Updated: February 26, 2014 at 3:29 pm
The Colorado Springs City Council, which just imposed higher utility rates on the public, today will consider nearly doubling the pay of Colorado Springs Utilities CEO Jerry Forte. At the same meeting, the council is likely to approve another rate increase - 3 percent on electric and 3.6 percent on natural gas as part of a consent agenda. The council insists the latest rate hikes result from a cold snap across the country that has driven up energy costs.
Under the extreme raise plan, Forte's base wage goes from $276,750 to $447,175. He would receive a bonus of $25,000 for each of the next two years. The bonus isn't tied to performance; it's an incentive to stay through each year. The deal includes an additional $26,400 a year to pay for the CEO's medical insurance after he retires.
With the bonus deals, Forte's final compensation would increase to $498,575. To his credit, Forte didn't push for the increase. The proposal results from council's decision to spend $33,000 on a consultant to study executive wages at other utilities. Advocates of the raise fear they'll have a hard time retaining Forte or replacing him without the new money.
If reactions of Gazette readers are an indication, the community isn't happy. Here are a few typical excerpts from the discussion thread under a news story posted Monday on gazette.com:
- "Now I know why my budget billing just went up $32 a month," wrote Genda Besselsen Hegr.
- "Say WHAT???? Yes I am Yelling!!!!" wrote Matthew Flynn.
- "This HAS to be a joke. Even on my best, most productive days, I still would never, EVER deserve a 60% raise," wrote Richard Humphreys.
- "And they want to raise our rates by 3%? I don' think so," wrote Marshell Forrest.
Meanwhile, as the council/utilities board raises rates and advocates new overhead, it continues investing in Neumann Systems. The local startup pitched a coal-scrubbing contraption for the Drake power plant that will cost ratepayers $130 million-plus - more than the amount council anticipated. The investment was supposed to pay off when Neumann Systems sold the invention to power plants around the globe, but it hasn't been selling. As council continues funding an emissions solution far above the cost of conventional systems, it studies the possibility of decommissioning Drake.
The council-controlled utility may soon resemble a coal train going off the rails.
Forte may, indeed, be underpaid. The $33,000 consultant said Forte's base compensation, not including bonuses, is 38 percent below the 50th percentile of CEO wages at comparable utilities. This means council members past and present have allowed their employee to fall behind. Now, some on council want an instant fix that is positively shocking to average ratepayers who struggle to pay for council's rate hikes.
Perhaps City Council isn't the proper entity to oversee a major public utility. Most council members lack substantial executive experience. Even more lack credentials in the buying, selling and generation of power. If that wasn't obvious, it's abundantly clear today.
In justifying the near doubling of one CEO's wage, the council will talk about salaries at other utilities. Council members will tell ratepayers the utility needs to act more like its peers. Yet, we've long heard Colorado Springs must maintain a municipal utility to be different. City ownership, we have been told, gives ratepayers local control of costs. We must own and operate Utilities, they say, so council can spare us the excesses of other utilities with high-wage executives.
Either we want to be different or just like all the rest. If it's the latter - if we are to mimic practices of other utilities - we should seriously ponder cashing out. Consider selling electric and gas portions of Utilities to a company supervised by experts, using proceeds to pay down debts and move our community forward.