TRS-80? Commodore? Altair?

To the aging techies who first acquired a home computer in the 1970s, those names are familiar. By today’s standards, they were awful little bundles of nastiness, ready to crash for any reason. If you were smart, patient and tech-savvy, you could master their mysteries, and do … well, not much beyond creating documents.

In an era of rapid change when successful organizations shed legacy products overnight, CSU is stuck in 1960.

The original $500 TRS-80, introduced by Radio Shack in 1977, was heralded at the time in an Associated Press story.

“It can do a payroll for up to 15 people in a small business,” wrote the awed reporter, “teach children mathematics, store your favorite recipes or keep track of an investment portfolio. It can also play cards.”

The TRS-80 is long gone and Radio Shack is no longer a dominant electronics retailer. The computer (with its eight-line screen and its dazzling 24K to 32K of RAM) was a successful product for a while (and was used by thousands of newspaper writers to cover events and write stories on-site), but the Shack couldn’t keep up with the rapidly changing market.

That’s business, isn’t it? You ride the tiger — improve, innovate, bring down costs and beat out the competition. Once your product is obsolete, forget about it and move on.

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But suppose that you couldn’t move on? Suppose Microsoft were still obliged to support every legacy operating system, and computer manufacturers had to continuously update every device they ever created? You’d be out of business — so consider the dilemma of Colorado Springs Utilities.

CSU is the city’s monopoly area provider of gas, electric, water and wastewater services. As such, it’s obliged to support, update and maintain vast legacy systems, as well as expand those systems. It’s locked into the past, both structurally and financially.

For instance, when Village Seven was first developed in the 1970s, Utilities made the decision to directly bury electric transmission lines. The usual practice had been to protect such lines by threading them though conduits, but manufacturers claimed that newly developed protective insulation would last indefinitely underground, so why bother with conduits? Direct bury would save millions, be quicker to install and be just as reliable.

Half a century later, the whole system has to be replaced. There are no conduits to thread new lines into, so it’ll be an expensive process.

CSU can’t walk away from a legacy neighborhood, can’t abandon sections of the city where distribution networks are aging and can’t seek out other investment opportunities.

In an era of rapid change when successful organizations shed legacy products overnight, CSU is stuck in 1960.

You know that your aging infrastructure is failing, you know that you need to spend more on maintenance and you know that the electric utilities business is changing radically — but you’re trapped. City Council serves as the Utilities board of directors and has always favored both system expansion and low utility rates. The latter goal can’t be realized without some scrimping, particularly on capital improvements.

That’s why CSU managers love the downtown Martin Drake Power Plant. It’s cheap to operate and maintain, and it’s paid for. The company is already highly leveraged, thanks partially to the Southern Delivery System and the escalating cost of pollution control systems at Nixon and Drake.

CSU can’t walk away from a legacy neighborhood, can’t abandon sections of the city where distribution networks are aging and can’t seek out other investment opportunities. 

Why shut down the “city treasure” (as CSU boss Jerry Forte once characterized Drake) and pay out hundreds of millions to build a replacement facility?

Could CSU sell its gas and electric divisions, use the proceeds to pay off SDS debt and let someone else worry about Drake?

Imagine that your rich Uncle Phil passed away and left you a medium-sized municipal electric and gas utility. You’d hire McKinsey to figure out what it was worth. Senior managers at the utility would rejoice, figuring that a sale would make their stock and stock options worth a pile of money. Whoever bought the entity (Xcel? Black Hills?) might shut down Drake and invest in system upgrades.

But that’s not going to happen. CSU managers wouldn’t get a fat payday if Xcel bought gas and electric. They don’t own any stock, and most would be rewarded with pink slips. Similarly, board members wouldn’t get credit for their foresight — they’d get recalled for raising rates.

Maybe there’s a Steve Jobs or a Sheryl Sandberg buried somewhere in CSU’s hierarchy, an impatient young person who could transform the creaky old organization and drag it into the 21st century — but why bother?

Fledglings don’t stay in the nest. They fly away, just as young techies 35 years ago eventually discarded their TRS-80s. Legacies are for suckers.

5 COMMENTS

  1. The entire concept of a City owned monopoly being the only choice offered to citizens is stupid at best and anti-capitalistic and unAmerican at worse. No citizenry should be forced to do business with any one government operation or any one business. It is unwise and wrong to the extreme. If the condition of CSU’s infrastructure is a concern and truly in need of repair and update the quickest and most economical method to obtain that update is to open the electric utility market in Colorado Springs and allow the market and competition to provide citizens the best price on electricity and improvements to the infrastructure. Waiting on government to do anything is more painful than we can afford or stand.

    • Just remember that all utilities own franchise areas and that only one utility is granted the franchise for a specific area. Whether it be Springs Utilities or someone else, say Xcel, that company still holds a monopoly over that area and the consumer is forced to deal with that one company. Think of what it would be like if five different electric companies served the Colorado Springs area. That could equate to five seperate sets of electric utility lines running down the street. Calculate that same scenario for water, wastewater, and gas and things could get complicated real quick. At least with CSU, they are a not for profit. I can’t imagine the rate hike that might be imposed if one of the utilities were sold to a for profit company. The new owner would want to do upgrades, replacements, etc. and add on profit as well!

  2. Selling off any part of the utility is absolutely ridiculous. First of all, the buyer would only pay what the assets are worth plus some time value for future revenues AND yes profits (of which all of us have to pay for). Second, if any improvements besides the incremental being performed now are begun, rates for utilities would necessarily inflate dramatically.

    Did you want infrastructure without paying for it? There is no free ride, we all must either pay now or pay later, just like Midas :). If it is CSU or some other company, it makes no difference other than private companies must make a profit and will raise rate and likely take a lot more of our payments out of state to pay stockholder dividends, pay for other people’s utility improvements etc.

    Estaven57 – The reason why we have Utilities monopolies across the nation is because they are/were the only way to get a utility to commit to serving their areas. Would you go into a rural area and compete with several other companies? If a city was unprofitable, then the utilities companies could leave the market, maybe all of them. Ah yes, the other side of the equation.
    In a large city it could make sense if the infrastructure were all shared etc. Be patient though, your idea might be possible in the future or we might just skip to generating all our own energy on an individual basis. But for Water/Wastewater, we are likely going to have monopolies and need them for many years.

  3. Two weeks ago the Gazette published an article on the great cost of living in Colorado Springs, CSU was a big factor in that with some of the lowest rates in the country, IN THE COUNTRY! I have lived many places and paid a bill to both Xcel and PG&E, trust me, you don’t want those bills. Also, I see the biggest “gotcha” in John’s assessment, and most of the complaints about CSU and specifically the Drake plant, is the word MIGHT. There are no guarantees that another owner would change Drake, as the author said, it is paid for (and produces some of the cleanest coal energy in the country) that would really make for nice profits to their investors. Also, we are citizen owners, so we can have a say with city council, you just have to show up and make a thoughtful, intelligent case.

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