At the end of the year, the 20-year franchise agreement between the city of Boulder and Xcel Energy will expire. The agreement is actually a relatively mundane technical document that gives access to the city’s rights of way so the company can sell and distribute electricity and natural gas to all residents. In return, Xcel pays Boulder about $4 million, which it collects from Boulder customers, as a “franchise fee.”

In the past, renewal of the franchise agreement — which must be approved by voters — has been a mostly procedural task. But this year, opposition to the franchise has built among Boulder residents who believe the city should be moving away from using fossil fuels as an energy source faster than Xcel.

City staffers agree that Boulder needs to add more renewable energy to its fuel mix in order to meet its long-term greenhouse gas reduction goals, but they haven’t decided the best way to make that happen.

The city’s options for increasing renewable energy

Sticking with Xcel: The franchise agreement, as defined by state regulations, cannot actually address where Boulder’s energy comes from — whether that be a specific coal plant or a wind farm. But the franchise agreement, which essentially commits Boulder to using Xcel as its energy provider, offers the city an opportunity to negotiate other side agreements with Xcel. The city can, essentially, refuse to enter into another 20-year franchise agreement unless Xcel makes other commitments, which could include helping Boulder “decarbonize” its energy supply.

If the city sticks with Xcel, which would require voter approval in November, the city also retains the $4 million generated by the franchise fee annually, which goes into the city’s general fund. The franchise agreement would give the city an opportunity to create a municipal utility after 10 or 15 years.

But critics of the franchise say that if the city chooses to drop its commitment to Xcel once its signed a franchise, Boulder residents may be on the hook to pay for a portion of any power plants that Xcel builds in anticipation of providing electricity to Boulder for the full 20 years.

Going it alone: If the City Council decides to let the franchise agreement expire — or if voters turn down a franchise renewal in November — state regulations require that Xcel continue to provide electricity and natural gas service to Boulder residents. But Xcel says it will no longer have the authority to collect the franchise fee.

The city can replace the revenue generated by the franchise fee by adding an excise tax on electricity sales, which would be calibrated to provide the same amount of revenue. This excise tax would also have to be approved by voters, and could be worded to only take effect if the franchise expires.

Once Boulder is free of the franchise agreement, the city could choose to start its own municipal utility, which would require buying Xcel’s infrastructure — including power lines and electricity meters — from Xcel.

The city could also choose to lobby the state legislature to make “retail wheeling” legal. This concept would allow the city to buy its own electricity from bulk providers, such as wind farms and solar plants, and have the power delivered over Xcel’s infrastructure.

The compromise: Ideally, city staffers say they’d like Xcel to extend the current franchise agreement for two years so that the city and Xcel could jointly do a decarbonization study. While Xcel has extended the franchise from its original expiration on Aug. 3 to the end of the year, the company has so far refused to consider extending it beyond 2010.

Pros and cons

What franchise supporters say: Sticking with Xcel may be the cheapest and most reliable option. Creating a municipal utility — which hasn’t been done in Colorado for more than a decade — would likely take years and could be expensive.

If the city lets the franchise agreement expire — or if voters turn down both the agreement and a new excise tax — the city could be out $4 million, which could cause significant cuts to basic city services.

If the city wants to decarbonize faster than Xcel, it can buy a bulk purchase of Windsource credits from Xcel.

What franchise opponents say: If Boulder signs on to another 20-year agreement with Xcel, a profit-driven company that does not have Boulder’s needs at heart, the city will never cut its carbon footprint at the rate desired by citizens and outlined in the Climate Action Plan.

Now, Xcel has just opened a new coal plant in Pueblo, ensuring that coal remains a major part of Xcel’s portfolio for decades to come. And while the company is relatively green, compared to other large utilities, it has mostly made those changes kicking and screaming. For example, the company originally opposed Amendment 37, which created a renewable energy standard for Xcel.

Purchasing Windsource credits is not a viable long-term solution, in part because once the cost of renewable energy falls below coal, the program will have to be limited to keep everyone from switching over to it. Xcel also has a checkered past, at one point selling more kilowatts of wind power than it owned.

If you go

What: A city-sponsored open house on Boulder’s energy future. Representatives from the city, Xcel Energy and the citizen Decarbonization Tech Team will be present.

When: 6 to 8 p.m. Tuesday

Where: Commons in the East Boulder Senior Center, 5660 Sioux Drive

More info: bouldercolorado.gov/energyfuture