FORT COLLINS, Colo. -- Platte River Power Authority’s Board of Directors unanimously resolved to oppose the adoption of proposed Amendments 60 and 61. In the Board’s opinion, if passed, the two ballot issues would necessitate an increase in the rates charged by Platte River with no discernible off-setting benefits for ratepayers.
Amendment 60 would subject enterprises such as Platte River to property taxation. At current property tax rates, Platte River’s tax obligation could exceed $23 million per year and require an increase of approximately 15 percent to the wholesale electricity rate currently charged to the municipal utilities of Estes Park, Fort Collins, Longmont and Loveland.
Amendment 61 would require voter approval for borrowing by Platte River and limit the time period for repayment of debt to 10 years. The requirement of voter approval to “borrow money” would needlessly complicate the financing process and, again, increase rates.
Presently the Board determines when debt is issued. If Amendment 61 passes, voter approval would be required and could only occur at a November election. The timing of such elections may not correlate with capital needs or advantageous conditions in capital markets. Moreover, Platte River does not have a political boundary, as do cities and counties: its facilities are currently located in multiple counties. It is unclear who would vote in any such election, but it is likely that the issue would have to be on ballots in more than one county. Platte River would be responsible for some, or all, of the costs of any such election, which could increase the costs associated with the issuance of debt by hundreds of thousands of dollars.
The reduction of the time period for debt repayment will significantly increase future rates and create unintended subsidies. The generation and transmission of electric power is capital intensive. Debt used to raise funds for large capital projects is typically issued for a 20- to 30-year period, and the repayment of debt is one of the largest costs for Platte River. The longer repayment period reduces rates and extends debt repayment over a time period that reasonably conforms to the life of the asset. Shortening the repayment period will also create a subsidy benefiting future ratepayers. While future ratepayers will benefit from projects funded by the debt, the ratepayers on the system will pay for the projects during the shorter repayment period.
The requirement for voters to approve borrowing may create limitations beyond the issuance of bonded debt. For example, it may eliminate the ability of Platte River to use lines of credit and other short-term financial vehicles routinely relied upon by businesses as means to control costs.
The Board opposes the adoption of Amendments 60 and 61 and urges voters to reject these ill-advised measures.