The Colorado Public Utilities Commission cut more than $6 million out of Black Hills Energy’s request for an extra $8.5 million a year in revenue Wednesday.
Even so, Commissioner Frances Koncilja wanted more cuts and complained the state commission has been too agreeable in past rate requests from the electric utility.
Black Hills is seeking a 5 percent hike in monthly electric bills to help pay for a $70 million “peak power” turbine at its Pueblo power station.
During the three-hour PUC meeting in Denver, the commission cut back the rate of return Black Hills could collect on the turbine, eliminated $520,000 in executive compensation, cut more than $1 million in requested pension expenses and made other reductions.
How much those cuts will shrink the final impact on ratepayers’ monthly bills will be determined at a “technical conference” between Black Hills and PUC staff on Wednesday. But it has to be much less than the 5 percent originally sought.
Koncilja, a Denver lawyer but a Pueblo native, was named to the commission last spring by Gov. John Hickenlooper, and she has been a sharp critic of Black Hills. At Wednesday’s meeting she challenged almost every part of the rate request, pressing her colleagues — Chairman Joshua Epel and Commissioner Glenn Vaad — to be tougher on the utility.
Koncilja claimed the rate request was larded with indirect expenses and costly debt that Black Hills customers shouldn’t have to pay.
“If we don’t rein in this company, they are going to continue to do this,” she said.
Epel and Vaad have repeatedly heard Koncilja talk about the harsh impact of high electric costs in Pueblo and in the Black Hills service area, but they drew a line at agreeing that the commission hadn’t done its job in the past.
“I’m comfortable we’ve made prudent decisions,” Epel told her. “I understand there is a compelling case about the conditions in Pueblo.”
Vaad argued that Koncilja’s harsh characterization of Black Hills could backfire.
“Casting doubt over the management of this company could cause their cost of credit to go up,” he told her.
The PUC has its own staff to review utility filings and there is the state Office of Consumer Counsel which also gives its opinions. The commission also has staff “advisers” who present all the various recommendations to the three commissioners.
On a list of issues Wednesday, both the staff and the OCC recommended sharper cuts in the Black Hills request. Koncilja supported those, only to lose on a 2-1 vote to Epel and Vaad.
She pressed one adviser on why Black Hills paid higher interest rates on its debt than Xcel Energy and was told Xcel had a better credit rating. She said that was not the fault of Black Hills’ ratepayers.
She also argued Black Hills had withheld from the PUC that it faces a $60 million pre-payment penalty on some of its debt, information she said should have been revealed to regulators but only emerged during the October rate hearing.
“I think there is a basis for Pueblo or the OCC to file a claim for fraud,” Koncilja said.
As for Black Hills’ announcement last week that it wants to reduce its reconnection fee from $50 to $15 for people who have lost service, Koncilja said testimony at the rate hearing in October forced that.
“They only did that because I asked a lot of questions at the evidentiary hearing and they knew we figured them out,” she said.
Vaad agreed that the request for a reduced reconnection fee was suspect.
Koncilja said the $70 million turbine, which will rarely be run for Pueblo customers, was an example of the commission’s leniency.
“(Black Hills) moves into four of the poorest counties in the state and builds what ratepayers don’t need,” she said.
Epel countered that it was state law — not the PUC — that allowed Black Hills to purchase the $70 million, gas-fired turbine in order to replace the utility’s old coal-fired power plant in Canon City.
He said the commission has refused Black Hills’ requests, such as its plan to pass along the cost of acquiring natural gas reserves, to ratepayers.
“We’ve said very clearly (Black Hills) didn’t make the right business decisions,” Epel said.