Dive Brief:

• Colorado regulators have rejected a portion of Boulder's bid to form a municipal utility, finding the city's plan to take over Xcel Energy's infrastructure in unincorporated areas violated the principles of monopoly operation, BizWest reports. 
• The order is not final, however, and the case will move forward; Boulder will have the chance to modify its application, and the city has indicated it is open to negotiating alternative ways to deliver power outside its boundaries.
• Should the city eventually get the green light to form a muni, it has asked that Xcel continue supplying Boulder residents with electricity for a five-year span beginning in 2018.

Dive Insight:

Boulder's plan to form a municipal utility was never going to be simple, but figuring out how to provide power to residents outside the incorporated boundaries has perplexed the city. Now state regulators have made it clear that taking over the wires outside the town is not an option, sending city officials back to the drawing board.

“It is clear that the application as submitted infringes upon the exclusive service territory of [Xcel]," Colorado PUC Chairman Joshua Epel said, according to BizWest. "When the city submits a subsequent amended application, it must be designed to enable the city to provide service exclusively for the benefit of the citizens of Boulder without running afoul of the doctrine of regulated monopoly.”

Neither the city nor Xcel gave too much comment, preferring to wait until the decision is finalized later this month.

Boulder's push to form a muni has been fraught with obstacles, including a recommendation from PUC staff that utility regulators reject the city's plan, saying the application was incomplete. In turn, Boulder filed a brief defending its move to share city lines to get power to customers outside the city's boundaries. 

Xcel has argued that using city-owned lines to get power to customers in unincorporated areas is a violation of its right to serve those residents. The city countered that what it is proposing is not particularly new, and has cited examples of Xcel sharing power lines with other regional utilities to serve its customer base. 

But an Xcel spokeswoman did tell BizWest that Boulder "will now have the opportunity to supplement and correct their plan in this proceeding, but we hope the city leaders will instead be willing to work together with us to help develop a plan for Boulder to achieve the carbon-reduction it had set as its goal for municipalization."