It’s time to take a look at Colorado Springs Utilities

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Sixty years ago, my father took me duck shooting for the first time. He had given me a 20-gauge single-barreled shotgun a few months before my 12th birthday, and had carefully instructed me in its use.

We spent weekends trap shooting and skeet shooting. He taught me how to lead the clay pigeon, estimate range, and take my shot. He taught me the importance of accuracy, and the greater importance of judgment.

“Don’t waste your shot,” he told me, “and don’t cripple birds. If you can’t bring them down, wait — you’ll have another chance.”

Satisfied that I had learned my lesson, he took me shooting on the Sanborn Ranch with three of his pals. The ducks were flying on that cold winter day, and I did my father proud. He was happy and his friends slapped me on the back as they sat in the afternoon sunlight and passed around a flask (not to me, alas!).

Hunters who shoot at anything that moves are more likely to shoot their companions than the ducks overhead, or the quail rising before them (see Cheney, Dick). Politicians who flail about wildly, or choose targets that are out of range accomplish little, and are eventually ushered off stage (see Leigh, Tim).

Yet even the most reckless of shooters may be aiming at the right target.

Consider Colorado Springs Utilities, which City Council has declared will forever be municipally owned.

Ten or fifteen years ago, Memorial Hospital had the same status. Except for a few right-wing cranks who thought the city ought to stick to its knitting and let health care facilities be run by private entities, city residents and their leaders overwhelmingly favored continued municipal ownership.

The hospital was profitable, well-run and dominated its market — what was not to like?

But the cranks were right. The health care market was fluid, rapidly changing and inherently risky. Small stand-alone municipal hospitals couldn’t make it alone.

The Memorial story had a happy ending, thanks in part to Tim Leigh and his sometimes irascible colleagues.

Thus encouraged, Leigh went after Colorado Springs Utilities. In retrospect, his quixotic crusade against Jerry Forte and Dave Neumann was like sending Dick Cheney to Afghanistan to fight the Taliban. Leigh fought the wrong battles on the wrong terrain with the wrong weapons — but maybe he was on to something.

The case for keeping CSU intact as a four-service utility provider is simple and straightforward. CSU is conservatively and carefully managed, provides utility services at competitive rates, and allows the city to control its own destiny. Rates are determined by our elected City Council, not faceless bureaucrats at the Public Utilities Commission. CSU transfers more than $30 million annually to the city general fund, more than any private utility would pay as a franchise fee. If Xcel bought CSU’s electric generation and distribution facilities, rates would go up and hundreds of CSU employees would lose their jobs. CSU wouldn’t be a part of our community — corporate chieftains in Minneapolis would make the decisions, and they’d be slow to respond to the needs of local residents and businesses.

The case against keeping electric generation and transmission is even simpler. Electric utilities are increasingly businesses of scale. CSU’s customer base is too small to fund system upgrades, such as replacing Drake. Cheap gas and a tougher regulatory environment threaten CSU, just as Wal-Mart threatened traditional retailers a generation ago. We’re living in a fool’s paradise. The politicians on Council are pandering to their constituents, afraid to even ask for an outside opinion.

So what will Keith King and his timid colleagues do? Nothing is the best option politically, but the worst in the long run. Hiring McKinsey or any credible national firm to study CSU’s long-term viability wouldn’t be popular, but it might be the most important single action Council will take in the next four years.

As one cranky right-wing retiree told me a couple of weeks ago “Here’s the deal — we can sell electric generation for $1 billion today, or wait ten years and sell it for $1.”

Sometimes you have to take the shot — because, as my Dad told me sixty years ago “If you don’t take any shots, you won’t get any birds.”

4 Responses to It’s time to take a look at Colorado Springs Utilities

  1. Your point with the duck hunting is lame (no pun). If you take a shot for a billion dollars, what about the cost to the rate payers? I guess you would like us to sap that billion out of citizens over the next ‘n’ years instead of letting the citizens tap out that billion in benefits to the community via lower rates, including increased jobs etc. within Colorado Springs?

    This article is a political shot and that is it. Has no basis. Sounds exactly like Tim Leigh’s lines. You made absolutely no logical basis. You compared energy generation to health care? (Is the Memorial sell/lease a success?, seems to me that isn’t quite answered completely yet)

    How about our infrastructure in Colorado Springs? Who will ALWAYS pay for it? (citizens) Will that not cost the same, or in fact more if done through a private entity? Yes, economies of scale apply to a power plant, I’ll grant you that, but replacing generation cannot be reliably predicted even 10 years from now. What can be predicted is that we will save a lot by taking advantage of the infrastructure we have for as long as possible so that new/cheaper technologies can replace it.

    How about we give the proceeds of the billion to the citizens and business in the form of a distribution. Then it might make sense to citizens that we do such a thing. Almost any other option just ‘taxes’ the citizens.

    It would be good in the future to cite sources with facts rather than amatuers with blind opinion and comparison between two industries that have no commonality.

    Tim
    April 30, 2013 at 11:00 am

  2. Perhaps an old car that has proven reliable is more dependable than an unproven with too many bells and whistles and flash.

    We have flash and fluff.

    What roll did instability surrounding utilities and local government have in the decision of FaceBook to land in Des Moines.

    Would it be better to first stabilize basics, like local government, prior to making sweeping changes in utilities at this point?

    Only so many companies can say NO to Colorado Springs before the target list runs low.

    Rick Wehner
    April 30, 2013 at 11:10 am

  3. The Independent already looked at the economics. The $1 Billion gets mentioned much, but after bonds and liabilities are paid, we are actually under water. There is no vast economic windfall selling electric generation because that is the collateral for all the bonds. And they do have to be paid first.

    And since when has CSU not been able to build generation to replace old plants? Drake 5, 6, and 7 were built to replace the first 4. Nixon 1 was added, Tesla hydro, and then 10 years ago CSU built Front Range in a partnership and recently took full ownership of its 480MWs. Half of out generation is from gas. How exactly is “cheap gas” and tougher regulations threatening CSU? And that “cheap gas”, has already doubled from when it was cheap $2/KCF to $4/kcf. It is expected to stabilize at $6 long term. It is already more expensive than coal, which makes the other half of our generation… coal, even more favorable.

    All I ask, is those that are for selling Electric generation, to actually do the math. Don’t take some made up number as fact, do the math and see exactly what money will be made. Or just disprove what the Independent has already done. And while Xcel has a larger rate payer base to pay for our improvements… we also must pay for improvements in Denver, Minnesota, New Mexico, and 5 other states and all their projects and upgrades. That does not include the profits that must be paid to their share holders.

    Obviously, we can sell to Xcel, and the world would not stop turning. We can join Denver, but the Devil is in the details. Do the math…it isn’t some vast improvement and economic wind fall. It’s just a different name. I fail to see why we should sell a asset that provides lower rates, and better service that the other alternatives. It isn’t broke.

    Kevin
    April 30, 2013 at 2:22 pm

  4. This – along with the current inability for regional entities to work together on the flood-water issue, all of which must pass muster with the voters, points out a potential need for a more objective way of approaching these issues.

    The need for critical issues to be reviewed and explained to the voters by an independent, third party not aligned with the city – the county or Utilities.

    No politics. All Numbers.

    ‘Secret’ meetings at the Library with photos of police guarding the door make for good drama – but does in reinforce with the public an aura of trust?

    Rick Wehner
    April 30, 2013 at 4:11 pm