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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:
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:
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.