Neumann and Leigh still battle

Beyond NeuStream’s fate, the alternative of replacing Drake would mean a long process.

Beyond NeuStream’s fate, the alternative of replacing Drake would mean a long process.

The next salvo in the war of words between Neumann Systems Group President Dave Neumann and Colorado Springs City Councilor Tim Leigh won’t be at a public meeting.

Neumann asked last week for a special City Council meeting, outlining 16 alleged falsehoods and misstatements made by Leigh about Neumann’s coal-scrubbing technology being installed at Martin Drake Power Plant.

Neumann’s letter to Council said his company and Colorado Springs Utilities “have been subjected to a barrage of false and pejorative information [that] have damaged our reputation, damaged our ability to perform for the city through the loss of key personnel, damaged our ability to obtain financing for the company, damaged our company valuation and damaged our future business prospects.”

But Council President Scott Hente refused to call a special meeting, meaning it would take three councilors to override him and schedule a special meeting.

It could be Hente is tired of the very public pitched battle between Leigh and Neumann, which has gone on for months. Leigh has criticized the project and demanded it be halted. Neumann has fought back, answering Leigh’s allegations with detailed explanations.

Neumann said Leigh’s attempts to discredit Utilities could have harmed the reputation of CSU and its employees. Neumann added that Leigh could have harmed CSU’s bond rating and jeopardized “over a billion dollars of Colorado Springs Utilities assets.”

Neumann’s meeting request is just the latest round in the battle.

Leigh sent emails to about 3,000 business associates and friends — mostly claiming that the NeuStream won’t work, Utilities shouldn’t have signed a contract for unproven technology, and cheaper technology could be found “off the shelf.” He still says he believes that NeuStream should be stopped, due to upcoming federal regulations that will make burning coal for electricity too expensive.

“We need to look at the larger picture,” Leigh insists. “We might have to decommission both the Drake and the Nixon plants much earlier than anyone’s current timetable. It doesn’t make sense to continue spending money on the Neumann scrubber.”

Neumann fired back, filing an ethics complaint, still under investigation.

The city’s Independent Ethics Commission is checking claims that Leigh is seeking personal gain through a Utilities vendor, that there’s a conflict of interest based on direct or indirect financial interests in downtown properties affected by possibly closing Drake, and that Leigh is engaging in activities “that may create or does create the appearance of impropriety.”

Neumann alleges Leigh offered to broker a deal to sell Neumann’s company to a vendor in North Dakota.

City Attorney Chris Melcher dismissed some of Neumann’s complaints, saying his opinion was that Leigh was within his First Amendment rights to speak out about the NeuStream.

Neumann disagrees.

“While I would never challenge Mr. Leigh’s First Amendment right to make any statement, I do challenge his legal right to damage the city and its taxpayers, and CSU’s bond holders, ratepayers, employees and vendors through making demonstrably false statements,” Neumann said. “I also believe that the city could be liable for his actions if they do not act to mitigate the effect of his false and damaging statements.”’

Expense questions

Neumann also claims Leigh inappropriately filed expense reports and was reimbursed for a trip last summer to visit the Environmental Energy Resource Center in Leigh’s hometown of Grand Forks, N.D. — a visit that Neumann says Leigh never actually made.

Leigh filed the reimbursement request Aug. 19, after he took the trip, one that he characterized in an earlier letter to Council as a “private trip through the Bakken (oil fields) and to visit some old friends in North Dakota and Minnesota.” He urged Council to consider a “deep-dive investigation” into CSU’s real value by a third-party authority.

When he returned, he asked for reimbursement for $1,302.93 for travel expenses, including hotel rooms and mileage. Aimee Cox, the City Council administrator, said he would have to outline what he learned on the trip, and City Council would consider the request.

Leigh responded with an email saying he went to North Dakota to learn more about oil and gas exploration, but also gathered information about NeuStream from the EERC, an energy research group at the University of North Dakota.

The EERC has no record of Leigh’s visit during that time frame in the summer of 2012, says Derek Walters, manager of marketing, communication and outreach for the organization.

“We keep a database of all visitors, and we track their agenda when they’re here,” he said.

“We have no record of him ever visiting the facility.”

Leigh’s expense reports don’t specifically say he visited the EERC, but he lists NeuStream as a justification for reimbursement for the trip.

“Neumann’s system has been tested (and those tests validated) and it’s the impression of industry experts, it works,” Leigh said in the email. “This was verified at the EERC at the University of North Dakota.”

But before that trip, Leigh briefly changed his tone about NeuStream, saying in one of his “market report” emails that NeuStream worked.

On July 17, Leigh said he took electricity experts to “provide Dr. Neumann with an opportunity to showcase his evidence (to prove his stuff works); that he can remove noxious pollutants from coal plant emissions more effectively and less costly than convention [sic].”

“In a word — Neumann is no Professor Harold Hill … and it’s possible he’s a reincarnated professor Ned Brainard (You’ll recall Professor Brainard invented Flubber and Flubber Gas in 1964 all to great acclaim (and profit) for his public/private partner, little Medfield College),” Leigh said in the email.

“And frankly, it turns out we can be thankful we have Neumann … in our midst. And I’ll concede based on the information I now have on hand, it appears his stuff works and it’s possible it could save us millions when compared to an alternative scrubber system.”

Changing opinions

Leigh’s not saying that now. Instead, he says he’s being targeted by people who don’t want him to ask questions about Drake, Utilities leadership or NeuStream.

He’s hired two attorneys to represent him before the ethics commission, and believes he’ll be cleared of the allegations.

Leigh wouldn’t confirm nor deny that he visited the EERC in August 2012.

“Those questions are being fully investigated by the commission,” he said. “And on advice of my attorneys, I’m not going to comment about specifics. But I am confident all the answers will come out, and I will be exonerated.”

And he’s still on the attack, calling Neumann’s tactics “shameful.”

“This is clearly politically motivated in a hot political scene, designed to quiet my voice and questions about policy decisions,” he said. “I think it’s shameful that people want to quiet my voice and will stoop so low as to hire a national political consultant to come to this town to defeat my bid for election in a municipal district. That tells me that it’s not about the election itself, it’s about the questions I’m asking.”

Leigh alleged Neumann paid for direct-mail flyers and handbills delivered in Leigh’s district that attacked him personally.

“They’re making false claims,” he said. “Somebody wants to shut me up.”

Neumann’s responses to Leigh

Dave Neumann, in an eight-page letter to City Council, has cataloged and answered every complaint, question and issue raised by Councilor Tim Leigh. Below is a synopsis of the questions and answers.

 

Point: Leigh says technology is too experimental, has no proven operational experience and no performance specifications.

Counterpoint: Neumann says he showed Leigh the data regarding NeuStream on June 8, 2011, and again on July 17, 2012, that included more than 30,000 hours of data related to NeuStream’s operational experience.

 

Point: On Nov. 19, 2012, Leigh sent a “market report” email saying he’d been told that NeuStream doesn’t work. “I’d like to see the third party verification. Does third party verification exist? Who performed the research? Was the research done to validate a predetermined conclusion?” he asked.

Counterpoint: Neumann says Leigh has seen data supporting NeuStream, including information from the Electric Power Research Institute’s testing. He cites Leigh’s own email to Council: “Neumann’s system has been tested (and those tests validated) and it’s the impression of industry experts that it works.”

 

Point: On Jeff Crank’s radio show March 2, Leigh said CSU should not be a venture capital partner of a research and development company “with no product or previous business experience.”

Counterpoint: Neumann said NSG has completed more than 40 government contracts and “has never received anything other than a satisfactory review from the government.” NSG has twice made the Inc. 500 list of fastest-growing companies in America, has been recognized as a Colorado company to watch and nominated for the Edison Award. Neumann says the nature of the public/private partnership is not a venture capital relationship. The NSG contracts are fee-for-service contracts.

 

Point: During the same interview, Leigh said the NSG contract was open-ended with no guarantees for installation of performance.

Counterpoint: Neumann says the contract has system and cost performance requirements tied to incentive fees. Increases in costs compared to proposed project costs result in deductions from the incentive fee amount. “NSG’s contract is clearly not ‘open-ended’ and NSG has a multi-million dollar incentive to perform the contract with CSU,” he said.

 

Point: Leigh also claims Neumann will earn a 10 percent profit on the deal.

Counterpoint: Instead, the NSG deal has a 10 percent fixed fee added to all design, engineering and procurement charges. The fees, Neumann says, translate into a true profit level of less than 5.4 percent.

 

Point: Leigh said there is no data that confirms NSG will meet CSU’s obligations.

Counterpoint: “Mr. Leigh heard from his own experts that NSG had brought revolutionary, verified technology to the table,” Neumann says.

 

Point: A competing vendor can do it more cheaply, Leigh has said.

Counterpoint: A cost study showed the cost of a traditional lime spray dryer system, required by the state previously, was significantly higher and not as effective as NeuStream, counters Neumann.

 

Point: Leigh asked if NSG would submit its books to forensic accounting audits.

Counterpoint: Neumann says NSG will submit to a CSU audit at any time. NSG has already agreed to federal government audits and passed those; it undergoes an independent audit annually.

2 Responses to Neumann and Leigh still battle

  1. You know, you have to wonder – Is Tim Leigh as crazy as he appears to be? Between him and our failure-as-a-mayor, Steve Bach, they seems determined to ruin the city. What’s with them?

    Phil
    March 25, 2013 at 4:16 pm

  2. Tim can be a very abrasive person, I do not particularly care for him but know he is willing to ask direct and tough questions many others are unwilling ask. This issue needs to play out a bit longer.

    Tom
    April 1, 2013 at 4:26 pm