UPDATE: Utilities strikes deal on emissions control

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We just got off the phone with Bruce McCormick, Springs Utilities' energy chief, George Luke, energy supply general manager, and Suzanne Kladder with Neumann Systems Group.

McCormick says the new agreement means the city will pay substantially less than if another provider of emissions technology installed the equipment. The Neumann system will cost $73.5 million for the equipment and another $39.5 million for installation, compared to more than $150 million for another vendor.

In addition, the city is negotiating a new deal that would pay the city more of a share of sales Neumann makes of its technology, since the city was the guinea pig, so to speak. How much hasn't been released, but a current agreement calls for payment to the city of 1 percent of sales, and McCormick said the new agreement "gives more consideration to Utilities and our customers, so it's going to improve the return we get."

So far, Neumann doesn't have any other orders, Kladder says, but the company is "talking to several other utilities."

Nixon Power Plant 25 miles south of Colorado Springs also will be equipped with emissions control technology, but probably not until 2016 or beyond, after the Environmental Protection Agency releases its control standards for sulfur dioxide next summer.

Luke and Kladder both say they are confident the Neumann technology installed on Drake will meet EPA regulations.

Dave Neumann, who invented the technology, gave a rare interview to the Indy a few minutes ago, saying, "We're extremely thrilled with the opportunity we are getting from CSU to go full scale with this technology."

He says his company has received three U.S. patents, has nine more pending in the U.S. and has four each in nine other countries also pending, including Europe, China and India. Some of those deal with nitrogen and carbon dioxide emissions control as well as sulfur dioxide.

"What's really been great over the last couple of months, the governor himself has taken a personal interest in this," Neumann says. "We've had a great reception there of their indications of their willingness to support us on other grant applications. We're getting support from the entire Colorado (congressional) delegation as well. We're just really thrilled with the support we've gotten from CSU and the City Council as well."

He noted that Council President Scott Hente, President Pro Tem Jan Martin and former Mayor Lionel Rivera have been particularly supportive.

McCormick says the installation, operations and maintenance of the equipment at Drake will require hiring 15 additional employees. Hiring will begin next year.

Kladder says she's not sure how many employees Neumann will need to manufacture and deliver the equipment, but local economic development officials have pegged the manufacturing operation at potentially hundreds of employees when orders begin to come in.

McCormick says the emissions control equipment addition seals the community's reliance on coal for years to come, but that's not such a bad thing, he says.

"I think we all understand for our community and much of the nation coal needs to be part of the resource mix going forward," he says. "It’s such a big component, and it’s so cost effective. This technology certainly presents coal in an environmentally responsivle way. We’re happy the technology will be installed at lower cost and will create local jobs. For all those reasons, it’s a good thing."

All of which demonstrates how a great idea and a lot of hard work, both for Neumann's crew and the city, can pay off.

"It’s really been a long haul to get to this point," McCormick says.

—————ORIGINAL POST, 11:24 a.m.————-

Several years of partnering with a Springs-based technology company, Neumann Systems Group, headed by Dave Neumann, a former Air Force Academy professor, is paying off.

Springs Utilities announced today it's struck a deal with Neumann to install his new emissions control equipment at the Martin Drake Power Plant for a fraction that traditional technology would cost. The city willi pay $73.5 million, compared to estimates of several hundred million dollars for other vendors.

The city has allowed Neumann to attach the technology onto the Drake plant during the last two to three years to test its viability. City officials have said should the technology prove out, it could bring hundreds of jobs locally to build and ship the emissions control units.

Here's the release:

Colorado Springs Utilities and Neumann Systems Group (NSG) have executed an agreement for the design and installation of new emissions control technology for Colorado Springs Utilities’ Martin Drake Power Plant. The contract value is $73.5 million with the potential to earn an incentive based on meeting cost and performance goals.

The technology, NeuStream™, will remove sulfur dioxide (SO2) from the emissions of the coal-fired plant complying with new regional haze air pollution requirements in Colorado and supporting the concept of clean coal for power generation.

“This is great news for our community. NeuStream™ will save money for Colorado Springs Utilities’ ratepayers because it will be installed at lower cost than traditional scrubbing technology and will require less operating and maintenance expenditures,” Scott Hente, chairman of Colorado Springs Utilities’ board, said.

Neustream™ is compact — requiring a smaller footprint than traditional technology, which makes installation of emission control technology at the small downtown power plant campus feasible.

NSG projects local job creation resulting from this agreement and numerous local firms are expected to participate in the design, manufacturing and construction associated with the project. Work is slated to begin this fall and the project is schedule to be completed in 2014.

“I would like to recognize NSG for their innovation in developing this new, low cost environmental technology, and Colorado Springs Utilities for their leadership in supporting this local company and the associated jobs,” said TJ Deora, director of the Governor’s Energy Office. “This is a fantastic example of a collaborative effort that will result in a cleaner energy product.”

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