The Colorado Public Utilities Commission on Thursday ruled that Xcel Energy will not be able to collect the $16.6 million balance it says it is owed for work performed on the SmartGridCity project in Boulder.

The ruling is in line with an earlier decision by an administrative law judge that the utility should not be allowed to collect the remaining $16.6 million in costs it incurred in the project because it had not met established criteria demonstrating customer benefits, according to a story in the Boulder County Business Report.

The PUC in early 2011 allowed Xcel to recover $27.9 million in program costs from customer rates, but withheld the remaining $16.6 million until the utility could demonstrate benefits to customers, and provide a comprehensive plan.

Referring to Xcel, PUC spokesman Terry Bote said “We gave you opportunities to come back and present your case, and you didn’t do it.”

Also quoted in the story was Michelle Aguayo, an Xcel spokeswoman: “We are disappointed in today’s decision by the PUC. SmartGridCity has provided benefits to our customers and valuable information to us about technologies that are feasible and could be deployed cost-effectively in Boulder and elsewhere on our system.”

She added that the project also had enhanced the utility’s ability to replace or repair equipment, lowered power bills through grid optimization and reduced operations and maintenance costs.

The SmartGridCity project began in 2008 with a lot of optimism, but along the way Xcel to deal with unanticipated difficulties and issues that bumped the total project cost to $44.5 million, well above the initial numbers. There has been enough dissatisfaction among Boulder residents and officials with the project that the city council is expected to vote in April on splitting from Xcel and developing its own municipal utility.