A bill aimed at giving Colorado homeowners the right install electric storage batteries — a first in the nation —received final passage Monday with strong bipartisan support and is one its way to the governor.
It is by now a given that Pueblo’s civic leadership is fed up with Rapid City, S.D.-based utility Black Hills Energy, which provides most of the city’s residential power. The utility’s repeated rate hikes over the years alongside other contentious policies have rankled residents and local elected officials alike. The tension culminated in a vote by the Pueblo City Council last September to explore how it could pull out of its franchise agreement with Black Hills and maybe even take the bold step of starting its own, municipal utility.
But exactly how do you get there from here? That’s what the city’s newly impaneled Electric Utility Commission will try to figure out. The commission met for the first time Thursday, and the Pueblo Chieftain’s Ryan Severance was there to report on the proceedings as commission members mulled their options. Foremost among those options at this early stage?
Panel member Chris Markuson, Pueblo County’s economic development director, said he’s researched other communities in situations similar to Pueblo’s, and their first step commonly is engaging in a feasibility study.
Next? Hire a lawyer:
Due to the various legal components of what the commission is tasked with — determining if the city can exit its contract with Black Hills Energy 10 years ahead of schedule and create a municipal utility in its place — it was also recommended that members begin looking into hiring an attorney adept in energy issues who can help navigate the city through the process.
“I think you can find a consultant that starts a process of the feasibility study and then build that legal component as soon as possible,” Markuson said.
Though going solo poses a formidable and complicated challenge for the city of 110,000, it is hardly unprecedented. There is a number of long-standing, municipally owned and operated utilities in Colorado that could serve as a model. The largest is just up the road in Colorado Springs, where the city’s utility — governed by members of the city council who also serve as the utility’s board — provides local power, gas and water.
Actually ending the Pueblo’s franchise agreement with Black Hills requires the approval of city voters, who had agreed to a 20-year franchise with the company in 2010.
Gov. John Hickenlooper said he doesn't drive himself around as governor, but next year when he's term-limited out of office and is again a civilian, he'll motor around the state in an electric vehicle.
A Pueblo city councilman wants the Steel City to rely completely on alternative energy by 2035, and he’s catching some national attention for it.
Larry Atencio, the representative from Pueblo’s East Side, told Mother Jones what he envisions for the city, which has been in upheaval over energy prices for everal years. Atencio first introduced a resolution to his fellow lawmakers a year ago pledging to propel the city toward complete renewable energy within 17 years.
But Mother Jones asks: Can Pueblo, a place “where there are lots of poor people struggling to pay their utility bills,” do it?
The magazine points out that making a major shift toward renewable energy could mean even higher rates. It’s earlier efforts to rid the city of fossil-fueled electricity that are said to have started the utility rate spiral in the first place:
When Black Hills Energy raised rates, a lot of that money went toward closing dirty power plants and building cleaner ones. The company shut down an outdated gas plant in downtown Pueblo and an old coal plant in Cañon City (the next town to the west). Black Hills was the first utility in Colorado to eliminate coal from its system. It replaced that dirty power with wind turbines, solar panels, and natural gas. As a result, 19 percent of the electrons streaming from Black Hills Energy to Pueblo come from renewables, and the company is on track to reach 30 percent in the next two years. According to (company spokeswoman Julie) Rodriguez, Pueblo’s electric supply is “one of the cleanest in the state.”
Atencio told Mother Jones, as he did local reporters, that the high rates from energy provider Black Hills provided some inspiration for the resolution, which has no legally binding requirements. That’s probably why the resolution has been so popular among residents.
While the Mother Jones piece raises a lot of questions about what may be in store for the Steel City — which is actively putting an emphasis on attracting the solar industry — there haven’t been any actual policy shifts or new ordinances that support the ambitious goal.
What unifies Pueblo politicos of every stripe? Black Hills Energy. It seems elected officials in the Steel City can’t go wrong by lashing out at the Rapid City, S.D.-based public utility, which supplies the city most of its power — and has been widely excoriated for years of spiraling utility bills.
Talk on the Pueblo City Council has turned to ending the city’s franchise agreement with Black Hills at the earliest opportunity, and that talk got even more heated last week, as the Pueblo Chieftain’s Peter Roper reports:
City Councilman Chris Nicoll got a loud ovation from the audience last Monday when he led a majority of council in saying it’s time to put Black Hills Energy on notice the city will be looking at ways to take an “off ramp” and get out of its 20-year franchise contract with the utility.
Nicoll was angry. So were other council members. Not to mention the citizen activists in the room who have been arguing against Black Hills rate increases and other social policies for years.
As we’ve noted here before, the council is thinking of ending the franchise with with the investor-owned, state-regulated utility in 2020, a decade earlier than the agreement is scheduled to expire. Will the city follow through? Writes Roper:
…what does it mean for the city to cancel its franchise agreement in 2020, a decade before it is set to expire?
“The city needs to look at all the available options, talk to experts and see what’s possible,” Nicoll said this week. “I don’t have some dream alternative ready to go, but we need to put Black Hills on notice that Pueblo is looking for other options.”
The utility got the message this week.
“We remain committed to providing reliable service to the Pueblo community,” Black Hills lawyer Kevin Opp said Friday. “We certainly hope the city doesn’t go down that path (of cancelling the contract in 2020).”
The utility has had a difficult relationship with Pueblo ratepayers.
To say the least. As Roper sums it up:
The utility has been the target of sharp criticism in the Pueblo community over rate increases as well as its reconnect policy for low-income people who can’t pay their bills and lose service.
The tense relationship has been become a full-blown political issue in recent years, stirring heated debate on the state Public Utilities Commission and prompting legislation by Pueblo’s delegation to the state legislature.
So fed up are civic leaders with Black Hills — which has provided most of the Steel City’s power since it acquired the previous electric provider, Aquila, in 2008 — that the City Council has talked of ending the city’s franchise agreement with with the investor-owned, state-regulated utility in 2020. That would be a decade earlier than the agreement is scheduled to expire.
Burke’s replacement to oversee the company’s southern Colorado operation is company veteran Vance Crocker. Will it lead to substantive changes, or is it just PR? Either way, Black Hills seems to be on the bubble.
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.
Updated: Julie C. Rodriguez, a spokeswoman for Black Hills Energy, got back to us with a response to Sen. Leroy Garcia’s withering view of the company’s rate-hike request. Here it is (with the original story below).
“In short, the Phase 2 filing is not a request for a rate increase, it is simply a plan to appropriately allocate among customer groups the revenue that was approved by the PUC in December 2016 (and implemented on January 1, 2017) as part of our Phase 1 filing,” she said. “The proposed Phase 2 changes to customer bills must be approved by the PUC and are revenue-neutral, meaning they would not result in any additional revenue for Black Hills Energy. We expect any changes in bills associated with this filing will not become effective until March 2018. Through smart meter data, we found that residential customers, making up 90 percent of Black Hills Energy customers, are responsible for more energy use than is recovered in their current rates. As a result, other customer groups, like business customers, have been paying a disproportionally greater share of the cost of service. This prompted the proposed changes to customer groups.”
Sen. Leroy Garcia is infuriated that energy customers in southern Colorado face a rate hike, when they already pay some of the highest rates in the state.
In the last session, Garcia asked to create a legislative committee to hold public meetings before the next session to evaluate Black Hills Energy rate increases, but Republicans shot down the proposal on a party-line vote.
The Democratic senator from Pueblo is riled up that South Dakota-based Black Hills is asking the state Public Utilities Commission for a package of rate hikes to pay for a gas-fired generator in Pueblo. That facility replaces a coal-fired plant in Cañon City, which closed in 2012 under pressure for clean-air advocates. Part of the reason for the high cost — and The Washington Post in 2014 noted there were several — is Colorado’s Clean Air-Clean Jobs Act, which passed the legislature easily with bipartisan support in 2010.
Black Hills wants to create tiered rates for customers who use higher amounts of energy, similar to the summertime rates charged by Xcel Energy. Black Hills, which powers 52 southern Colorado communities, also wants to raise its minimum monthly residential rate from $16.89 to $20.13. The minimum charge covers fixed cost such as a connection, meter and billing to extend service to a home, separate from the amount of energy used in the home.
Net-metered solar customers could pay up to 50 percent more. The utility is asking for a monthly charge of $25.45 to recover the cost of a second meter, which measures solar energy production, as well as a higher energy use charge.
“Energy to cool our homes, heat them during the winter, keep our rooms lit, and cook our meals is a basic need that shouldn’t be held hostage by a big corporation trying to line its pockets with mysterious fees,” Garcia said in a statement Monday afternoon.
“Coming out of a legislative session of pushing back against rate increases, it is especially insulting to see Black Hills try to get rate increases and new fees tacked onto energy bills when they think no one is looking. The PUC needs to think long, and very hard, before they consider rate increases and new fees that will stretch the budgets of hard-working people and their families even thinner.”
Garcia sponsored Senate Bill 105, signed into law in May, to make monthly bills from investor-owned utilities (namely Black Hills and Xcel) easier for everyday folks to understand, including line-item billing and easier-to-grasp visual elements about energy use each month.
He also co-sponsored House Bill 1323 to prevent anyone who had a recent affiliation with a regulated utility from serving on the Public Utilities Commission. The bill died in the Senate State, Veterans and Military Affairs Committee on a 4-1 vote on May 4.
Garcia noted that Wendy Moser, a former lawyer for Black Hills Energy, was appointed to the PUC in January.
The rate hikes are part of the utility’s effort to recoup the cost of the new generating station. After examining costs the Public Utilities Commission lowered the amount Black Hills could recoup from ratepayers from $8.5 million to $636,267. Black Hills has appealed that amount to the courts.
The PUC could hold a hearing to accept or adjust the proposed package of rate increases or ask administrative law judge to hold the hearing and consider the judge’s recommendation, but that decision hasn’t been made yet, said Cindy Schonhaut, the director of the Colorado Office of Consumer Counsel.
The PUC will take public comments until at least November, depending on when the hearing is set.
Comments can be emailed to dora_PUC_complaints@state.co.us, or mailed to 1560 Broadway, Suite 250, Denver, CO 80202.