Franchise agreements give Xcel permission to use the public right-of-way in cities and counties for utility infrastructure projects. In Denver’s case, Xcel also owns and operates the city’s street lighting system, so the agreement outlines how street light maintenance works in Denver.
Every twenty years, Denver renegotiates the franchise agreement with Xcel, with the current agreement set to end December 2026. Xcel and the city are trying to send a measure to voters a year early to be sure there is a new agreement in place by 2027; the new agreement would run through 2046.
Denver voters have weighed in on the Xcel franchise agreement since 1906 after historic levels of corruption in the 1904 Colorado Governor's election, when prisoners were let out of jail and told to vote as many times as they could. According to Denver Department of Transportation & Infrastructure (DOTI) COO Cindy Patton, Denver residents became worried about corruption in government and clamored to vote on the major utility agreement two years later, and that process still carries on today.
But both the city and Xcel know that getting enough voter approval for measure could be challenging — because, well, people really don’t like Xcel, with customer complaints about high bills, persistent outages and a lack of customer service.
“The challenge in our public engagement conversations will be separating rate setting and those types of things from this document,” Patton told a city council committee on June 23.
Patton’s concerns were echoed by councilmembers Amanda Sawyer and Chris Hinds, who said they worry voters will use the measure as a referendum on Xcel in general rather than looking at the narrow specifics of the franchise agreement.
“This is an opportunity for me to vote on something that's Xcel related, and I'm very frustrated with Xcel,” Hinds hypothesized as a Denver voter. “They believe this is their opportunity to vote on those frustrations, or rate increases, or resistance to a rapid transition from fossil fuels.”
Sawyer says she hears legitimate concerns from her constituents in District 5 about broken streetlights, but still wants the proposal to pass because she believes the franchise agreement benefits Denver.
What Does Denver's Franchise Agreement With Xcel Cover?
Along with giving Xcel access to Denver’s public roads, sidewalks and utilities to install and maintain energy-related infrastructure, the franchise agreement authorizes a 3 percent fee on gas and electricity bills that Xcel then gives back to Denver’s general fund. According to Patton, the city receives around $30 million per year that can go toward anything Denver needs as a result of that fee, which would be preserved under the proposed extension.Under the agreement, Denver will notify Xcel when the city is tearing up roads for repairs so the utility provider can repair electricity lines at the same time. This decreases the need for multiple construction projects on the same stretch. At the same time, if the city is constructing or repairing buildings, streets or sidewalks, the franchise agreement requires Xcel to relocate utility infrastructure in the public right-of-way to make space for the new city construction.
“This saves significant taxpayer money for public projects and minimizes construction and service disruptions to Denver homes and businesses,” a city-provided outline of the agreement explains. According to DOTI, the relocation requirement saved Denver around $3 billion for non-airport projects over the last twenty years.
In the newly proposed agreement, that relocation requirement is preserved and extends to all the land surrounding the Denver International Airport, as well. The extension also allows Xcel to charge Denver customers a 1 percent fee toward moving transmission lines underground, which the city can access.
Additionally, the agreement stipulates how Denver pays Xcel to maintain the city’s street lights and how Xcel will maintain those lights, but financial details were not discussed at the June 23 meeting.
Everything else related to Xcel is regulated by the Colorado Public Utilities Commission, which holds hearings for proposals related to rate changes, infrastructure investments and customer service concerns.
What Could Change in Denver's Extension With Xcel?
In addition to the main franchise agreements voters will weigh in on, the city and Xcel developed three other documents that city council must approve. The first is the operating agreement between DIA and Xcel. The DIA agreement covers similar ground to the franchise agreement, but does not require a vote.In the past, the franchise agreement has covered Denver customers’ contribution to Xcel’s low-income energy assistance program. However, that program is now managed at the state level, with major updates in 2021 from the state legislature to increase the amount of money that could go toward bill payment assistance or weatherization for low-income residents. If approved by the council and voters, Denver's new franchise agreement will no longer include guidelines for low-income programs, which are now overseen by the state.
The city and Xcel are also establishing a Denver Development and Innovation Group (DIG) designed to help the two parties discuss and streamline load forecasting and distribution planning as well as information sharing and plans for modernizing the electric grid, such as more sustainable energy sources.
The Denver DIG would have representatives from the mayor’s office, DOTI, Community Planning and Development, Economic Development & Opportunity, Climate Action, Resilience & Sustainability, the Denver Permitting Office, the Department of Finance and Xcel, according to the proposal. Councilmembers said they would like to see city council have a voice on the Denver DIG, also.
Councilwoman Sarah Parady asked if there were nods to Denver’s climate goals in the main agreement, worrying that siloing those into the DIG would lead to those goals being ignored. Patton said climate goals aren’t a good fit within the franchise agreement because they generally do not have to do with the public right-of-way.
Sawyer asked if there were timelines for the replacement of streetlights that have been knocked down, saying there are some in her district that have been out of commission since 2021 due to car crashes. However, Grace Ramírez, senior area manager of community and government affairs for Xcel, said timelines are not part of the agreement. Patton added that timelines rely on the broader supply chain.
Ramírez said another struggle is that Denver’s street lights are not “smart” lights, so there is no way for Xcel to know if they are out or not until someone reports the outage, which can also make repair timelines difficult.
“We maintain over 64,000 street lights in the city and county of Denver, and, I believe, over 14 different types,” Ramírez said. “We do try to replace them…but sometimes we can no longer purchase that same equipment to replace it and we then manufacture it custom in our shop.”
She added that Xcel is trying to stockpile light poles and other equipment so repair timelines can be speedier despite no reference to timelines in the new proposal.
Sawyer would also like to see Xcel shut off power to neglected and derelict buildings in Denver. According to the councilwoman, staffers have discovered electricity to be attractive to squatters. However, Ramírez said that type of regulation can’t be contained within a franchise agreement, because the state PUC is in charge of Xcel’s disconnection program.
The next step for the proposal is the July 8 Finance & Governance Committee, where councilmembers will decide whether to pass the agreement to the full council for final consideration. A public hearing is scheduled for the July 14 City Council meeting for the public to weigh in. Should the council approve the agreement on July 21, voters will see a ballot question in November.
And if councilmembers' predictions are correct, the path to that measure passing will be challenging.
“We need this agreement with you and you guys are fantastic partners with us, but our residents have to vote on this and our residents are mad,” Sawyer said. “There are nuances, and it's hard to campaign on nuance. …I do think it's really concerning.”
