Another suitor is knocking at the door of Colorado Springs Utilities
. Less than two weeks after Xcel Energy
wrote to John Romero, with Springs Utilities, about acquiring the power department, Vision Ridge Partners LLC of Boulder has submitted a proposal to lease Utilities, citing the city-owned Memorial Hospital example as a way to capitalize on community assets. (The city remains locked in a high-stakes lawsuit with the Public Employees Retirement Association over the Memorial lease. If the city loses, the tab likely would soar well above $200 million. The city received only $259 million for the lease from University of Colorado Health.)
Drake: Is it doomed for the scrap heap?
Xcel proposes to take over the city's power plants, including Drake, Nixon, Front Range, Birdsall, the four hydroelectric plants and a backup generator and possibly its transmission system
Here's the Vision Ridge proposal:
See related PDF
Here's a few bullet points from the proposal:
— Since 1924, CSU has been providing its citizens with reliable, cheap power and natural
gas. However, structural economic problems and national regulations necessitate
— We propose to align ratepayers, the city, and the utility by creating one of most
community-centric utilities in the industry: focus on reliability, maintaining low utility
bills, achieving sustainability goals, and creating local jobs while transitioning the risks
of this future to Vision Electricity Partners
— Vision Electricity Partners would lease the electric and natural gas utility for a fixed cost
per year, guaranteeing annual payments to the city, and managing the utility for
reliability and profit goals
This is peculiar to say the least, notes City Councilor Joel Miller
, who with other Council members, compose the Utilities Board.
The Board voted in April 2013 to not continue a study of selling the electric and gas utilities, much to the chagrin of various community leaders, among them Mayor Steve Bach
. Bach and his cronies want the downtown Drake Power Plant
mothballed and demolished to make way for a downtown sports stadium
and hotels and trinket shops and restaurants. Drake provides a third or more of the city's electric supply.
"Somebody out there is basically doing their own RFP," Miller says. He adds that he wonders if a behind-the-scenes group is trying to get traction for selling or leasing Utilities to serve their own interests, much like he believes is the case with City for Champions
tourism venture calls for building the downtown stadium.
We just got off the phone with Reuben Munger
, Vision Ridge's managing partner. He said the lease proposal was done without the knowledge that Xcel recently sent a letter saying it wants to acquire the electric portion of the roughly $4 billion Utilities operation.
Here are highlights from our conversation with Munger:
First, he denied having spoken with Bach, local developer Steve Schuck
(who instigated a meeting about selling utilities a couple yeas ago) or anyone with the Philip Anschutz
empire, which owns the Broadmoor
and the Gazette
, among other attractions, and is buying the Penrose-Norris Events Center. Anschutz is building what would be the nation's largest wind farm in Wyoming at 2,500 megawatts, a project costing $9 billion, according to the Denver Post
"Our firm is focused on helping municipal utilities address the changes that are happening in interest of the environment nationwide, and Colorado Springs has a strong and successful operation that we felt could be augmented by third party relationships that could be taken further to help the community to grow and prosper," he said.
"We see the opportunity for the community to build on its ownership of utilities, but also strengthen its financial position as it faces a series of obligations.... We do think the world is shifting quickly and increasing outside resources and capital could facilitate some of those changes required over the next three, five and 10 years."
Munger said his company would advance demand-side management to reduce load. Springs Utilities already has remote meter readers in place that would enable a rate structure based on time of use to be imposed.
He also said wind and solar would be components of the power supply.
Third-party management is rare, however, he admitted.
"We would be doing it with a significant partner that would give the citizens comfort," Munger says, but he refused to name that partner. He did deny that it's Xcel or Anschutz, however.
"It's premature to explain the exact structure of how we can give the community certainties that payments the city receives for Utilities can be maintained under a vast array of scenarios," he said. "This creates long-term values" while maintaining local regulatory control.
"The obvious next steps are largely in the hands of Utilities board," he said. "Ultimately this is a decision for the community."
Responding to a question, he said Vision Ridge has fewer than 10 employees but with its "operating partners," has hundreds.