Powering Pueblo is the community conversation about the electric question. It seeks to educate the public about the options available to them and help them understand the role of the Electric Utility Commission and their decision-making process.
To do this, we plan to:
- Meet people where we are and deliver information to them without searching for the details themselves
- Simplify the messaging and use visuals to facilitate the quick consumption of information
- Leverage the Commission members, City staff, regional stakeholders, and other champions to convey the message
- Provide fact-based messaging to become the trusted source of information on the subject of public power
Phase 1: The Feasibility study
Pueblo’s residents have expressed concern with their service from Black Hills Energy. The City is kick-starting a conversation about electric utility services because we can lead a non-biased conversation about the different options. Should the community decide to localize, the City will play a large role in making the change. Option include re-negotiating agreements with Black Hills Energy to creating a local Public Power utility.
The Energy Utility Commission was established to lead the discussion and make a final recommendation to Pueblo’s City Council. As a first step, the Commission has launched a financial feasibility study. This will look at how much the different options cost and the impacts the options have on rates. The feasibility study will determine the next steps.
Phase 1 Conclusion
The Phase 1 Feasibility Study told us that a public power utility is achievable. The Study also told us that:
- Over time, a public power utility will reduce rates and costs.
- A public utility would result in increased local control.
- Creating a public power utility and seizing facilities is legal.
The Phase 1 Study also offered insight into three issues that the Pueblo Public told us were most important in the energy conversation:
- Over time, establishing a City-owned electric utility will reduce costs by an estimated 10-12%.
- Rate increases for a City-owned utility are projected to be less than a Black Hills owned utility.
- A public electric utility would prevent money from leaving Pueblo every year in the form of taxes and entity profit.
Phase II: Specifics of Establishing a Municipal Electric Utility
Now that we've finished the Phase 1 Feasibility Study, we will move forward with a Phase II Study. This report will shed light on more of the specifics associated with establishing a public power utility. These include:
- A step-by-step analysis of potential regulatory filings.
- A detailed analysis of the power distribution system to ensure its proper value and functionality.
- A business plan to estimate power costs, fees associated with the existing Black Hills facilities and the cost of serving the entire region with power.
Phase II will include price estimates for providing energy within three different scenarios:
- Providing power to the City of Pueblo
- Providing power within Pueblo County
- Providing power to the full Black Hills Energy service area
Feasibility studies are often conducted in phases, so continuing with a Phase II study is normal. Once Phase II concludes, there could be a need for a Phase III study, which would explore options to buy and sell Black Hills assets, either voluntarily or otherwise.
Facts about the Energy Conversation in Pueblo
Affordable energy is an important topic in Pueblo. Since approving the franchise agreement with Black Hills Energy in 2010, the Pueblo community has experienced increased rates and high restart rates that many feel have been crippling to the Pueblo economy.
The Electric Utility Commission is weighing several different options to fid the best solution for the Pueblo community. The process of setting rates and distributing electricity is not an easy process to understand. For this reason, we have broken down some of the important questions related to the energy question.
What’s the difference between receiving your energy from a public provider vs. a private corporation?
Public power utilities are like our public schools and libraries: a division of local government, owned by the community, run by boards of local officials accountable to the citizens.
- Governed by elected/appointed boards — mayors, city council members, citizens
- Exempt from most taxes — instead make payments in lieu of taxes or transfers to the general fund
- Transparent — as a division of local government, subject to sunshine laws
- Lower rates in the long term — due to access to cheaper financing, stronger credit ratings and tax-exempt status
Investor-owned utilities are private, for-profit enterprises. They are owned by investors or shareholders, who generally are not customers of the utility or members of the community, and their primary motivation is to increase the value to shareholders.
- Governed by private boards
- Pay taxes to local government
- Excess revenue is returned to shareholders
- Regulated by PUC
How are rates set?
Rates are set and adjusted through the regulatory rate review process — a process that can take up to a year.
Black Hills reviews all its infrastructure and operating expenses and uses that number to determine how much costs should increase to cover expenses and earn a profit. They submit this to the PUC for approval.
The PUC approves or denies the costs.
Black Hills takes the approved number and determines how much rates should increase for each customer group, including business and residential.
The PUC makes a final decision on the rates.
New rates appear on your energy bill.
Who determines Pueblo’s energy rates?
Black Hills Energy:
Black Hills Energy pays for the infrastructure and operating costs associated with producing, purchasing and delivering energy. This includes paying for power plants, meters, pipelines and power lines, and the people to build and service them. Before raising rates, the utility must receive approval from the PUC.
The Colorado Public Utilities Commission:
The PUC is responsible for regulating Colorado’s telecommunications, electric, gas and water utilities, making sure the lights are on and the rates are fair for the residents of Pueblo. The commission looks at all past operating costs for Black Hills, as well as economic and market conditions, to determine how much money Black Hills needs to continue to provide energy and earn a return on investment. The commission uses this information to approve or deny the company’s requests for rate increases.
The City of Pueblo:
Because Black Hills is a public utilities company, the City has nothing to do with setting the rates. However, City Council can vote to explore alternative ways to power the community, including a city-owned public utility service.