Denver voters will decide this November whether to approve a new franchise agreement with Xcel Energy that collects roughly $34 million annually from ratepayers through a three percent surcharge on utility bills, then returns it to the city's general fund. A new analysis from the Independence Institute examines the twenty-year contract, which the City Council advanced in July 2026 by a 10 to 2 vote after initially refusing to send it to voters in 2025. The report concludes that Denver used infrastructure negotiations to secure climate spending it couldn't otherwise require, while Xcel agreed because the capital earns a guaranteed return anyway.
The franchise agreement grants Xcel the right to use Denver's streets and rights-of-way in exchange for the three percent pass-through fee, which customers pay via a line item on their bills. An additional one percent of revenue goes toward burying power lines underground, costs that are built into base rates. Another one percent of substation budgets—totaling approximately $6.4 million—will fund beautification projects, which also become rate-based capital. Of the franchise fees collected, $2 million per year will be redirected to programs like heat pumps or electric vehicles, shifting ratepayer money toward electrification initiatives. Xcel will separately contribute $125,000 annually for low-income energy assistance and conservation, plus a one-time $2.5 million payment for utility bill help—provisions that are supposed to come from shareholder funds rather than ratepayers.
Mayor Mike Johnston said the "proposed agreement makes it easier for people to heat and cool their homes with clean energy," according to the report. The contract includes public reporting requirements, with a city-hosted dashboard to track metrics and spending, plus five-year partnership reviews administered by Denver's Office of Climate Action, Sustainability and Resiliency. The franchise agreement doesn't give Denver authority to set utility rates—that remains the Public Utilities Commission's job—or to dictate what energy sources Xcel uses to generate power. The report notes that Xcel Energy missed its 2025 emissions target under state law SB21-264, coming in 7.2 percent above the required compliance level and higher than 2015 baseline levels.
The analysis explains that the outcome of the vote carries less weight than voters might assume. If the agreement fails, Xcel retains its status as the state-regulated monopoly with exclusive rights to sell gas and electricity in Denver. Even without the franchise agreement in place, Denver isn't barred from exploring municipalization, but rejecting the contract doesn't trigger a municipalization scenario either. The Denver Gazette reports that if voters reject the agreement, they may still owe the three percent franchise fee, as Xcel and the city interpret the arrangement—though that reading is disputed. The report states that Denver estimates buying the infrastructure from Xcel would cost between $4 billion and $5 billion, meaning the city loses substantial money in avoided costs if it walks away, while Xcel loses little except legal certainty to use public rights-of-way.
The report concludes that neither party emerges favorably from the arrangement. Denver leveraged a right-of-way negotiation to obtain climate spending and recover costs from ratepayers, while Xcel readily agreed because climate-related capital investments earn guaranteed returns. The city lacked a credible negotiating alternative given the multi-billion-dollar price tag for municipalization. Regardless of how Denver residents vote, Xcel keeps its monopoly position—the fundamental power structure remains unchanged.