Steve Pomerance

Some Camera readers have asked me questions about how regulated monopoly investor-owned utilities like Xcel work in practice. Here is some background information. Xcel Energy is a holding company that owns regulated monopoly utilities in eight states, including Public Service Company of Colorado, which is regulated by our Public Utilities Commission. Xcel makes money by investing their own cash equity (plus money derived from bond sales) in building power plants, power lines, etc. These investments are then added to the “rate base” on which Xcel is granted a rate of return by the PUC. This return is calculated based on the bonds’ interest rates and a rate of return on the equity, which, per the relevant case law, is supposed to be, “commensurate with returns on investments in other enterprises having corresponding risks.” The bonds are paid off as they come due. The invested equity is paid off in equal payments over the lifetimes of the power plants and other infrastructure. In r...

Why are we chasing Denver’s density? A friend asked me what I knew about Boulder’s plans for increasing density. She was concerned about the push for Boulder being “inclusive,” a catchall phrase currently bandied about that means pretty much whatever the person hearing or reading it imagines. Certainly there has been a lot of verbiage about “densifying,” like forcing neighborhoods to accept multi-unit buildings or high-rise developments right next to or replacing single-family houses, schemes that the current Boulder City Council seems to have abandoned, at least temporarily, because of public outcry and anger. So I can understand her concern. Since at some level this is a numbers game, I did a bit of research comparing Boulder to Denver. Obviously, Boulder is smaller than Denver, but I thought the ratios would be interesting: Per the 2018 Boulder Community Profile, our city occupies 27.3 square miles, had a population of 108,507 people, and had 100,148 jobs when the data was ...

Proposition CC, on the ballot this November, would allow the Colorado state government to keep all tax revenues above the population-plus-inflation limit approved by Referendum C in 2005, which got rid of the ratchet effect of the Taxpayer’s Bill of Rights, or TABOR. The state forecasts that Prop CC would allow the state to keep about $310 million for 2019-2020 and $342 million for 2020-2021 that otherwise would be refunded to the taxpayers. House Bill 1257, which put Prop CC on the ballot, says this money is for public schools, higher education, roads, bridges and transit. As KC Becker, Speaker of the House and a Boulder representative, commented in The Colorado Sun, “Is this the long-term fix to any of the state’s long-term issues? No, it’s not,” but “I think it’s a necessary, important part of it.” But the real problem is that most of Colorado’s huge unfunded needs are caused by growth and development not paying its way, and Prop CC fails to implement any of the necessary fixes....

I just returned from the annual International Energy Economics and Finance Association conference, where people from all over the world gathered to discuss global warming and climate change. I was on a panel discussing “securitization,” a financial tool that uses borrowing to reduce the cost of paying off utilities to shut down coal plants. Interestingly,  an op-ed I wrote  in April on the Colorado securitization bill was referenced by some people to illustrate their various perspectives. Our discussion ended up boiling down to a fundamental choice: Are we willing to pay whatever it takes to get utilities to shut down their coal plants? Or are we going to force some utilities to take a financial beating, because they invested in coal in the face of global warming? What really amazed me was how many people were aware of and inspired by Boulder’s struggle to create a clean energy municipal electric utility. I also received reports about utilities that were shifting to clea...

Last week I testified at a Colorado legislative committee hearing regarding HB19-1037, the “securitization” bill. This arcane but important concept emerged as many states shifted from supplying electricity through regulated monopolies to competitive systems, where customers and communities have choices as to where they get their power. As a result, these monopolies lost their captive markets, so their uncompetitive power plants built under the old regulated system no longer had customers. But the utilities had relied on the regulatory structure to provide a guaranteed revenue stream, so the states had to cover the utilities’ losses to avoid “regulatory takings,” where utilities are involuntarily deprived of something they relied upon. Securitization was a way to reduce the cost of solving this problem: Bonds were sold that had backing from a governmental entity. The proceeds paid off the utilities for their remaining investment in these plants; the bonds were then paid off by the r...

This year Boulder will be updating its Transportation Master Plan, so now is the time to focus on what needs to be done. The key fact is that we are past the inflection point on the hockey stick-shaped graph of congestion versus traffic. In other words, we’ve used up the capacity of our roads, so a little more traffic produces a whole lot more congestion. Just look at the huge numbers of cars stacked up for long stretches on Colo. 93, U.S. 36, Arapahoe Road, the Diagonal Highway, etc., in the morning or evening, and the jams during lunch hour in many places around town. Also, many local interior roads that had no real congestion some years ago now have delays through multiple signal cycles at many times during the day. Having just reviewed the current 2014 TMP, and having been involved in the original plan and its updates, as well as having studied some innovative strategies in other places, here are some suggestions for the city council and staff: First, set standards that you...

According to the IRS, “Opportunity Zones are an economic development tool — that is, they are designed to spur economic development and job creation in distressed communities.” This concept was part of the 2017 Republican tax cut bill. About 8,700 census tracts have been approved as opportunity zones across the country. Boulder’s opportunity zone was selected by the governor’s Office of Economic Development and our city government employees without consulting the City Council or the citizens. This census tract is about 2.5 square miles, and encompasses the area between 28th and 55th Streets, and from Arapahoe Road to Iris Avenue, with a notch cut out by Valmont and Airport roads. This “distressed community” includes the new Google office buildings, the 29th Street Mall and Boulder Junction. Obviously, this choice was not about helping the disadvantaged; it was about getting investors to dump yet more money into Boulder, plain and simple.(Diagonal Plaza is the only part of the oppor...

According to the IRS, “An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.” “Opportunity Zones are an economic development tool—that is, they are designed to spur economic development and job creation in distressed communities.” So you know, according to our state government, which designated Colorado’s Opportunity Zones, the area in Boulder between 28 th Street and 55 th , from Arapahoe to Iris, is a “distressed community.” And we’re not the only one to have such a bizarre designation. Parts of Fort Collins, Estes Park, and Grand Junction are now OZs. But there are some rural parts of the state included that at least might be genuinely in need. Investing in an OZ gets you some incredibly beneficial tax breaks. If you stay in the deal for 10 years, you pay no Federal capital gains tax on any profit you make in the deal. (Plus, you get to avoid 15% of the capital gains tax...

In 1858, Chief Niwot, Boulder’s first real environmentalist (that we know about), told the European settlers the area was cursed: “People seeing the beauty of this valley will want to stay, and their staying will be the undoing of the beauty.” We are seeing Chief Niwot’s curse play out. The arguments for more and more, whether based on the specious need for continual growth and change or on the magical logic that more people means less total impact, drown out what should be obvious — there are fundamental constraints on how many people and jobs can be jammed into the Boulder Valley and still have it be a desirable place. Growth plus climate change have made our water supply much less secure. Boulder has three water sources: the Arapahoe Glacier area via the Lakewood Pipeline, the Middle Boulder Creek drainage via Barker Reservoir, and the Colorado River via the Colorado-Big Thompson Project (C-BT). Under the 1922 Colorado River Compact, the Lower Basin states (CA, AZ, NV) are ent...

The situation is depressingly simple – new development imposes costs that it doesn’t pay for. So either the rest of us pick up the tab, or the situation gets worse. To unpack this a bit, every new employee requires housing, which pushes up housing prices. We are at the point now where over 50% of new employees would need a very significant financial help to live in Boulder, or even in the rest of the county. So you understand the math, if the average new employee in a particular type of business requires 100 sq. ft. of floor space, and it costs $100,000 to buy down the price of a new housing unit to make it affordable for that average worker, that’s $100 per sq. ft. And per Keyser Martsen Associates, a very well respected California firm that has done numerous such studies, the actual cost to provide affordable housing for new office workers in Boulder is $129.49 per sq. ft. (as of two years ago), with other types of uses varying from slightly higher to considerably lower. The cu...

Relative to  my last column  on the flaws in the site review process, on Wednesday  the Camera covered  the Boulder City Council’s “workshopping” of a ballot item to extend the current capital improvements tax. This tax funded, for example, the rebuilding of the civic center area between city hall and the library. What caught my eye was a failed attempt by council members Bob Yates, Jan Burton (who is running for re-election), and Andrew Shoemaker to remove $2 million of the funds targeted for replacing Fire Station No. 3 at Arapahoe and 30th, and instead spend the citizens’ tax money to make operational the “arts cinema” that the developer of the Pearl West building promised during site review, but allegedly does not now have the funds to complete. This hole in the site review process has been known about for years, so why hasn’t it been fixed? So it’s clear, Station No. 3 is undersized to cover all the growth in east Boulder, and is too close to the Boulder C...

Because the discussions on this subject are all over the map, I thought it would be useful to summarize what I think would be an appropriate approach. A reasonable goal would be to maintain some level of economic diversity in our community. But that doesn’t mean that everyone who wants to live here and every business that wants to expand here can do so. We have finite resources: our streets, our water supply, our views, and our Open Space are limited in their carrying capacity. Besides, trying to build more market priced housing won’t work. The market has already priced this housing out of range of anyone even somewhat above the area median income . So just adding market rate housing will just add more people with high incomes or net worth, and leave out the middle and lower income folks. Also, the demand is so huge that it cannot be reasonably satisfied: There are over 60,000 workers that commute in every day, and together with their families, they would double Boulder’s pop...

Last week, I heard about a radical improvement to battery storage. These “flow batteries” are much cheaper than the current technology, with costs expected to drop by half or more. Commercial production is anticipated within a few years. Less expensive batteries will allow wind and solar energy to serve our demands much more cost-effectively, because they allow us to match this variable supply to our relatively inflexible demand by storing renewably generated energy when supply exceeds demand and then using it when demand exceeds supply. This would be in addition to our current ability to manage demand by, for example, cycling cooling loads at peak times, creating ice at night (using the excess wind energy that occurs then) to do cooling during the day, or running clothes dryers at off-peak hours. Not only do batteries allow a utility to flatten its demand curve, but they may allow the utility to avoid having to contract for committed backup power adequate for its peak load. When a...