How should Council respond to Xcel? Listen, at least

Xcel Energy’s June 27 letter to Colorado Springs Utilities will be a game-changer, regardless of its immediate outcome.

In the letter, Xcel vice president for asset development Bryan Hassler proposed that Xcel and CSU enter into a nondisclosure agreement “with the specific intent of exploring over the next 60 days if there is a value proposition that would provide for Xcel’s acquisition of and assumption of operations for CSU’s generation fleet.”

CSU’s board, the Colorado Springs City Council serving in its dual function, was supposed to consider this proposal at a closed session on July 16, but board member Joel Miller made the letter public on Tuesday.

It’s clear that Miller wanted to torpedo the deal. Non-disclosure agreements are just that — and once one of the parties reveals the very existence of the agreement, it may be impossible to go forward.

But Miller, who probably believes that he was acting with the highest and purest of motives, decided to substitute his individual judgment for that of his eight peers on the board. Joel, that’s what civilians do — does the name Edward Snowden ring a bell?

But it may not much matter, and Miller may have indeed done us a favor.

If Council votes not to consider Xcel’s proposal in open session, it will be an act of extraordinary stupidity, but the genie is already out of the bottle. CSU is in play, and Colorado Springs voters and ratepayers will want to know more.

The city’s municipal utility owns three major generating facilities and four small ones. It also owns an extensive network of high-voltage transmission lines, and an even more extensive local transmission network. It has the exclusive right to provide electric service within the corporate limits of Colorado Springs.

What’s all that worth? We don’t know. For generations, local elected officials and CSU’s managers have chanted the same familiar mantra: Local ownership and local control mean lower rates.

But unless Colorado Springs residents and their elected officials have some idea of the system’s value in the marketplace, it’s foolish to consider rates as the sole measure of continued municipal ownership.

CSU and city officials alike have long resisted the idea of hiring an outside firm with appropriate expertise to estimate the system’s value. They’ve argued that, since the system’s not for sale, why bother?

But we all know that everything has a price.

You might be sentimentally attached to that old painting that hung in Grandpa’s study, but when find out that it’s a Thomas Moran landscape worth more than $1 million!!?? Grandpa goes to auction.

Selling CSU’s electric generation facilities might mean slightly higher rates. But as Hassler points out in his letter, it would get us out from under problems associated with emissions regulations and give us the advantages of scale.

And make no mistake about it, electric power utilities are all about scale nowadays. Just as there’s a reason that Colorado Springs no longer manufactures trucks, as we did in a Westside factory in the early 20th century, there’s a reason that most of Colorado gets its power from big investor-owned utilities.

It would also get the merry amateurs of City Council out of the loop, and let the professionals at the Public Utilities Commission deal with rate-making. Council members wouldn’t much like losing a big chunk of their power, but most of us who have watched them in action (and, on a personal level, even served as a council member) know that they’re ill-suited to have and exercise that power.

So what should Council do? Tell Xcel to wait for a few months, while we complete an independent third-party assessment of the system’s value. Is CSU’s electrical generation and transmission system worth $1, $1 million, or $1 billion? And what’s the present value of future avoided costs?

We don’t know — and there’s no excuse for our ignorance. Council has long succeeded in sprinkling fairy dust in our eyes (and in their own!), but it’s time to take off the blinders.

So Joel, Andy, Keith, Don — what are you afraid of? I guess we’ll see on Wednesday.

 

2 Responses to How should Council respond to Xcel? Listen, at least

  1. I oppose the sale of any part of CS Utilities to a corporate conglomerate like Xcel. Local control is always the best way to contain costs and guide the destiny of the facilities. I don’t see any upside to the consideration of a “non-disclosure agreement.”

    Jimmie B
    July 11, 2014 at 8:29 am

  2. Couldn’t have said it better myself.

    This just goes to show that those who lust for power are the least suitable to wield it once they have it. The clown factory just keeps pumping out more and more clowns.

    Henry Wolford
    July 11, 2014 at 11:02 am