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San Isabel Electric makes offer to help Pueblo operate public utility

Posted at 11:06 AM, Nov 20, 2019
and last updated 2019-11-20 13:06:34-05

PUEBLO — Another southern Colorado electricity provider is offering to help the City of Pueblo to unplug from its current provider.

San Isabel Electric is proposing to the council it will offer its services to help Pueblo create a municipal electric utility if they are contracted.

Right now, the Pueblo Council is deciding whether to continue a relationship with Black Hills Energy or develop its own energy provider.

Black Hills Energy recently offered freezing rates to the city for five years and to invest more in the community, but Mayor Nick Gradisar said there wasn't much excitement when it was introduced.

"You saw at city council's reaction last night to what the offer was to freeze rates. That they are not very excited about it and neither is the community very excited about freezing rates when they are at the highest level on the Front Range," he said.

Black Hills Vice President Vance Crocker explained the energy provider's position.

"We are just offering a better path for a better collaboration that is much safer and much better for our community," Crocker said.

San Isabel Electric says three concerns among residents are: "The City of Pueblo doesn’t have the expertise to run an electric utility, The City can’t afford to purchase Black Hills Energy’s assets. The City doesn’t have the money for the fight."

If the city were to create a public utility, it would have to purchase the energy system currently owned by Black Hills.

Black Hills released a study this fall claiming it would cost the city more than $400 million of an initial investment buy Black Hills equipment to get started with a municipal utility, along with rate increases from $138 per customer, per year in the first year to $330 more in the 20th year.

Pueblo City Council President Dennis Flores says they have their own numbers.

"The original Phase 1 study had the purchase price somewhere around $326 million I believe...we've been told by the people that are working and putting that study together that the city could save anywhere from 10% to 12% percent in utility costs," Flores said.

The city released a Phase 2 study last month that shows more details about the "financial, engineering, operational and legal feasibility of municipalization."

San Isabel Electric is offering to pay for any startup fees and Black Hills Energy equipment instead of the city making the payments themselves. The company says it would be paid back "as part of their contracted services."

San Isabel Electric says if they were hired to operate the municipal utility, the city could still make it's own local decisions, set its own rates and any money made would stay in Pueblo. The company and the public utility would be separate entities.

By operating the public utility under contract, San Isabel Electric said it would:

  • Maintain poles, wires and electrical equipment
  • Respond to outages
  • Manage billing, human resources and other administrative services

The ultimate decision to become a municipal electric utility lies with the citizens of Pueblo and that will only happen if city council decides to put this question on the 2020 ballot.

Seeking a long term commitment, Black Hills Energy makes offer to freeze electricity rates in Pueblo for 5 years
Switching to public power utility will cost Pueblo more than $400 million, study says
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