NOREEN: Nothing scandalous about Utilities paying the city
Now here is another unspeakable scandal: Colorado Springs Utilities pays an annual franchise fee of about $125,000 to Manitou Springs.
If you’ve been listening to Doug Bruce and others recently, you’ve been led to believe that Utilities’ payments in lieu of taxes, or PILT, and other fees paid to the city’s general fund are part of a clandestine shell game. It’s great stuff for those who like to conjure vast, dark conspiracies.
The truth, as usual, is much less exciting. From coast to coast in America, power companies pay franchise fees to the cities they serve. The cities own their streets, but the streets and other rights-of-way must be torn up occasionally so utility work can be done.
For that kind of work and other utility activities, the cities are compensated.
“It’s a straightforward way to deal with the issue,” said Utilities spokesman Steve Berry. “It’s really not out of the ordinary. It’s not rare.”
A 2006 study of 382 public power companies done by the American Public Power Association shows PILT is standard operating procedure everywhere.
In 2006, for example, Xcel Energy and Denver negotiated a 20-year franchise agreement. Xcel, a shareholder-owned utility, also must pay property taxes to Denver and every other Colorado city where it does business.
In Colorado Springs, the power company is owned by the citizens, so it pays no property tax and no sales and use tax on the coal it burns. Instead, it makes payments in lieu of taxes to the city general fund on the widely accepted theory that a private utility would have to do the same.
Contrary to Brucian rhetoric, this is not a crooked shell game. It’s the way publicly owned utilities do business everywhere, including Los Angeles, which owns the largest public power company in the nation.
The council will consider continuing the PILT in January, although Bruce insists they were ended by Initiative 300, approved in November. Unrealistically, he wants an ordinance to overrule a city charter that specifically addresses transfers of money from utilities to the general fund.
“We’re going to pass an ordinance, and it’s likely to be challenged in court,” Mayor Lionel Rivera said, acknowledging that seven-figure PILT money is a central issue.
Of course, that was just a joke about the Manitou Springs franchise fee being a scandal — there’s nothing at all wrong with that. Yet if Bruce had his way, Colorado Springs would take a radically different approach to utilities business decisions for no apparent reason.
In Bruce’s wacky system, the electric utility would pay Manitou, but would not pay its owners — you and me — in the same way.
Pretty nutty when you think about it.
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Listen to Barry Noreen on KRDO NewsRadio 105.5 FM and 1240 AM at 6:40 a.m. Fridays and read his blog updates at gazette.com/blogs/barrysblog. For more of Noreen's columns, go to http://www.gazette.com/sections/metro/the-view-from-here/
