Pueblo council hears of challenges in operating electrical utility
The best chance Pueblo ratepayers have for controlling their electric costs is to create a municipal utility, but that’s a tough, expensive job and rarely successful, according to the city’s longtime adviser on utility issues.
William McEwan, who represents Pueblo in rate cases before the Colorado Public Utilities Commission, explained to City Council that city residents are tired of paying Black Hills Energy electric costs but probably don’t understand the full costs of creating their own utility.
There are several community groups working toward finding another source of electric power, including one called Pueblo’s Energy Future. They are urging council to notify Black Hills the city wants out of its franchise contract in 2020.
McEwan, who has more than 30 years experience in municipal utilities, said there hasn’t been successful buyout of an investor-owned utility in Colorado in 70 years. He noted that Boulder has been working to divorce itself from Xcel Energy for the past seven years, but that process is still ongoing and expensive.
“I truly believe the long-term solution for Pueblo ratepayers is a municipal utility but its a tough, tough process,” McEwan said.
Creating a city utility would likely mean buying Black Hills’ distribution network, valued at $160 million, and paying the utility something for its $560 million investment in the new Pueblo Area Generating Station. That cost would be determined by the Federal Energy Regulatory Commission.
McEwan said the city needs to get a better understanding of potential
costs before it considers giving Black Hills notice that it wants out of its franchise contract.
Council has heard from citizen groups about the high costs of Black Hills rates and has formally opposed higher rates at the PUC. But taking on the job of buying out parts of Black Hills is daunting.
District 1 Councilman Bob Schilling was on council in 2008 when the city considered buying Aquila, the previous utility. Schilling said just the initial investigation of the process cost $800,000.
“We’d have to be crazy to do that again,” he told council.
Council President Steve Nawrocki said he’d want city voters to give approval before undertaking a serious investigation of creating a utility just because of the costs.