Boulder and Xcel Energy have reached a settlement agreement in the company’s lawsuit against the city over City Council’s 2014 vote to create a municipal electric utility.

The settlement resolves the ongoing legal dispute but does not impede the ongoing work by the city, Boulder officials said.

In its original lawsuit against Boulder, Xcel contended that council’s decision to form the utility was premature, and the city had not done enough work to show a utility could meet the city charter’s requirements. The Colorado Supreme Court last year disagreed with previous rulings by both the Colorado Court of Appeals and Boulder District Judge Judith LaBuda and ruled the dispute should be heard in district court.

The settlement announced Thursday, not only reduces litigation costs but also “does not affect the city’s plan for voters to determine in a future election whether the city will create a municipal electric utility,” the city stated in anews release.

An Xcel spokeswoman said the settlement was an appropriate way to address the matter.

“The settlement is a positive outcome and we believe it was appropriate for the city to unwind what we have always thought was a prematurely formed utility because the city didn’t know, and still doesn’t yet know, if it can satisfy voter imposed charter metrics tied to cost, reliability and clean energy,” Xcel spokeswoman Michelle Aguayo said in a statement.

Under the settlement agreement, city staff will request council dissolve the utility created in 2014 and not enact an ordinance creating a new municipal electric utility unless it is approved by voters and complies with the charter. Council is scheduled to consider that request at its June 18 meeting.

The matter of final public authorization likely will come before voters for a final “go/no go” vote in 2020 or 2021.

Xcel, meanwhile, agreed to file a motion to dismiss with prejudice the complaint. The company also agreed not to use the lack of a utility as a defense in a possible condemnation lawsuit by the city.

Boulder city attorney Tom Carr said that was a key to the settlement.

“We were concerned that Xcel would argue in a condemnation case that we couldn’t have good faith negotiations because the entity that would actually ultimately own the assets didn’t exist yet,” he said. “We created it as a paper entity (in 2014) so they wouldn’t have that argument.”

In 2011, Boulder voters authorized the city to explore forming a municipal electric utility, assuming approval from Colorado’s Public Utilities Commission, and demonstration that the municipal utility could acquire Xcel’s local distribution system and charge rates that don’t exceed those charged by Xcel at the time of acquisition. Additionally, Boulder would have to demonstrate reliability “comparable” to Xcel, and that it could produce enough revenue to pay for operating expenses and debt payments.

About two years after the 2011 vote, Boulder’s City Council voted 6-3 that it had met the requirements to provide service comparable to or better than Xcel’s, with rates as cheap, and with increased renewable sources and lower emissions.In May 2014, council voted to create the utility on paper. Xcel, in June 2014, claimed in a lawsuit that council’s vote was premature and that Boulder had not done enough to show it could run a utility under the stated criteria.

The city has said a municipal utility will allow it to bring clean electricity to the community more quickly and enable local control. The city has a goal of 100% renewable electricity by 2030, as well as an 80% reduction in the government’s emissions by the same year.

Council in December voted to re-authorize the condemnation of the utility’s assets. Boulder in April offered Xcel $68.5 million to acquire its assets, including facilities and property, but the city will file condemnation in district court if negotiations with Xcel fail