Beware of those savings — they’ll cost you, Pueblo learns
Author: Dan Njegomir - August 25, 2017 - Updated: August 25, 2017
It’s not like there’s any love lost between Rapid City, S.D.-based Black Hills Energy and the city of Pueblo, to which the investor-owned public utility provides power. The city’s elected leadership, including its City Council and legislative delegation, long have been at odds with Black Hills over its repeated rate hikes in recent years. The city has a reputation for paying some of the highest power rates in Colorado.
So, you can imagine the reaction among Pueblo City Council members when they learned this week that an upgrade to city’s street lights a few years ago as a cost-saving measure recommended by Black Hills — which owns the lights and charges the city to use them — could now cost the city a lot more under a pending rate request by Black Hills to state regulators. In fact, as the Pueblo Chieftain’s Peter Roper reports, Black Hills “wants to more than double the annual cost of the city’s high-efficiency LED street lights — a $1-million increase that would erase the savings from the low-energy street lights.”
The council is furious, with Council President Steve Nawrocki calling the request “a slap in the face,” Roper reports.
Here’s some background details, courtesy of Roper:
Essentially, the utility wants to double the cost of what it charges the city to use its poles, electric lines and other infrastructure, even though the LED lights were installed to save power and money.
Back in 2014, council entered into a $4.2 million contract to install some 8,000 high-efficiency LED street lights because they would lower the annual charges from Black Hills. The financing came from Wells Fargo with the understanding the city would pay off the debt with savings from the LED lights. As collateral, the city listed its fire stations.
Even though the city paid for the new LED lights, Black Hills still owns them and the street light system. The city simply pays to use them.
In its filed testimony (to the Colorado Public Utilities Commission), Black Hills officials argue they need to get more revenue from city’s street lights — which they own. The mistake was to set the monthly costs for the new lighting too low from the start, according to testimony.
“In our discussions before the Phase 2 filing, we determined the company has not been charging enough to cover its fixed costs for the street light system after the city installed the LED lights,” a senior Black Hills expert wrote.
Oops. Now, the state-regulated utility’s mistake could cost Pueblo, again, if the PUC goes along with the request. And, again, Pueblo feels betrayed.