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Pueblo City Council introduces ordinance to prevent establishing own utility

Posted at 12:09 AM, Jan 14, 2020

PUEBLO — On Monday night the Pueblo City Council introduced a proposed ordinance that would stop the city from establishing its own electric utility. This is part of a multi-pronged approach to possibly ending an 20-year agreement with Black Hills Energy.

It comes after years of outrage from citizens and some city leaders who believe that Black Hills Energy rates are too high.

During the public comment portion of the city council meeting one amendment was added to the ordinance by Black Hills. Prior to this the proposal had stated the city would agree not to pursue its own electric service in exchange for different rate and monetary commitments from Black Hills. However, the amendment presented would allow a ballot initiative to ask voters if they want to pursue a municipal utility, that is, if the city council were to approve the ordinance.

As part of the proposed agreement, the city would stop all efforts to create a municipal utility until the current agreement with Black Hills expires in August 2030, including not taking any actions to try acquiring the company's assets. Furthermore, the city would not put forward any ballot issue on terminating the ongoing agreement with the company. However, citizen-sponsored petitions for such a ballot item would be allowed.

In return, Black Hills would agree to the following:

  1. Black Hills agrees not to seek an increase in base electric rates before January 1, 2025 unless an event of “Force Majeure” occurs; a “Government Imposition” occurs or a “Material Change” occurs.
  2. Black Hills agrees to cooperate with the City to accomplish the City’s goal of becoming a one hundred percent (100%) renewable energy municipality by 2035.
  3. Black Hills agrees, before December 31, 2022, to issue a request for proposals for renewable electric generation in an aggregate amount of up to 200 megawatts, which Black Hills estimates will result in electric rate savings of between $117-$284 million for ratepayers.
  4. Black Hills agrees, before December 31, 2024, to facilitate the development of six (6) community solar gardens, three (3) of which must include subscription setasides that are reserved for low income customers.
  5. During the remaining term of its franchise, Black Hills agrees to contribute $400,000 for the purpose of providing low-income energy assistance to the City’s residents. This contribution will not be paid by Black Hills’ electric utility customers.
  6. Before the end of its franchise, Black Hills agrees to contribute no less than $7.5 million as follows: a. An average of $400,000 annually consisting of cash and in-kind contributions to community organizations and projects; and b. An average of $350,000 annually consisting of cash and in-kind contributions for economic development, including the recruitment of new employers to the City.
  7. Black Hills agrees to undertake good faith efforts to facilitate the redevelopment of Units 5 and 6 located on the City’s Riverwalk, by selling such property to a developer for redevelopment. Concurrent with the sale of the Units 5 and 6 property, Black Hills will complete necessary environmental remediation as agreed to by Black Hills and the developer.
  8. In its own name or through an affiliate company, Black Hills agrees to make financial and in-kind investments of no less than $4 million before January 1, 2025 and an additional $2 million before August 12, 2030 in real estate or properties located in the City. These investments will not be paid by Black Hills’ electric utility customers.
  9. Black Hills agrees, by December 31, 2020, to submit to the City a feasibility analysis for development of a new customer service center to be located in the City. After development of a new customer service center, Black Hills commits to redevelop its existing customer service center located at 105 S. Victoria Avenue or make that property available for redevelopment.
  10. Black Hills agrees to have a meeting of the Black Hills’ Board of Directors in the City of Pueblo prior to December 31, 2023.
  11. Black Hills agrees, on or before December 30, 2020, to submit to the City (for later approval by the Public Utilities Commission) a new electric rate schedule applicable for businesses who produce alternative agricultural products (e.g. hemp) if the new electric rate schedule is feasible.
  12. During the remaining term of its franchise, Black Hills agrees to invest no less than $200 million in system-wide assets to support Black Hills’ rating in the top quartile of electric utility system reliability.
  13. Black Hills agrees to create and continue in operation for the duration of its franchise, a new advisory stakeholder group consisting of residential and business customers, non-profit organizations and elected officials, which would meet a minimum of twice a year to discuss important electric utility issues.
  14. During the remaining term of its franchise, Black Hills agrees to invest $2.6 million to improve lighting service to the City’s streets and parks, including pedestrian lights, street and parking lot lights and playground lights, using the undergrounding fee as a funding source.

Pueblo resident Jenny Jacobs said, "One side says let's stick with the thing that we know. It's gonna really run us dry. Or we can take a chance and it'll be a big chance, but maybe it'll work?"

In regards to the proposal Vance Crocker, vice president of Black Hills Energy, said, "It brings $300 to $500 million of value to our community. It's got hundreds of million dollars in savings for our customers, that's primarily through our renewable advantage programs." Key points he mentioned are not seeking a utility increase until at least 2025, cooperating with the city to transition to 100% renewable energy by 2035, and providing $400,000 every year for the rest of its contract for low-income energy assistance.

Black Hills did say that customers in Fremont County and Pueblo West would receive these benefits.

No final decision has been made on this. The council moved to push the proposal for final presentation on January 27.

During the meeting different views were shared by some of the council members. Some believe it's an obvious choice to approve the agreement while others believe it's a bad deal.

Click here to read more about this controversial issue.

On a related note, just last week Pueblo County Commissioners hosted a meeting regarding the proposed reliability upgrade for Southern Colorado by Black Hills Energy that would include a transmission line running from Pueblo West through Penrose to Cañon City. Commissioners denied a similar project last year.

In this effort, Black Hills Energy is buying land from Pueblo West to build a sub-station and wants to build the line close to businesses, as opposed to houses on Industrial. The company says the plan will meet the demand of its customers, but people who live in the area said they don't want this in their backyard.

"We just request that they keep this out of neighborhoods," said Melvin Manrose, who lives in Pueblo West. "There is no reason for it to go through a neighborhood because there is no existing transmission line in Wildhorse Creek."

The next meeting is set for Feb. 13.

It is no secret that the City of Pueblo is trying to move forward with a plan of their own to unplug from Black Hills Energy and create a municipal utility. Customers have complained of high electric rates.