Counterpoint: Owners should consider selling power authority

With the start of the new year, one of the big issues for Northern Colorado will be the impact of electrical power deregulation initiatives, both from the U.S. Congress and from the Colorado General Assembly.

Colorado Congressman Dan Schaeffer will have much to say about this issue through his cosponsorship of federal legislation that attempts to provide for deregulation. Many believe that it will be patterned after the earlier deregulation of the gas industry.

California has made strides toward deregulating its electrical power companies. Both investor-owned and municipally owned enterprises have compromised to forge new opportunities to supply customers at the lowest possible cost.

However, do not expect the same result in Colorado. Based upon our state’s failure to pass meaningful legislation with respect to branch banking, the long-held Colorado pattern of doing nothing will likely prevail regarding the issue of electric utility deregulation.

Most impacted by this threat of deregulation are the owners of Platte River Power Authority. This municipal electrical-power supplier is owned by the cities of Fort Collins, Longmont and Loveland, and the Town of Estes Park.

Each of the municipal owners of PRPA provides services to a blend of customers ranging from large industry to the smallest of residential users.

Through deregulation, the largest users — whether industrial or governmental — potentially could purchase their power from national suppliers. Once these large users are lost, the remaining users will become the residences within each of the constituent cities.

One alternative is to continue present operations assuming that access to each of the businesses and residences through a utility easement is a valuable and expandable commodity. However, with rapid technology advances, do many of us really believe that Tele-Communications Inc. will ever recoup its billions invested in cable television as satellite dishes continue to advance? One has to question how much a utility easement will eventually be worth.

Another possible alternative was signaled by the Nov. 25 1996 merger of Duke Power Co., an investor-owned electric company, and PanEnergy, the nation’s third-largest natural-gas supplier, into Duke Energy. Together, these companies have formed a $23 billion integrated energy provider.

Do you suppose that PRPA fancies itself as an integrated energy provider? If so, is a merger with KN Energy Inc. of Lakewood beyond the realm of possibility? KN, as an interstate supplier of gas, would provide an opportunity to diversify. The headlines would proclaim the merger by announcing that the new company, with assets of less than $1 billion, will undertake nationwide competition against a variety of larger utility enterprises.

As 1997 begins, PRPA’s Board of Directors should spend time strategizing its future instead of a futile attempt to forestall deregulation. One look into the future suggests the result of deregulation will be adverse at best.

Competition from national integrated energy companies will doom the Northern Colorado power authority founded in the late ’60s. The practical alternative for PRPA is to find an investor-owned utility to acquire the Authority and the individual cities’ power, transmission and distribution systems.

Being a monopoly in what will shortly become a deregulated industry is not a position to be envied. A coordinated sale of the various electric departments and their power supplier, PRPA, could generate as much as $400 million to the four owners — or the equivalent of almost $1,900 per resident. With those resources, surely the cities wouldn’t feel compelled to ask for more user-fee or tax increases soon.

Former Fort Collins mayor John Knezovich is a certified public accountant.