Boulder Shouldn’t Municipalize Its Energy Utility System
I’ve sat in the background and expressed my opinion privately on the energy utility municipalization issue in Boulder. It’s been one where the debate and exploration so far has been much more emotional, at least in my opinion, that rational.
Beth Hartman recently reached out to me with an extremely clear point of view that parallels mine. It was stimulated by a recently announced spending increase of 18% for the 2015 budget, borrowing $4 million from the general fund for the municipal utility effort. I’ve long felt that the city of Boulder could take a much more innovative approach to this problem, but everyone I’ve suggested this to who is an advocate of municipalization had said “but we can’t spend the money on that.” Now that the city has demonstrated that they’ll take money from the general fund to spend on municipalization, I encourage everyone in Boulder to rethink the path we are taking.
Following is the OpEd and Beth and I had published in the Boulder Daily Camera today. I’m certain it will generate plenty of emotional response, which I put in the “whatever” category. I’m much more interested in the rational, thoughtful responses that discuss what we could be doing around our energy future that’s actually progressive as well as innovative.
The original article is at Boulder’s budget: Our best bet?, but the Daily Camera took all the links out, so if you want the backstory, they are in the post that follows.
Boulder’s Budget: Our Best Bet? By Brad Feld and Beth Hartman
Boulder recently announced a spending increase of 18% for the 2015 budget, borrowing $4 million from the general fund for the municipal utility effort – in addition to the money that the city has already spent. With the utility business model currently under pressure around the world from disruptive forces that many in the industry refer to as a “death spiral,” the city’s assertion that this money will soon be repaid should be carefully examined by every citizen and business leader in town.
Citizens and businesses would be wise to scrutinize this investment not just because of the millions that are being spent now, but more importantly because of the serious impact that potentially higher electricity prices could have on this community in the coming years. While Boulder is currently building a strong reputation as an entrepreneurial ecosystem to rival Silicon Valley and is consistently voted among the top cities to live in the country, there is almost nothing more fundamental to quality of life and competitive business than affordable energy.
A municipal utility may be able to provide electricity that is cheaper or about as affordable as our current utility offers – or the city may waste millions of dollars trying, just as communities in Florida, California, and New Mexico have done recently. Although the city is hoping that rates will be lower and Boulder will actually earn money, the fact that Barclays recently downgraded the entire utility sector indicates that this is not currently a business model with strong growth opportunity for new entrants. In addition to uncertainty about costs, there are several big legal questions pending that must be answered before we know if the plan will even work, over which the city has little to no control.
Why are we taking this considerable risk? Instead of buying a bunch of old poles and wires, we could be spending the money on more innovative initiatives that would have a real impact on saving energy and reducing carbon emissions, such as solar panels, an electric vehicle car sharing program, or installing Nest thermostats the way Airbnb is doing.
There are many innovative energy companies right here in Boulder, offering an opportunity to support solutions that can be rapidly replicated in other cities around the world. Instead of spending so much on a 20th century business model, the city could focus more on coordinating efforts between local energy entrepreneurs, the university, research labs, and consulting companies, providing thought leadership on new energy solutions. This would also offer amazing economic benefits to our own community, through helping to create more jobs at Boulder-based organizations. The city could start offering this support now, without waiting to see what happens with the uncertainty of forming a utility.
Another important question is what else our community could be doing with the millions of dollars we are spending on this effort, whether it’s schools, roads, affordable housing, open space maintenance, or any other initiative that our city needs. If you are a citizen who is concerned about the city’s new budget, please reach out to city council and ask them what else we could be doing with so much money. We could also ask for more details on how exactly they plan to deliver an energy service that is at least as good as what we’re getting now.
If you understand the difference between renewable energy and efficiency, distributed generation and demand response, and net metering and decoupling, please reach out to city council and have a conversation with them about their plans to start a utility during this time of disruption for an incredibly complex and challenging industry. Finally, if you are a business owner and you rely on affordable energy for your company to run every day, please reach out to city council and ask them how they are going to support your needs.
Getting into the utility business now is in many ways akin to starting a land line telephone company right when the internet and cell phones were really starting to get popular. Our community needs to question the wisdom of our city investing in this industry right now, with so many real risks.