Neumann Systems Group insists rising criticisms are unwarranted
It seemed like a good idea at the time.
Dave Neumann, a defense contractor with a proven track record, approached Colorado Springs Utilities in 2007 with a pilot project: a clean-coal scrubber using innovative technology that would require less water than dry scrubbers , less space and less electricity. CSU officials were intrigued. They set about seeing if the NeuStream technology worked in the lab the way Neumann said it did.
It did. But beyond that due diligence, they hired outside firms to double-check testing accuracy at three separate pilot levels. Every step of the way, they got approval from City Council, sitting as the Utilities Board. After years of internal study, and an outside verification process, CSU got the nod in December 2010, to install a full-sized NeuStream at Martin Drake Power Plant, costing a total of $121 million, including construction costs and upgrades to the power plant. NeuStream was included in budgets for 2012 and 2013.
And Utilities is moving forward, issuing bids for site grading, pier foundation installation and tank foundation construction, which will be executed in April. CSU plans to build four large process tanks by mid-summer, which have already been purchased.
But something went wrong on the way to full installation.
Mayor Steve Bach and a group of business leaders targeted the downtown power plant as a relic to be torn down. Other city politicians targeted NeuStream, claiming it didn’t work as advertised and that Utilities shouldn’t be in the research-and-development business.
The bright glare of negative publicity surprised all involved, coming just a few short months after the installation contract was approved. And the drumbeat of criticism is only getting louder, despite the board’s repeated votes in favor of the project.
At least one City Councilor, Tim Leigh, has called for the resignation of CSU’s management team, claiming the pilot project with Neumann shows bad fiscal judgment. Bach has suggested that if the NeuStream project ended, the money could offset stormwater maintenance needs that could total in the billions. CSU expects to spend about $121 million on NeuStream, but the lion’s share will go to a contractor for construction. Those bids haven’t yet gone out. So far, Neumann has received $60 million for the design and development of NeuStream.
“We’re not used to being the center of attention,” acknowledges Bruce McCormick, chief energy officer at CSU. “But we’re focused on getting the job done.”
But while it’s business-as-usual for the municipally owned utility company, Neumann Systems Group is faltering. Company officials say the political maelstrom has damaged its reputation and harmed its ability to attract business. Because of the constant attacks, founder Dave Neumann said last week he was forced to lay off 11 people because of uncertainty over whether he’ll have a contract after the April city election.
Neumann said surrogates for Bach told him that ending the contract would be the new City Council’s first priority.
At least four utilities were so interested in NeuStream they paid for an independent study from the Electric Power Resource Institute, a nonprofit created with congressional direction in the 1970s to promote and study research for electric power. Although the report remains the intellectual property of those customers, Neumann and Utilities say their summary information shows the project works as advertised. They also say they’re confident it will work at full scale, providing a cheaper way to meet upcoming stringent regional haze requirements well before a January 2018 deadline.
“We are certain it will work,” McCormick said. “If we weren’t, we wouldn’t have spent all this money on it.”
NeuStream doesn’t only remove sulfur dioxide, also known as SOX, from coal emissions. It removes mercury and particulate matter as well. The side product is gypsum, which can be sold to make particle board and used as fertilizer on crops.
Todd Tiahrt, CEO of Neumann Systems Group, says Colorado Springs’ unemployment situation also makes its leaders’ stance more confusing. Despite lofty jobs goals, Bach has suggested closing the plant, meaning workers would lose their positions. Added to the jobs losses at NSG, Tiahrt says it doesn’t make sense.
“There’s some ulterior motive,” he said. “I’m just not seeing what it is.”
The utilities industry is complicated, even for those inside the field. But stricter environmental requirements are on the way. CSU must be ready for them.
McCormick said even if the city decided to tear down Drake, building a new gas-fired plant would take around 10 years. Until then, new regulations must be met.
“If they end the contract, we’ll still have time to install something else,” McCormick said. “The process takes about two years. And with new emissions, they give about four to five years to meet them. So there’s time, but not much time.”
“We’ll have to find something that fits, first,” added Dave Grossman, Utilities spokesperson.
That adds another wrinkle to the already-complex process. Drake has been around for decades, and the power plant has undergone both technological changes as well as capital expansions. That means the campus doesn’t have room for traditional scrubbers.
“That’s why the NeuStream seemed to be the answer,” Grossman said. “It’s modular, so we can add to or take away from it as we need to.”
CSU isn’t the only group interested in NeuStream. The federal government thinks it has potential to capture carbon dioxide, solving one of the greenhouse gas issues that contribute to climate change, and has given Neumann $11 million to continue research. The project has been successful in laboratory experiments.
That support from the federal government makes political wrangling over NeuStream seem unnecessary to Utilities officials and Neumann Systems Group.
Leigh says he has no “truck” with NSG, but believes Utilities has been mismanaged. In his blogs, Leigh calls the NSG contract “…a miserable financial deal … with a research and development inventor who has no proven product (with no guarantee for installation or performance), and where after simple investigation, alternative solutions were discovered which were and are available for less cost.”
CSU managers say that isn’t the case — that traditional scrubbers would cost about $158 million to buy and install, while the NeuStream only costs $121 million.
“Other technology is available, but we’d have to explore the costs,” McCormick says. “And we’re going to explore the best options at the Nixon plant. But at Drake, it was complicated by the tight fit.”