TOWN HALL COMMUNITY QUESTIONS

On August 1 And November 19, 2019, the EUC held two public Town Hall Event. During the meeting, the public was able to submit questions about the Energy conversation to be answered by the EUC members. Below, find the community questions and the answers below. 

Community Questions from the Town Hall Event held August 1, 2019


How long will it take to see savings?

The Feasibility Study conducted by EES indicates residents would see a rate reduction almost immediately after a public power utility is established.

Does the 10-20 percent reduction in rates factor in the purchase of infrastructure, and if not, what would the rate reduction be after purchasing the infrastructure?

The Phase I Feasibility Study does take into effect the possible purchase of infrastructure, and still indicates that rate reductions could be up to 10 percent.

The Phase I study was released to a small group of people months before the community saw it. Will the same thing happen with Phase II?

The main purpose of the Phase I feasibility study was to determine whether it is financially and logistically possible for the City to create and operate a municipal electric utility.

The EUC and City Council initially reviewed the draft feasibility study before it was made public to all residents to make recommendations for additional clarification and information so that the final report was accurate. We anticipate that the same steps will be taken with the Phase II Study. Know that once the information is verified, we will share the second feasibility study with the public.

What do you expect to learn from Phase II? When will the public see the report?

The Phase II study will shed light on more of the specifics associated with establishing and operating a public power utility. Phase II includes:

  • 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 public power.
  • A Phase II study includes detailed options for providing power independent of Black Hills under three scenarios: for the City only, for Pueblo County only and for the full Black Hills service area.

Phase II is expected to be released to the public during the Fall of 2019.

Will the Phase II study be the end? Or will there be more steps?

There may be a need for a Phase III study, which could explore options to buy and sell Black Hills assets.

If the Phase II study reaches a similar conclusion as Phase I, how will we get a vote to exit the Black Hills franchise?

The recommendation will go to City Council, who will then vote to put it on the ballot for the citizens of Pueblo.

When will the EUC make its final recommendation? Have you already made up your minds?

The EUC is still receiving the relevant information to the decision-making process and does not yet have a recommendation. The timeline for a final recommendation will depend on when the feasibility studies are complete. We are in Phase II, and there may be a need for a Phase III.

When might this go to the public for a vote?

We’re required to have the vote before August 10, 2020.  It is likely that the election will take place in the Spring of 2020.

How will the ballot question be formulated and revised and chosen?

City Council works with the City Attorney’s office to come up with the most accurate and clear language for ballot questions. The final question is voted on by the Council in a public forum.

If the voters say yes to a public power utility, what is the time frame for a recommendation and implementation? Who would make the recommendation and do the citizens vote on that?

The EUC is working to make the official recommendation in time for City Council to make a decision for the ballot in 2020. There is no specific deadline for the recommendation, but we are working backward from the election date.

Can the recommendation be to acquire part of the network rather than the entire network?

The City is working with EES, an expert consultant, to explore every option.

What do you think would be the structure of the new public power utility?

It’s too early in the process to know. We are still gathering information to determine if a public power utility is the best option for Pueblo. After that decision is made, and if it’s voted for by the citizens of Pueblo, then decisions about its structure will be discussed. It has been suggested that the municipal electric utility enterprise be governed by an independent board elected by Pueblo voters, similar to the Board of Water Works.

In your opinion, what will be the largest obstacle to creating a new public power utility?

The largest obstacle will be deciding as a community on what option is best for everyone, and working out all of the various financial, logistical and legal details.

Can you explain the condemnation process?

Condemnation is an authority that cities have to acquire private property when the best interests of the citizens supersede the private interests of a property owner. The City would only enter this process very cautiously and utilize legal counsel. Experts would be called on to determine the value of all assets involved, which takes into account the purchase price less depreciation.

How are condemnation legal costs determined and who pays them? Is it the ratepayer or the taxpayer?

Condemnation requires that a lawsuit be filed in court. The court decides who is responsible for paying legal costs.

What makes this process in Pueblo different from the one in Boulder?

Boulder was the first entity to go through this process in Colorado, and we have the benefit of learning from their process. Additionally, Boulder’s primary goal was environmental, whereas our top priority is the economic benefit for citizens of Pueblo (followed by the environment and local control). So we’ve had different primary considerations from the start of the process and have learned from Boulder’s experience.

Boulder has spent over $20 million in their process so far. They don’t have a utility yet. I understand they have spent most of that on legal costs. Will Pueblo have similar costs?

While it is not possible to predict exactly what costs Pueblo may have at this time, we are doing a lot of research and planning to make sure we make a financially sound decision and won’t repeat any mistakes that were made in Boulder. We are entering this process more cautiously and well-prepared, which is why we’re spending so much time on the feasibility studies.

A complete analysis will include a full risk assessment that includes recognizing and addressing a variety of outcomes. Will a full risk assessment be completed?

This information will be made public by the Mayor and City Council through the Phase II feasibility report and subsequent public meetings.

Will any ballot question be written such that nuclear power could be a source of energy for Pueblo?

Nuclear energy is not a viable energy option for Pueblo because of the extremely high cost of building a nuclear power plant facility, the challenge of storing the radioactive waste produced and the real and perceived risks associated with nuclear energy.

Are there any power wholesale companies based in Pueblo or Southern Colorado?

The wholesale power industry is currently going through a lot of change and growth. Many wholesale providers are paying a lot of attention to Pueblo and what we do as a City. If we decide to create a municipal public utility, there will be options for wholesale partners.

Wholesale power providers always look for long term contracts. What preventive measures are the EUC considering to avoid the fate of Georgetown, TX, a city that signed a long-term contract and wholesale prices are now lower?

Wholesale energy providers need contracts to recoup investments in infrastructure, so there is always a little bit of risk involved in power purchasing. However, there is an optimal timeline for these contracts and to mitigate the risk of paying more than wholesale, which we’ll definitely research thoroughly if we choose to create a municipal public utility.

Does the present franchise agreement allow for a micro-grid to be carved out of Black Hills Energy service area to allow for competition?

No. Under the current franchise agreement, Black Hills has a monopoly on electric utility service in the City.

Black Hills limits the solar homeowner's capacity to produce at 120%. Does the PUC have the ability to eliminate this restriction? 

This question is unrelated to the City forming its own municipal electric utility enterprise and is best answered by the PUC.

Do you think Black Hills or a new public power utility would be more likely to help us achieve 100% renewable energy by 2035 as the City Council has pledged?

Having a local power utility gives our community more control over how we source our energy.

There are a lot of renewable energy projects in Pueblo right now, and it’s very possible we’ll be able to meet our 2035 goal if things continue to progress in the direction they’re headed.

Where does Black Hills produce the energy we use? Do they own the facility or do they buy brokered power?

As a general matter, Black Hills produces the electricity used by its customers but sometimes buys electricity on the open market to meet peak demand.

When Pueblo’s electric service provider was changed in the past, what happened to the linemen and other workers during the transition?

In the past, employees have all had the opportunity to work for the new service provider, and this case would be no different. We would need skilled workers to run the new utility.

The City would work hard to make the transition as smooth as possible for the citizens of Pueblo and Black Hills Energy’s current employees to ensure there is no economic or service disruption.

What is the CPCN? How does this affect the transition to a new Public Power utility? How has the transition worked in the past?

When Black Hills Energy purchased the electric service assets of Aquila in 2008, the CPCN (Certificate of Public Convenience and Necessity) was transferred by the PUC to Black Hills. Under state law, the City of Pueblo has the right to acquire Black Hill’s electric utility facilities and form its own municipal electric utility.

For Mr Aliff: You said that Black Hills Energy has not been forthcoming with data. Can it be subpoenaed?

Pueblo’s City Council has full investigative powers which include the power to subpoena. It would take the majority of the City Council to support such action. If Black Hills Energy failed to honor the subpoena from City Council, the dispute could only be resolved in court.

For Ms. Vetter: What considerations have been given to Pueblo West’s interest in Black Hills Energy off-ramp?

Any decision regarding the future of electric utilities in the Pueblo region will affect the Pueblo West community. The Pueblo West Metro District is thankful for the opportunity to participate in the Electric Utilities Commission as it does impact us. This project and undertaking was initiated by the City of Pueblo and remains their decision. However, serving on the Electric Utilities Commission allows Pueblo West to provide input on the process and ensure that Pueblo West voices are heard as this moves forward. Pueblo West looks to work collaboratively with the City, Pueblo County and other entities on this important issue.

Since Black Hills Energy is not helping the EUC by providing data for a better decision, what are the consequences? 

We do think it’s an obligation for Black Hills to share the information they’ve withheld from us. The City’s option is to file a lawsuit against Black Hills to compel disclosure. The Mayor and City Council have not ruled out taking Black Hills Energy to court.

What is Black Hill’s response to the possibility of losing the City franchise? What legal recourse might they use to retrain the franchise, or delay the implementation of a public utility?

Like all companies, Black Hills owes it to their investors to do the best they can to make money and stay in business. We believe they will do everything they can to protect that, including filing a lawsuit against the City.

What role or contribution does the exclusive, non-competitive contract have in the current situation? Can any changes be made while it’s in place?

No changes can be made to the franchise agreement while it’s in place unless Black Hills Energy agrees. It’s a legally binding contract.


Community Questions from the Town Hall Event held November 19, 2019

If a ballot issue goes to the public and it is decided to split with Black Hills, will they bow out without litigation or resume a legal battle? Will condemnation hearings be required?

It is unknown what Black Hills course of action will take if the City’s residents vote for public electric power. The City would prefer a negotiated settlement with Black Hills rather than a lengthy legal battle.

Can the City effectively run an electric utility? The street repair tax has increased from $1 to $3 and not a lot of repairs have happened. 

Under the Mayor’s budget, more than $5 million will be spent on City road repairs in 2020.

A City-run electric utility in Pueblo would function similar to the municipal water utility, which is governed by an elected Board of Water Works. Pueblo has experienced success in several areas due to the municipalization of water utilities and the EUC believes municipal electricity in Pueblo would achieve similar results.

Where will the City find employees? What will their salary be in comparison to Black Hills salaries? 

The new municipal electrical utility will honor the current collective bargaining agreements negotiated with Black Hills. All union employees will be kept by the new utility. Black Hills management employees (non-union) will be given a preference for re-employment by the new utility.     

What happens if Black Hills refuses to sell their facilities? 

 The City will abide by the will of the voters and pursue municipalization and condemnation of Black Hills electrical distribution facilities.  

What does the public vote look like? Is it for an option or is it a simple question (i.e. City control)?

 The EUC has recommended placing municipalization to the ballot in 2020. It is up to City Council and the Mayor to support this recommendation and allow voters to choose to continue service through Black Hills Energy or to create a municipal electric utility.

Would municipalization investments include monies for new and additional power supplies from wind power, solar power or other new sources?

The EUC is confident that a municipal electric utility would help provide more opportunities for renewable or alternative energy sources.

Considering that we will eventually win a suit, wouldn’t Black Hills be responsible to pay Pueblo’s legal cost? Can the county go to home rule to make this easier? 

The payment of legal costs and expenses will be decided by the Court at the end of the condemnation lawsuit. The County does have the ability to ask voters to opt into home rule, although this would not affect the municipalization process. Under state law, counties (including home rule counties) do not have the legal authority to condemn utility facilities. Only cities (like Pueblo) have the legal authority to municipalize utilities.  

If the voters want option 3 (full Black Hills service area utility) and we will then get a bond to pay for it? Which will raise our taxes offsetting our savings? 

The EUC has recommended Option 2 – municipal electric service in the City and that portion of Pueblo County currently served by Black Hills. The revenue bonds issued to purchase Black Hills electric distribution facilities would be issued by the new municipal electric utility and not the City of Pueblo. Thus, no tax revenues will be used to pay for the bonds. The bonds will be paid overtime by municipal electric customers as part of their monthly bills. Even with bond payments being a portion of the monthly bill, EES Consulting has calculated that the new electric rates charged by the municipal utility will be at least 10% less than the rates currently charged by Black Hills. 

If it is decided to use the City/County proposal, how would the county get involved in the financing of Black Hill’s assets?

The cost of financing the purchase of Black Hills electric distribution facilities will be paid, over time, (as a part of their monthly bills) by ratepayers located both in the City and County, receiving service from the new municipal electric utility.

How long would it take to municipalize if the voters choose to do so? 

Municipalization could take place in less than a year if Black Hills agreed to negotiate a purchase price for its electric distribution system located in Pueblo County. If Black Hills decides not to abide by the decision of the voters and to fight municipalization, the legal proceedings before the PUC and the court could last between 36 and 60 months.

Why are we not going to the PUC and explaining our position? 

The PUC is aware that Pueblo is considering municipalization. Ultimately, it will be up to the PUC to decide which electric distribution facilities owned by Black Hills can be purchased by the new municipal electric utility.

Is PAGs Part of the stranded costs? What options exist with PAGS? 

PAGS will continue to be owned by Black Hills and the Federal Energy Regulatory Commission will require the new municipal electric utility to pay stranded costs for PAGS. The stranded costs will be paid over time by municipal electric customers as part of their monthly bills. Even with stranded costs payments being a portion of the monthly bill, EES Consulting has calculated that the new electric rates charged by the municipal utility will be at least 10% less than the rates currently charged by Black Hills.    

Do you have your minds made up? 

The EUC continued reviewing the information and receiving feedback up until they voiced their opinions at the November 21 EUC meeting. At that time their positions were voiced for the first time.

After 20 years would there be drop-in rates because the $368M is paid off? 

It is difficult to predict rates 20 years from now, however, EES Consulting has calculated that the electric rates charged by the municipal utility will be at least 10% less than the rates charged by Black Hills for three reasons. 

First, unlike Black Hills, the new municipal utility will not be required to pay federal and state income taxes which Black Hills currently passes on to its ratepayers. 

Second, the new municipal utility will be non-profit. Black Hills customers currently pay a profit to owners of Black Hills stock. 

Third, the new municipal utility, as a government entity, can borrow money for future needs at approximately half the rate of interest charged to non-government entities like Black Hills.    

What is the net worth of the $368M acquired assets after 20 years? What debt would remain after 20 years? What about the other 2 options? 

The value of the electric distribution facilities purchased by the new municipal utility would be depreciated over time. It is anticipated that revenue bonds issued to purchase such facilities would be paid in approximately 20 years. Options 1,2 and 3 have been considered by the EUC and the EUC is recommending that the City take Option 2.

San Isabel has stated that they would employ every union member that is currently working for Black Hills Energy. If the City decided to use a different operating company, would the EUC and the City support the Union members in the same way as San Isabel?

The new municipal electrical utility will honor the current collective bargaining agreements negotiated with Black Hills. All union employees will be kept by the new utility. Black Hills management employees (non-union) will be given a preference for re-employment by the new utility.    

How does San Isabel Electric’s comments from November 18 change matters? Will that change or impact the EUC’s recommendation? 

The EUC has taken San Isabel Electric’s presentation into account and is recommending that the City exercise Option 2. The decision of whether to enter into a contract with San Isabel (or another entity) will be up to the governing board of the new municipal electric utility after municipalization is approved by the voters.

Black Hills has indicated they will freeze rates. Is this enough of a compromise? Have you learned of additional negotiations between Black Hills and the City? 

Negotiations between Black Hills and the City are ongoing. The Mayor will keep the public fully informed.

Was Black Hill’s return on equity considered in Phase II?

The PUC awarded owners of Black Hills stock a return on equity in Phase I of Black Hills latest rate case.

Has there been an analysis of the economic impact of the recovery of revenue by the local community through municipalization? How will you incorporate this impact into your recommendation?

The EUC believes that the lowering of electric rates will have a positive economic impact for Pueblo’s residents and local businesses.

I would like to hear what the position of the mayor might be. He was elected to lead the City and his opinion is very important to me!

The Mayor supports asking the voters in 2020 to decide whether they wish to remain with Black Hills or whether they support the creation of a new municipal electric utility.

How is the EUC Board selected? How do you assure the EUC board is not biased? 

When the City established the EUC they solicited applications from interested residents. From there, the council appointed each of the members. The EUC has always stated that their role is to be non-biased and listen to facts. Each member works hard to check their opinions at the door and maintain a neutral perspective with all facts.

As more and more customers adopt rooftop solar will the distribution assets drop in value? 

The Phase II study taught us that the cost of utilizing more renewable power is more cost-effective than once thought. The change in technology is certainly a factor worth considering.