In his Open Forum letter (Saturday May 28) under the title “Xcel—Negotiates for Cleaner Energy” a writer suggests that what Boulder needs to do to achieve “more green energy” is simply to negotiate with Xcel to provide it. It just so happens that the city has spent the past several years attempting to do that as part of its 20-year franchise renewal negotiations. Like Rip van Winkle, the writer seems to have missed out. Discussions ended in frustration last summer as the City finally opted to let the Xcel franchise expire – with the overwhelming support of its voters.
But the problem has deeper roots than either recalcitrant parties or technological hurdles. Rather the biggest difficulty derives from the history and economic model of the regulated utility industry. At a recent smart grid utility conference, it was said that the best way to understand the economics of regulated investor-owned utilities is to
look to the Soviet Union. It is a model not based on markets or competition, but rather on a byzantine structure of tariffs, regulations, and mandates that are set by politically incestuous technocrats. The result is a system of rates and policies that subsidize or burden various classes of customers differently, guarantee monopoly revenues and returns, protect executives and favored investors, block competition, and inhibit innovation. It is based on sale of Kilowatt-hours and guaranteed 10% return on invested capital. Renewable and environmental mandates simply end up as icing covering over a rancid and crumbling cake.
The carbon fuel industry is entwined with the utility industry and its regulators through deals, investments, and personal and political relationships. The only way communities can ever get control of their energy policy is to escape these archaic monopoly utilities under PUC regulation and liberate competition and free markets. Otherwise, the
writer might want to return to his slumber.