Town of Frederick News

Posted on: October 30, 2017

An Update on the Possible Electric Expansion

Frederick Power and Light logo

Believe it or not, the Town of Frederick passed Ordinance No. 18 on September 8, 1913 which established the Town’s electric utility! That’s over 104 years of effectively delivering power to our customers. The electric utility is an enterprise fund which means it must be self-sufficient, operating exclusively from the revenues it generates (in this case from the sale of power), and is authorized to issue its own revenue bonds. It also must receive under 10% of annual revenue in grants from all Colorado state and local governments combined.  Additionally, the enterprise fund does not have taxing powers and is not subsidized. A municipal utility is a not-for-profit electric operation owned by the community they serve. In Colorado there are 29 municipal utilities including, Colorado Springs, Longmont and Lyons to name a few.

Since the Town received notification from United Power of their desire to terminate the relationship in 2012, we have been managing our distribution system, and we have performed at a very high level. As a result of this success, we began evaluating the value to our community of possibly expanding our electric utility to include the entire community. Our evaluation takes into account the following critical factors:

  • Can we provide affordable rates?
    Specifically, when comparing our residential rates to our competitors, here’s how Frederick Power and Light stacks up:
    BASED ON 1,000 kWh
    Frederick Power & Light
    United Power
    Base Rate
    $14.40
    $17.00
    Street Light
    In Base Rate
    $3.10
    Power Rate per kWh
    0.106/kWh
    0.10751/kWh
    Power Cost
    $106.00
    $107.51
    Total Cost (Base, Power, Street Light)
    $120.40
    $127.61
  • Can we provide reliable power to customers when desired?
    The Town’s Power system is operational over 99.5% of the time.
  • Can we provide great customer service?
    We hope and expect that we are accomplishing this to our electric customers.  If we are not, we need to hear from you.

While there may be hybrids of directions for the Board to go with the electric utility, generally there are three primary alternatives they could consider:

  • Purchase the entire system in the Town of Frederick and bring the utility into one system.
  • Sell the Town utility to another vendor.
  • Frederick Power and Light and United Power continue to coexist competing and growing their territories separately.

With respect to these alternatives, I believe the Board is open to any and all options. A valuation has been completed and the pro forma is in process. A pro forma is a model that analyzes the anticipated results of the transaction (sale or acquisition), with particular emphasis on the projected cash flows and net revenues to ensure the best business decision is being made. While I can understand the desire for this information to be shared, it compromises the Town’s position in any negotiation, regardless of the direction or outcome.  What I do know for sure, is whatever direction the Town moves, it will be in the best interest of all 12,000 citizens of this great community, the future of the community, and will be focused on the three critical factors listed above: affordable rates, reliable power and great customer service.

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