Community Engagement

Pueblo, Colo., votes for second phase of municipalization study

The city council of Pueblo, Colo., has voted 5-2 in favor of taking the next step in studying the feasibility of municipalization.

Last year, Pueblo’s city council approved a resolution to study the feasibility of ending its franchise agreement with Black Hills Energy and forming a public power utility. The study, released in January, found the city could “conservatively” save 10 percent to 12 percent on their bills if it were to take over responsibility for its own electric service.

Pueblo approved its 20-year franchise with Black Hills in 2010. Colorado law allows Pueblo to buy or condemn Black Hills’ electric facilities in the city ten and 15 years after the franchise agreement’s effective date.

The second report authorized by the city council will examine the regulatory filings needed to proceed with municipalization, provide a more detailed engineering analysis to ensure that distribution assets are properly functionalizing, and draw up a business plan for a municipal electric utility, including operational power cost estimates and further analysis of possible exit fees and stranded asset costs.

The second-phase study will also look at three municipalization scenarios: one for a public power utility that serves just Pueblo, an alternative plan that includes some out-of-city customers, and a third possibility that would include buying Black Hills’ distribution network for nearby communities.

Canyon City and Fowler, Northwest and Southeast, respectively, of the city of Pueblo, are both watching to see how Pueblo’s municipalization efforts play out. Canyon City has been taking electric service from Black Hills on a month-to-month basis since its franchise agreement with the utility expired in November 2017.

The Pueblo city council authorized the spending of as much as $200,000 for the second-phase study, which like the first will be conducted by EES Consulting. The first study cost the city $122,000.

The second-phase study should be finished and be ready for review by late July or early August, according to Thomas Corlett, a member of the Electric Utility Commission, which was created to advise the city council on municipalization.

The Electric Utility Commission chose the consultant to do the studies and is responsible for reviewing the results of the studies. Current plans call for a third study before municipalization would be put on the ballot for voters to decide.

The first opportunity to put the issue on the ballot would be this fall. The next opportunity would be before August 2020.

There has been “a revolution in the energy industry,” Corlett said. The industry is unbundling and moving away from the vertically integrated business model of the past. “In order for us to get better rates, electricity has to be more competitive,” he said.

“Our primary concern,” Corlett said, “is we have a low-income community and climate change is on the horizon.” He said the most direct way “to get more renewables on our system is to buy on the wholesale market,” he added.