From The Aspen Times (Andre Salvail):
Matt Rice, Colorado director for American Rivers, said his organization wasn’t trying to “drop a bomb” in advance of the city’s meetings. He said the report, released Thursday, was intended for council members, city officials and others involved in the debate over the merits of the project. Rice also expressed disdain for a press release the city issued Friday stating that the American Rivers-commissioned report contains “egregious errors.”[…]
A work session at 1 p.m. Monday is designed to give council members answers to some long-pressing questions surrounding the project; the council’s regular meeting Monday evening will include a public hearing on a zoning request for the proposed facility, dubbed the Castle Creek Energy Center.
At the core of the organization’s report, researched and prepared by Tier One Capital Management LLC, is an estimate that the project will cost between $16 million and $18 million, with $7.3 million in interest payments over the life of bonds used to finance construction. The city of Aspen has disclosed a capital cost of $10.5 million, according to Tier One.
The city’s financial analysis, Tier One claims, does not include debt service on the $5.5 million bond that local voters approved in 2007. “Debt service will add significantly to the cost of the project, and it is inappropriate not to consider debt service in assessing financial feasibility,” the report states.
“Tier One concludes that the project is not cost effective,” the report continues. “Given the very high price of this project and debt service extending for 28 years, future electrical rate increases are a likely result.”
The city’s Friday statement says that Tier One’s alternative analysis of the project’s costs includes “many factual errors and egregious mistakes.” The city listed what officials have determined to be “three of the most fundamental” errors:
— Tier One “incorrectly states that the city of Aspen didn’t consider debt service” in its analysis.
— Tier One’s conclusion that the project should be abandoned is deeply flawed “due to its failure to consider only the incremental costs needed to complete the project [as] opposed to considering investments already made with benefits for projects other than the hydro plant.”
— Tier One “assigned ridiculously low inflation rates” for the cost of coal -— a power source on which the city is hoping to lessen its dependence through hydropower — using rates between .3 percent and .6 percent annually.