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Pueblo, Colorado, urged to form public power utility

Pueblo, Colorado, should form a public power utility, according to a panel created by the city.

The Pueblo Electric Utility Commission, a seven-member panel created to consider the issue, voted unanimously on Nov. 21 to support breaking away from Black Hills Energy and forming a public power utility.

The panel presented its recommendation to the Pueblo City Council at a recent work session.

The city council will consider its options, according to Pueblo Mayor Nicholas Gradisar. “I think it’s a possibility it’ll be on the ballot in May,” Gradisar told Fox21 News.

The council will need to make a decision by March for a question about forming a public power utility to make the May ballot, Gradisar said. If the council doesn’t act on the issue, it’s likely citizens will launch a petition drive to get the measure on the ballot, he added.

During the work session, a representative from the Electric Utility Commission told the city council that two studies indicated forming a public power utility was feasible and would lead to lower rates and opportunities to add renewable energy.

Creating a municipal utility in Pueblo could save Black Hills Energy electric customers 10 percent to 14 percent, partly because of lower estimated power costs, according to a report drafted for the city.

Other benefits of creating a public power utility include local control over power supply resource types, rates, local programs and key decision-making, according to a mid-October report drafted by EES Consulting, an engineering and management services firm.

Pueblo has a franchise agreement with Black Hills Energy, a utility owned by investor-owned Black Hills Corp., which is headquartered in Rapid City, South Dakota.

Pueblo, with about 111,000 residents, 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 10 and 15 years after the franchise agreement’s effective date.

The feasibility study analyzed buying three geographical areas where BHE provides electric service: within the city’s boundaries, all facilities in the County of Pueblo and all BHE facilities in Colorado.

BHE has about 96,700 customers in seven southern Colorado counties, 73,000 customers in Pueblo County and 53,550 in Pueblo.

EES estimated it would cost $868 million to buy BHE’s distribution and substation facilities across its Colorado service territory, $561 million to buy assets in Pueblo County and $348 million to buy assets within the city of Pueblo.

However, buying all of BHE’s distribution facilities in Colorado would produce savings of $832 million over 20 years compared with savings of $455 million and $246 million for buying the distribution assets in the county and in the city, respectively, EES said.

BHE, which doesn’t want to sell its Colorado utility, contends it would cost Pueblo at least $402 million to buy the utility’s assets within the city, increasing annual costs by $17 million to $47 million, according to a study released in September.

Based on the results of a request for information, EES recommended the city not purchase BHE’s generation assets and instead buy wholesale electricity from a third party.

Black Hills sells about 1 million megawatt-hours a year to customers in Pueblo and about 2 million MWh when including customers outside the city limits, according to the report.

If Pueblo decides to move forward with forming a public power utility, the city must take several key steps, including receiving a majority vote by its residents, according to EES.

Other measures include a vote to issue debt or get a loan to buy Black Hills’ assets. The city would also need Colorado Public Utilities Commission approval if it wants to include areas outside the city in the public power utility, according to EES.

Finally, if Black Hills refuses to sell its assets, Pueblo would have to complete the condemnation process through a legal proceeding in Colorado district court, a process that could last three years if appeals are filed, according to EES.

Boulder offers to buy Xcel Energy assets for $93.96 million

In other recent Colorado municipalization news, the City of Boulder, Colo., offered to purchase certain portions of Xcel Energy electric infrastructure for $93.96 million in a Nov. 20 letter to the investor-owned utility.

The city’s offer comes after an Oct. 28 Colorado Public Utilities Commission ruling that approved transfer of Xcel Energy assets outside substations to the city.

The appraised value of the assets outside substations is $62.3 million. The basis for the city’s offer is the value Xcel reports for financial filings; the offer is double the original cost of the assets, less depreciation.

Additional news and resources about municipalization can be found on the American Public Power Association’s website here.

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