August 27, 2012
Mayor Steve Bach on Monday called a $73.5 million contract between Colorado Springs Utilities and an inventor of a clean coal technology “alarming,” saying it illustrates the need for a thorough review of the city-owned utility.
Bach’s comments come after a story in The Gazette describing the terms of the agreement with physicist David Neumann, CEO of Neumann Systems Group, Inc. to install scrubbers at the downtown Martin Drake Power Plant.
Under the contract, Neumann gets 10 percent on every purchase, and he gets paid as work progresses, not at the end. In other words, Neumann is guaranteed to make money even if the technology fails.
In addition, the contract doesn’t have a deadline for completion or a spending cap.
“The information in your article is alarming,” Bach said in an email.
“It certainly illustrates how important it is that City Council retain outside, expert consulting to help with a thorough, strategic review of Colorado Springs Utilities,” he said.
The council acts as the Utilities Board and oversees the four-service utility, a billion-dollar-plus enterprise of the city.
Council President Scott Hente, who serves as board chairman, said the mayor’s request for a consultant to conduct a top to bottom review of Utilities is unnecessary.
“We have a Utilities Policy Advisory Committee. We employ outside attorneys on a very frequent basis to get legal advice for that,” Hente said. “We are already doing what he’s asking us to do.”
On more than one occasion, Bach has reminded council members that executive decisions of the city government are his and his alone. When asked whether Bach, who has no purview over Utilities, was overstepping his authority, Hente said “No comment.”
Hente contends Colorado Springs didn’t get a bad deal with the Neumann contract.
“I’ve been a board member since its inception,” he said. “I follow this very closely. I was very aware of what we were doing with regards to this. I think given all the circumstances, it was done in a manner that befits the city, and I am convinced that five or 10 years from now, the city will benefit from having that technology.”
Utilities ratepayers are funding the scrubber technology, which has worked on a smaller scale and is being tested at the city-owned downtown plant.
City Councilwoman Brandy Williams said ratepayers would benefit from more study.
“These are hundreds of millions of ratepayer dollars,” she said. “The future of the Drake power plant needs to be a community conversation, and we need all the information on the table.”