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Schuck's coal hard facts

City Sage



It's not always fun being Steve Schuck.

Schuck, the grand old man of the Colorado Springs business community, has long been impatient with plodding public bureaucracies, and the career civil servants who staff them. He's often endured the maddeningly slow processes that go with land development, especially infill projects.

Thinking of building on a 10-acre vacant lot in the middle of town? Prepare for project planning, plan submission, neighborhood meetings, plan modifications, plan re-submission, neighborhood objections, plan re-re-submission, more neighborhood objections, planning commission approval/rejection, appeals to City Council, and the final indignity of plan rejection or revisions so extensive that the project has to be abandoned.

Such processes, Schuck believes, benefit only the bureaucrats who preside over them. He also believes that the bureaucratic mindset governs much of the city's activities, as well as the operation of its enterprises.

Is Colorado Springs Utilities an effective, low-cost electricity provider, or is it an example of municipal socialism run amok? What about the future? Can small, stand-alone electric utilities survive in a time when investor-owned utilities are rapidly consolidating, and realizing significant economies of scale? Should CSU's management react as any private company would, and investigate the benefits/drawbacks of a sale?

So Schuck, hoping to jump-start yet another sluggish bureaucratic process, invited 20-some movers and shakers to hear the views of a couple of Denver players on the subject ("Schuck makes a 'power' move," IndyBlog, Sept. 4).

There's nothing unusual about that — but Schuck disregarded "best power player practices."

• You don't send invitations by e-mail, unless it's open to media and the public. Instead, you call the invitees, or have your executive assistant call their executive assistants.

• You don't meet in a public venue, such as the library. You have it at your home, or in your vast paneled conference room. If you have to use a semi-public room, book space at The Broadmoor or the Mining Exchange.

• You keep invitees a closely guarded secret. If the list leaks, invitees are embarrassed and non-invitees are angry. Nothing worse than being left off a power elite invitation list if you believe yourself to be part of that elite.

But let's ignore the process, and look at the substance.

Schuck believes that we ought to shop our electric-generation business around, and see what kind of deal we might be able to make. He fears, as do a surprising number of local businesspeople, that time is not on our side.

In the best of worlds, they argue, selling electric generation and distribution might bring in enough money to pay off CSU's debt and fund a billion-dollar capital investment fund. Moreover, the buyers would likely agree to shut down and demolish the unsightly downtown Drake plant.

What about rate increases? Well, maybe we could make a deal that would lock in current rates for years to come.

Sound too good to be true? It probably is. If electric generation is sold, rate-making authority would transfer from Council to the cold-eyed pros on the Colorado Public Utilities Commission. By law, utility rates must allow owners a reasonable return on their investment, and investor-owned utilities are subject to more stringent regulation than municipally owned entities. We might defer rate increases for a while, but then take a big hit when the agreement expires.

When serving as Utilities Board, City Council has been slavishly devoted to keeping rates low, even if it's meant sticking with overhead power lines, coal-fired generation, and an aging downtown power plant. Private managers would base decisions on system-wide considerations, and Colorado Springs would be just one small component of such a system.

And when we say "efficiencies of scale," what are we talking about? When a locally owned, locally managed company is acquired by a major corporation, a lot of people get fired. Subsequently, out-of-town managers seek to maximize margins, and contribute as much as possible to the corporation's bottom line.

That doesn't mean that Schuck is wrong. To the contrary, he's doing what Council and CSU should have done years ago — trying to find out what a depreciating city asset might bring in the marketplace.

For that, he deserves our thanks. And next time, Steve, put me on the list!

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