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Outsider

A canary in the coal mine

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Governments, even little pissant outfits like the city of Colorado Springs, are a lot like big corporations. They're run by insiders who do pretty much what they want, shareholders or voters be damned.

Consider, for example, the plans of our municipal utility to build a new coal-fired generating plant south of town near the existing Nixon power plant. The proposed plant is currently estimated to cost somewhere north of $300 million. That's a lot of money, and every nickel of it will have to be paid by you and me, via our monthly utility bills. We may use the same amount of electricity, but we'll be paying more.

I don't know about you, but I'm not happy about being shaken down by the city. At a minimum, I'd like to think that the decision to spend 300 million big ones is being made by folks who have considered all alternatives, and are both knowledgeable and well informed.

That's not the case. The decision is being made by City Council, which also serves as the board of directors of the municipal utility. And let's face it: Not a single member of that body is qualified, by either experience or education, to make even vaguely knowledgeable decisions. That being the case, they're dependent upon recommendations made by the executives of the utility company.

So what happens if Colorado Springs Utilities makes a disastrously wrong-headed decision? Short answer: We, the ratepayers, pay for the mistake. And if you examine the small print, it looks like the new plant has all the makings of a world-class boondoggle.

Let's briefly summarize the deal: Under a no-bid contract, the giant contractor Foster-Wheeler would build the plant, a coal-burner that would incorporate the latest technology. The federal Department of Energy would kick in about $30 million in the form of a "grant" -- much of which would have to be repaid. Utilities execs claim, of course, that this is the best available option for ensuring that we have reliable, affordable electricity supplies after 2010. Sounds good, until you start digging and unearth some inconvenient facts.

The plant is slated to cost $1,800 per kilowatt of capacity. Comparably sized plants have been built for $1,200 per kW. Why the disparity?

Foster-Wheeler made a similar deal with the city of Jacksonville, Fla. When the plant was almost complete, Jacksonville and Foster Wheeler got into a legal dispute, and work was halted. But since the plant employed Foster-Wheeler's proprietary technology, Jacksonville couldn't hire another contractor to finish the job. Clearly, Foster-Wheeler was in the driver's seat.

Despite repeated requests by analysts from the environmental group Western Resource Advocates, Colorado Springs has been unable to produce any cost justification files. CSU's latest excuse: They somehow misplaced 'em!

The plant is touted as "the cleanest coal-burning power plant in the world!" That's like calling some soldier "The nicest guard at the concentration camp!" -- coal-burning plants are not clean by their very nature. And although emissions from this plant are lower than most, it'll still belch out lots of carbon, mostly as carbon dioxide.

Utilities has already spent a couple of million bucks on preliminary studies, and wants to spend another $14.7 million next year. And will any of that money be spent to commission an objective, outside assessment of the project? Nope -- the entire process design, due diligence, updated integrated resource plan, public outreach, permitting and final recommendation to the Utilities Board (i.e., City Council) will be run by Utilities. If you think that maybe we ought to get some input from an outfit that doesn't have a dog in this fight, forget it.

As you might expect, CSU has prepared a snappy little PowerPoint presentation to push the deal, full of pretty pictures and soothing non sequiturs. Everything's there but the facts, and let's repeat those facts: This is a no-bid, noncompetitive deal, driven entirely by the beliefs and assumptions of the folks who run a small-city municipal utility. If they're wrong, too bad: The city's on the hook for $300 million.

That's not good enough. If Council has a lick of common sense, they'll hire some credible outside consultants to evaluate this deal, and make sure that it passes the smell test. A regional coalition of renewable energy advocates, after extensive study, believes that other alternatives are cheaper and better.

Maybe they're right -- and if so, we'd better find out, before we're on the hook for $300 million.

-- jhazlehurst@csindy.com

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