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Colorado Springs Utilities to Xcel: 'Thanks, but no thanks'

July 16, 2014 Updated: July 16, 2014 at 8:23 pm

Colorado Springs City Council will soon send a letter that reads something like this: "Dear Xcel Energy, thank you for your interest in buying Colorado Springs Utilities energy division, but no thanks."

The council, in its role as the Colorado Springs Utilities Board, emphatically said Wednesday it has no interest is selling any piece of the city-owned Utilities company. The council members are so sure of it that once the letter is written to Xcel Energy, they will keep it as a form letter to send to other companies that come sniffing around.

"There would be no advantage to the rate payer," councilman Andy Pico said. "That is why I would never support it. Thank you, but we're not interested."

In June, Minneapolis-based Xcel Energy, which has Colorado operations, asked Colorado Springs Utilities if it would entertain the idea of selling its electric generation fleet, including the controversial Martin Drake Power Plant, Ray Nixon coal-fired plant, the city's natural gas-fired plant, its hydroelectric facilities and its backup generators.

The company offered to have closed-door discussions with Utilities about a possible sale. Councilman and Utilities board chairman Merv Bennett said the letter from Xcel's vice president of asset development seemed like a fishing expedition and he didn't view it as a serious offer.

Even so, he said, the board should respond politely and move on.

In April 2013, the Utilities Policy Advisory Committee, a seven-member group that studies policy and makes recommendations to the Utilities board, recommended spending $500,000 to hire NewGen Project Management to study the sale or lease of the city's electric assets.

But even then UPAC members knew it would be a complicated issue. Although there are four Utilities divisions - water, waste water, electric and gas - the bonds for each division are rolled up as one. Selling or leasing one division would mean different owners and different rules for a private utilities and public utilities.

The council, last year, voted to dump the proposed study of selling off one division.

At that time, six new members of City Council had just been elected. Councilman Joel Miller said he ran his campaign saying he was against the sale of the city's utilities. Nothing, he said, has changed. Council president Keith King said that during his campaign he hardly heard people talking about city issues. Utilities was the only thing on residents' minds, he said.

"The prevailing attitude was the ownership and the benefit that we derived, which is low rates," King said.

Xcel Energy is a U.S. electric and natural gas company, providing energy in eight states. In Colorado, the company has 1.4 million electricity customers and 1.3 million natural gas customers. A spokesman for the publicly traded Xcel, declined to comment last week on the company's interest in Colorado Springs Utilities and said the letter it sent to Utilities speaks for itself.

Sam Masias, who has asked the board to close the downtown coal-fired Martin Drake Power Plant, said the council should consider selling the city's electric and natural gas divisions. Under new Environmental Protection Agency guidelines a private company would need to provide 30 percent of its energy from renewable sources. That could mean a private company would shutter Drake, he said.

The City Council cannot sell any part of the city's Utilities without approval from voters, according to the city's charter. Masias said the council should put the issue on the ballot and let voters decide.

But council members said they are not interested in taking the time to get formal bids. Pico said past studies, conducted for Utilities, say even if a private buyer were able to pay the estimated worth of Utilities at $1.7 billion, it would be $100 million shortfall to the city and rates could go up 30 to 40 percent.

"There is no pot of gold at the end of this," Pico said. "The impact on rate payer, on the community, on the business community and individuals would be substantial - there is not a case to be made."

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