City of Boulder 2B - Five Year Utility Occupation Tax to Replace Lost Franchise Fee Revenue

The city of Boulder currently contracts with Xcel to supply electricity and natural gas, but the contract expires at the end of 2010. Under state law Xcel must continue to supply the city with energy in 2011 but is no longer required to pay a franchise fee to use the city’s infrastructure and rights of way. The city and Xcel attempted to negotiate a new contract, but the city's demand for side agreements to increase the amount of energy from renewable sources caused an impasse.

The original back-up plan was to ask the voters to pass this utility occupation tax in the event the renewal contract didn’t pass, but in the end the city council decide not to put a contract renewal on the ballot.

The franchise fee accounts for over $4 million of general fund money. In order to recoup the money, the city wants to tax Xcel the equivalent of the franchise fee. Xcel is expected to pass the tax on to energy consumers. On your current energy bill there is a line for a 3% “franchise fee.” These words would be replaced by “utility occupation tax” or whatever Xcel wishes to call it.

Many of the proponents of this ballot issue are concerned about a 20-year contract with Xcel and want the city to pursue municipalization of energy or muni-lite (aka community choice aggregation where the city purchases the energy but the power grid is maintained by an investor-owned utility). Quite a few communities in Colorado including Longmont have municipal utilities, but no community has done this in the last decade. This ballot issue would provide the city with a 5-year time-out to explore various options.

Currently Xcel pays an undergrounding fee which amounts to about $1 million a year. There is no provision in this ballot issue to recoup that money.

No matter the outcome of this ballot issue, you will see energy again on the city of Boulder ballot. Within five years voters must approve the next step in our energy future whether we stay with Xcel, go our own way or try to find some middle ground.

Recommendation: for

The city doesn’t have a lot of spare cash. To take away $4 million a year from the general fund would be painful. Under this proposal there is no increase in cost for energy consumers. You could just view this as a delaying tactic with hopes of a better outcome in the future and vote yes.


Website for the Yes side
http://www.renewablesyes.org/

Website for the No side
No known website -- Info on an opposition website appreciated.


CITY OF BOULDER ISSUE NO. 2B (Approved Ballot Language)

FIVE YEAR UTILITY OCCUPATION TAX TO REPLACE LOST FRANCHISE FEE REVENUE

SHALL CITY OF BOULDER TAXES BE INCREASED (UP TO $4.1 MILLION IN THE FIRST YEAR) ANNUALLY AND BY SUCH AMOUNTS AS MAY BE COLLECTED THEREAFTER, BY IMPOSING A TAX ON PUBLIC UTILITY COMPANIES TO REPLACE THE THREE PERCENT FRANCHISE FEE IF IT IS NO LONGER COLLECTED BY PUBLIC SERVICE COMPANY OF COLORADO (“XCEL ENERGY”) FROM ITS BOULDER CUSTOMERS AND REMITTED TO THE CITY;
AND IN CONNECTION THEREWITH SHALL THE CITY COUNCIL BE AUTHORIZED TO:
• LEVY AND COLLECT THIS TAX TO TAKE EFFECT ON JANUARY 1, 2011 AND EXPIRE ON DECEMBER 31, 2015,
• LEVY AND COLLECT THIS TAX UPON PUBLIC UTILITY COMPANIES THAT DELIVER ELECTRICITY AND NATURAL GAS TO CUSTOMERS WITHIN THE CITY OF BOULDER AT THE RATE OF $4.1 MILLION PER PUBLIC UTILITY COMPANY,
• INCREASE THE OCCUPATION TAX LIMITED BY THE LESSER OF UP TO THREE PERCENT PER YEAR OR THE AVERAGE OF RATE INCREASES MADE BY COLORADO PUBLIC UTILITY COMPANIES IN THE PREVIOUS YEAR, AND
• DEVELOP PLANS FOR PROVIDING A CLEANER FUTURE ENERGY SUPPLY WITH MORE STABLE ENERGY RATES AND TO IMPLEMENT SUCH PLANS WITH THE INTENT OF PLACING CHOICES FOR BOULDER’S ENERGY SUPPLY ON THE BALLOT BEFORE THE END OF 2015;
AND SHALL THE FULL PROCEEDS OF THIS TAX AT SUCH RATES AND ANY EARNINGS THEREON BE COLLECTED, RETAINED, AND SPENT, AS A VOTER-APPROVED REVENUE CHANGE WITHOUT LIMITATION OR CONDITION, AND WITHOUT LIMITING THE COLLECTION, RETENTION, OR SPENDING OF ANY OTHER REVENUES OR FUNDS BY THE CITY OF BOULDER UNDER ARTICLE X SECTION 20 OF THE COLORADO CONSTITUTION OR ANY OTHER LAW?

FOR THE MEASURE ____ AGAINST THE MEASURE____


See Ordinance No. 7751 to refer 2B to the ballot.
http://www.bouldercolorado.gov/files/Elections/2010/Ord_7751_-_Occup_Tax_4-1.doc