC order, denying Boulder's petition says that FERC cannot make a determination about stranded costs until a contract for power purchase is put before it between Boulder and Xcel.  My question then
 must be: How much power is the city asking to purchase from Xcel (what %) and for how long?  If we are asking to purchase 100% from Xcel for 20 years - which would no doubt mitigate all stranded costs - what would be the point of municipalizing?  Our energy
 mix would be the same as Xcel's energy mix.  If we are not asking for 100% for 20 years, what are we asking for?
 
My final question is about what this decision does to the City's timeline.  This issue was not addressed in the City Attorney's analysis at all.  The timelines for municipalization that we have talked about during council meetings seems to show a parallel
 process at FERC and in Condemnation Court.  Doesn't the FERC decision blow that timeline up?  It would seem that the FERC decision on stranded costs would be after the Condemnation proceeding in state court.  I suppose the City could go to Xcel before the
 Condemnation proceeding concluded, but if I was Xcel I would not consider the City a wholesale power purchaser until the condemnation proceeding is concluded, not before.  It is clear that FERC wants to see a proposed contract between Xcel and the City for
 purchase of power before it makes a stranded cost ruling.  How can the City legitimately ask for such a contract before the City is a wholesale power purchaser?  It looks to me like at best this is now a serial process, not a parallel one, and at worst it
 creates a big chicken and egg problem for the City.  What am I missing here?
 
I appreciate your consideration of these questions.
 
Ken Wilson
Council Member