Tuesday, September 4, 2012

UPDATE: Schuck makes a 'power' move

Posted By on Tue, Sep 4, 2012 at 3:41 PM

After a 55-minute conversation with Steve Schuck, we can report why he's called this special meeting with a select few, and the answer is relatively simple. Schuck wants to get the ball rolling on the possibility of selling Colorado Springs Utilities' electric division.

"There are members of Council who are taking positions prior to having the information on which a responsible decision could be made," he says.

Council has decided to research the value of Utilities and the prospect of selling the power division next year, but Schuck feels more urgency, given that the city is "broke and getting broker."

As for who is participating, he says, "It's just a bunch of people I decided to invite based on my sense of who would benefit from participating and who the community would benefit from receiving the information that this meeting can generate."

He expressed suspicion about the Council's study, asking who's doing it, whether it would be "driven" by CSU management, and whether it would be conducted with a "predetermined bias."

Schuck says he wants to know: first, what the electric utility is worth; second, whether locking in rates for 10 to 20 years would impact that value to a bidder; and third, whether it makes sense to proceed with a bigger discussion of selling it and applying proceeds, assuming there are some, to other city needs.

"This is not an attempt to try and influence an outcome," he says. But if the city could clear $1 billion from the power utility, he notes, it could have a lot of cash to address problems, such as storm water backlogs, without raising taxes.

"I'm not in a public office," he says. "This is my private meeting I have convened with friends of mine who agreed to come down and meet with a select group. I promised no politics in the meeting."

He called the meeting now, he says, because like it or not, the debate is underway, and facts are needed to help make an informed decision.

Schuck also notes he participated in three or four similar meetings during the debate in the last year over Memorial Health System, which voters last week voted to lease to University of Colorado Health.

"I see no reason to wait around for another year to wait for whatever process the Council wants to follow to get information on what is the best way to introduce the marketplace to the asset," he says.

He adds that the Council's recent vote to stand by its contract for pollution control equipment on Drake Power Plant plays a role in his timing, because the Neumann Systems Group technology could result in either a premium for the electric system or a penalty when selling it. "We're making decisions that could have a material impact on the value of the asset when you take it to market," he says.

Media will not be allowed at the meeting.

—————————ORIGINALLY POSTED TUESDAY, SEPT.4, 12:09 P.M.——————————————-

The unelected power brokers are at it again.

This time, they want to decide whether to sell the Colorado Springs Utilities electric department, and maybe gas also, and they're not twiddling their thumbs waiting for our elected leaders to study the idea and vote on it.

(City Council has authority over Springs Utilities, much to the chagrin of Mayor Steve Bach, who's expressing a desire to take control of it. The Council has called for a study next year to delve into the value of Utilities and analyze the future of Drake Power Plant.)

Colorado Springs Utilities Steve Shuck Drake Power Plant
  • Drake Power Plant: There's more at stake than one power plant.

But Steve Schuck, one-time governor candidate and long-time developer, isn't waiting for the Council to do anything. It's apparent he wants to drive the train, as evidenced in an e-mail he sent to certain big-wigs last Thursday.

In it, he calls a meeting to discuss how to place a value on the power utility.

Among the privileged few to receive this invitation — to a meeting Sept. 20 at 2:30 p.m., at the Penrose Library, are:

City Councilmen Merv Bennett and Tim Leigh
Jim Johnson, owner of GE Johnson Construction
Fred Veitch with Nor'wood Development Group
Cari Shaffer with Add Staff Inc. (the only woman on the list, we should note)
Jon Medved, longtime Springs businessman
Steve Bartolin, president and CEO at The Broadmoor
Les Gruen, owner of Urban Strategies
Richard Skorman, former vice mayor and mayoral candidate defeated by Bach last year
Wayne Laugesen, editorial page editor at the Gazette
Doug Quimby, La Plata Investments owner who also serves on the Chamber and EDC board
David Jenkins, owner of Nor'wood Development Group
Kevin Walker, owner of Walker Strategies who spearheaded the strong-mayor change of government campaign
Dick Celeste, former president of The Colorado College
Jerry Biggs, local businessman
Mayor Bach

Bach introduced the idea of off-loading the electric utility some months ago as part of his campaign to get rid of the Martin Drake Power Plant downtown. The coal-fired plant provides roughly a quarter of the city's base load and is getting pollution control equipment installed by Neumann Systems Group, a home-grown company whose contract gives the city a 3 percent share of gross sales of his systems to other utilities for several years.

Bach opposes adding pollution control equipment to Drake and wants Drake gone so that the lower downtown area can be redeveloped, perhaps with a sport stadium as an anchor. Bach already has paid Hogan Lovells law firm for an engagement whose purpose the city won't disclose, but which required consultation with a sports stadium expert attorney from Hogan Lovells' Denver office.

Some of Bach's staunchest supporters stand to gain financially from the downtown plan.

Now Schuck is leading the charge to sell the utility by calling a meeting of a batch of people, most of whom apparently are in charge of running this city though they haven't been elected to any office.

Here's Schuck's letter:

Much discussion has been taking place in our community about CSU. Unfortunately most, if not all, of it has been focused on Drake, Neumann, etc. with precious little attention being given to the much, much bigger picture.

Colorado Springs Utilities Steve Shuck Drake Power Plant
  • Schuck: Deal-maker?

How can City council properly evaluate alternatives and options without first having a clear understanding of how the market perceives and values the assets within CSU. It has irritated me, and probably you as well, that so many positions are being taken without the benefit of knowing what the market might pay for any, or all, of the individual utility operations, the conditions we might impose on a buyer, and the impact that such conditions might have on the amount a buyer might pay, etc.

So, with no official portfolio, no authority, but an abundance of curiosity and a clear sense that this is a truly defining moment for our city, it seemed logical to ask questions of some experts. That took me to Denver, a city which owns its water and waste water utilities, but neither power nor gas, and to two people whose knowledge, experience, impartiality, and friendship make them exceptionally valuable resources. Del Hock, past CEO of Public Service (predecessor to Xcel) and Bill Vidal, former Mayor of Denver, generously agreed to my request to come to Colorado Springs and meet informally, unofficially, and totally off the record with a few selected community leaders, including you if you are interested in participating.

What we will be seeking from Del and Bill are their perspectives and counsel about how to value CSU and the various ways said value might be realized. What we will not discuss is whether anything should be sold. That conversation is best saved for a later day, needs to include a larger audience, and can only be productive after we have a better sense of the market value of what we own. All this meeting is intended to accomplish is a better understanding of what we have and to learn what next steps Del and Bill might recommend to us.

Please let Millie know by emailing her at mmd@theschuckcorporation.com or by phone at 719-633-4500 if you will be joining us on Thursday, Sept 20th from 2:30 — 4:30 p.m. at the Penrose Library, 20 North Cascade Avenue, in the Penrose Adult Room.

Many thanks and best regards.

Steve

Which leads us to wonder if the public is invited. Obviously not, but we tried to reach Schuck to ask him and haven't heard back. We'll update if and when he returns the call.

We also talked with Councilman Bennett.

"I'm going to attend, and I'm going to listen. That's the only take that I have. I wanna hear what people have to say," says Bennett, who was on the city's negotiating team for leasing city-owned Memorial Health System to the University of Colorado Health. Voters approved the lease last week.

"All I know is, I was invited to come and listen, and that's what I'm going to do," he adds. "I don't know that there's anything clandestine going on. It was a note from Steve. He just wanted to bring a few people together to talk about it and ask if I would be there and I said, 'Yeah, I'll come.'"

We asked if we could tag along, to which Bennett said, "You'll have to ask Steve that. If it was my meeting, I'd say absolutely."

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