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Pueblo, Colo., continues preparations toward possible municipalization bid

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Essential Energy Insights - January 2021


Pueblo, Colo., continues preparations toward possible municipalization bid

The city of Pueblo, Colo., is hearing pitches from energy companies and is on the verge of hiring consultants interested in helping the city leave Black Hills Energy's service to form a city-owned public electric utility.

Fed up with electric rates that are among the highest in the state, the Pueblo City Council will soon decide whether to hire a consultant to study the feasibility of municipalizing electric service. The city is negotiating a contract price with EES Consulting, which ranked as the top respondent in a request for proposals, according to Assistant City Manager John Vigil. A resolution is expected to be presented to the City Council on Aug. 13 with the city staff's recommendation to hire this consultant.

Also, the council on July 23 authorized the hiring of Slate Communications of Fort Collins, Colo., to provide consistent and accurate information to Pueblo citizens about their options for municipal power service and find out what city residents understand about municipalization and what they want, Vigil said July 30. "Soliciting their feedback is going to be paramount to ensure we are doing the community's work," he said.

City Council member Larry Atencio said July 30 that energy and investment companies have made presentations to Pueblo, offering to partner with the city in its municpalization efforts. Capital Dynamics Holding AG, a global asset manager, made a presentation to the Pueblo Electric Utilities Commission, which Atencio co-chairs. The commission was established after the seven-member City Council unanimously passed a resolution in September 2017 to explore how to revoke the Black Hills Corp. utility's franchise to operate in the city and form a municipal utility in its place. The company operates legally as Black Hills Colorado Electric Utility Co. LP.

Black Hills' franchise reaches a halfway point in 2020, when the city has the option to end the utility's service or continue it to 2030. The council will decide over the next year whether to ask voters in November 2019 if they want to establish a city electric utility, Atencio said. As a municipalization goal, Pueblo wants to obtain 100% of its electric power from renewable energy resources by 2035. Black Hills aims to comply with the state's 30%-by-2020 renewable energy standard.

The feasibility study consultant will examine the costs of acquiring Black Hills' assets, as well as the cost of acquiring renewable energy to serve the city. Atencio said most likely a court would have to determine the costs of condemning utility infrastructure and whatever stranded costs are owed to Black Hills.

Meanwhile, residents of Pueblo and a number of small communities around the city have joined a grassroots organization called Pueblo's Energy Future in efforts to build support for public power.

The catalysts for the change are increasing electric prices in Pueblo and a desire for cleaner energy, according to the group's website. The coalition of community and environmental groups is hosting "town hall" meetings to host presentations by the Colorado Association of Municipal Utilities, venture capital and private equity firms engaged in renewable energy, civic groups and clean energy advocates.

Neighboring electric cooperatives have also been interested in Pueblo's municipalization efforts. Responding to customers' complaints in the city about Black Hills, the San Isabel Electric Association Inc. joined with the Southeast Colorado Power Association to express interest in acquiring Black Hills Energy's Colorado electric operations. Black Hills officials have said they have no interest in selling the Colorado assets.