Boulder’s Energy Future Project and Municipalization Exploration Study Update www.BoulderEnergyFuture.com

1. Boulder’s Energy Future Project and Municipalization Exploration Study Update www.BoulderEnergyFuture.com

2. AGENDA • The Municipalization Exploration Project and Why It’s Important • Where We Are Now • Where We Are Going • Work Plan • Schedule • Key Engagement Points • Council Decision Points

3. Municipalization Exploration Project Objective: To evaluate strategies for a city-owned utility which supports energy future goals and guiding principles, determines whether those strategies can meet the city charter test for municipalization, and to provide city council with a strategy and recommendation on whether or not to proceed with municipalization. To answer the questions: • Can we municipalize? – Meets metrics • Should we municipalize? - Adds value

4. Why Boulder is on this path. • Expired franchise agreement with Xcel • Seeking new ways to achieve community greenhouse gas reduction and climate change mitigation goals • To give residents and businesses access to: • Reliable power that is increasingly clean and competitively priced • Local decision making authority on where power comes from and new investments in emerging technology

5. Remember this little guy? Maybe you saw the inspirational motion graphic?

6. Energy Future Work Plan Phase 1: Develop StrategiesPost Nov. 2011 Election to 1st Qtr 2013 Phase 2: Strategy Implementation 1st Qtr 2013 to ? (1-5 years) Phase 3: Operationalize Strategies Upon Completion of Phase II

7. Formulating a Strategy What do we mean by strategy? • How and where we get our energy resources • What business structure meets financial targets • What assets do we need to serve our community • What investments do we need to make in electric infrastructure • How we achieve excellent reliability • Other components needed to support the community goals

8. Strategy Development Inputs Financial

9. Where we are now: Work Plan Objectives: • Roadmap for creating utility of the future • Gain community support for the ultimate outcome • Ensure integrity of the process • Documentation for third party evaluation • Consultants, technical engineers, local academics, community stakeholders and other interested individuals all contributing to analysis

10. Where we are now • Assembled state and federal legal teams • Hired Executive Director • Council approved work plan • Staffed Energy Future team • Retained financial, engineering, and modeling consultants • Selected modeling tools and collecting data for analysis • Formed project stakeholder work groups

11. Municipalization Exploration Study Tour of Regional Utility Substation

12. Where are we now: Draft Metrics • Quantitative measurements related to rates, reliability and renewables • Used to determine whether the Charter requirements have been met • Worked with stakeholder work groups to develop metrics • Business Community • Academic Community • Activists • Council to approve next Thursday, November 15

13. Charter Requirement & Proposed Metrics Charter Requirement Proposed Metric Rates do not exceed Xcel’s at time of Average cost per kWh acquisition Revenue sufficiency Debt Service Coverage Ratio Comparable equipment, facilities and services to achieve a SAIDI of 85 and SAIFI of .85; 15% reserve margin; and, NERC compliance Reliability compared to Xcel Reduce GHG emissions Short and long term plan to meet or exceed Xcel Increased renewables Short and long term resource plan to meet or exceed Xcel

14. Legal Legal • Hired FERC and Condemnation legal counsel • Evaluating various legal strategies, but to maintain the city’s negotiation position, these have to be kept confidential • Looking at options to mitigate litigation risks, including stranded costs • Ongoing PUC involvement • Continue to be open to discussions with Xcel Energy

15. Financial Financial Evaluation • Issued RFP and selecting financial advisor specializing in public power financing • Acquired financial modeling tools and identified data requirements, moving forward with an Excel spreadsheet based format • Formed stakeholder work group to vet model assumptions and assist in data collection • Output = Revenue requirement and rate comparability

16. Rate Comparison Colorado Association of Municipal Utilities (CAMU) survey results – Jan. 2012

17. Rate Comparison

18. Reliability • Identified experts • Formed stakeholder work group • Researching regulatory and legal standards • Collecting data • Output = Reliability recommendations for infrastructure and operations

19. Reliability Comparison

20. Resource Mix Resource Mix • Evaluated resource planning and optimization tools, selected one that already has 70% of what we need • Forming stakeholder work group to help develop electric resource options and cost • Recruiting experts in energy efficiency, demand side management, renewables, distributed generation, and transmission • Output = Optimum resource plan with cost to integrate into financial model

21. Asset Acquisition Asset Acquisition and Reliability • Formed team of staff and technical experts • Includes engineers, appraisers, GIS data analysts, former utility (including Xcel) experts • Held kick-off meeting to vet plan and approach • Identified and collecting data for use in valuation, able to leverage off existing records • Issued Engineering RFP and selected asset valuation , separation, and reliability engineers • Output = Separation plan to integrate with reliability and resource plan

22. Communications and Outreach • Website, newsletter and other traditional communication pieces created and updated frequently • www.BoulderEnergyFuture.com • Formed stakeholder work group • www.InspireBoulder.com for idea collaboration on specific topics • Neighborhood outreach

23. Evaluation of Risk & Benefits/Impacts Risk Assessment is part of entire work plan and is critical to understanding impact of various strategies • Strategies will be vetted for economic and community benefits/impacts • Risks will be identified, as well as ways to mitigate • Modeling value and risk with assistance from a top economic expert in this field

24. Evaluation of Risk & Benefits/Impacts Part of Risk Assessment is looking at what other municipal operations have done, both successfully and unsuccessfully. • Longmont, Ft. Collins, Colorado Springs and many others have successful municipal electric utilities • Also look at places that have experienced issues with their municipal electric utilities for lessons learned

25. Where we are going • Work Plan • Intense work plan analysis by staff and work groups over next 4 to 5 months • Finalize 20 year models and integrate between financial, resource, and decision analysis • Collect data and do projections of cost, load growth, etc.

26. Where we are going • Work Plan • Review best practices and benchmark with comparable municipal utilities • Develop risk matrix and prioritize strategies • Synthesize work group recommendations and rank using cost, risk, value criteria

27. Where we are going • Community review of strategy(ies): • Your chance to provide feedback • Follow progress on website – each working group has a web page • Through representatives on working groups • Public outreach to neighborhoods • Jan. 21 to 31 public input on municpalization strategies • Review and comment electronically

28. Where we are going • Strategy presentation to City Council in the first quarter of 2013 • Council will advise on moving forward • Will be an “off-ramp” opportunity

29. Where we are going • Post March 2013 • Independent third party evaluation of strategy • Develop plan for implementation of Strategy • Develop short- and long-term aspirational goals • Legal filings, if required • Purchase power and resource development • Define energy services plan • Rate and incentive design • Evaluate governance structure

30. Get Involved Today Follow along at www.BoulderEnergyFuture.com • Sign up to receive E-News reports and the monthly “Energy Future Today” newsletter • Use online comment form for questions/feedback • Invite us to present at your meeting Provide feedback on specific questions/areas at www.InspireBoulder.com • Strategies will be vetted here Contact Heather Bailey with questions/comments • BaileyH@BoulderColorado.gov or 303-441-1923