Black Hills Energy has turned down an offer of two electric associations to buy its assets in southern Colorado. Meanwhile, neighboring Pueblo, Colo., is in the early stages of exploring whether to form its own municipal utility to replace Black Hills' service, and those plans could involve the associations.
The Pueblo City Council has formed the Electric Utility Commission to advise the council on whether the city could set up a municipal utility to provide electric service in place of Black Hills. Council Member Larry Atencio, who is one of two council members serving on the utility commission, said Black Hills' 20-year franchise with the city began in 2010, but a provision in the franchise agreement allows the city to terminate the franchise on Aug. 11, 2020.
City officials have informally discussed making arrangements with a third party experienced in maintaining electric infrastructure, utility billing and other services. "That is one of the options we will be researching to see if that would be best for Pueblo," Atencio said when asked whether the city was considering involving the neighboring electric associations in its municipalization plans.
Pueblo officials have also been in discussions with Boulder, Colo., which has long sought to form its own municipal utility and leave Xcel Energy Inc.'s service.
Pueblo residents, who pay some of the highest electric rates in the state, are upset about Black Hills' disconnect and reconnect policies and customer deposits, Atencio said.
The seven-member City Council unanimously passed a resolution in September 2017 to explore how to revoke Black Hills' franchise to operate in the city and begin a condemnation proceeding in order to form its own municipal utility with the utility's assets. Black Hills' high rates for electric service threaten the economic and social well-being of residents and businesses in Pueblo, the resolution said. A municipal utility would in theory be able to establish low-income service policies that reflect the social values of the community.
Responding to customers' complaints in the city about how the utility is run, 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 Corp. Chairman and CEO David Emery on March 14 wrote to San Isabel CEO Reginal Rudolph and Southeast Colorado Power Association CEO Jack Johnston saying Black Hills has no interest in selling its subsidiary's Colorado assets.
San Isabel rural service territory covers 9,600 square miles between the city limits of Pueblo and the state's southern border with New Mexico. Rudolph said his association saw the acquisition of Black Hills assets as an opportunity to gain economies of scale and create value for its 23,000 member-customers. Colorado state law allows municipalities, but not publicly owned cooperatives, to municipalize utility assets through condemnation.
Neighboring Southeast Colorado Power Association has a 13,000 square miles service territory with about 10,300 metered customers in rural southeast Colorado, including customers in Pueblo County and several other counties. Both associations are members of Tri-State Generation and Transmission Association Inc., which is their power supplier.
