Colorado Politics

Pueblo’s joust with utility goes in circles | MAES







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Dennis Maes



To quote the immortal Yogi Berra, Yankee Hall of Famer and esteemed philosopher, “It’s déjà vu all over again.”

In 2010, the city of Pueblo entered into a 20-year franchise agreement for Black Hills Energy to be the city’s electricity provider. Pursuant to the franchise agreement, Pueblo was given the opportunity to opt out of the agreement in 2020 and again in 2030.

The relationship soured along the way due to a widely held ratepayer belief Black Hills charges exorbitant fees for its services compared to other Colorado municipalities.

Because of the dissatisfaction, Pueblo City Council exercised its option to terminate the relationship with Black Hills by placing the issue on the ballot in May 2020 so city residents could decide whether to take that step. The city leaders commissioned GDS Consulting to advise the city what the up-front cost would be if the city were to operate its own electric utility. The consulting fee and report came at a cost of $320,000 to be paid by the taxpayers.

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GDS Consulting found the up-front cost for the city to municipalize its electric utility would be between $255 million and $334 million with no recommendation as to where the funding would come from.

Unsurprisingly to most, the ballot measure was soundly defeated with 77% of the voters opposing the city takeover.

Reasons for the massive defeat included the enormous cost; the origin of the funds to transition; lack of a specific plan, and the perceived lack of expertise by the city to manage such a complicated venture. The management observation resulted, in part, from the city’s previous abysmal failure trying to manage an animal shelter.

Despite the crushing defeat, a new mayor, a new city council president and a majority of new council members exercised the right to, once again, ask voters to opt out of the franchise agreement in 2030. Because of time constraints, the city council was “forced” to hold the opt-out vote in a special election to be held on May 6.

Question No. 2A — Cancellation of Black Hills Electric Franchise reads as follows:

SHOULD THE CITY OF PUEBLO CANCEL ITS FRANCHISE AGREEMENT WITH BLACK HILLS ELECTRIC AND ACQUIRE THE GENERATION, TRANSMISSION, AND DISTRIBUTION ASSETS OF BLACK HILLS ELECTRIC, IF DETERMINED FEASIBLE?

Begging for yet another costly legal battle should the proposal pass, the challenge will be to define what feasible means. Feasible to whom? The drafting and vagueness of the language leaves much to be desired.

Not to be overshadowed and similarly with little concern for fiscal responsibility, the current Pueblo City Council commissioned GDS Associates to conduct yet another feasibility study at the cost of $300,000 to be paid for by guess who — yep, the taxpayers. Their conclusion, as before, is a city takeover is not feasible and there is no practical alternative. Cost was again the primary deal breaker.

But wait, there’s more. Prior to the release of the GDS report, a report commissioned by Black Hills through the Brattle Group disclosed it would cost the taxpayers a minimum of $1 billion to purchase just the electric distribution system from Black Hills. The purchase of the other Black Hills assets, legal fees to condemn assets outside the municipal boundary and lengthy and costly permitting regulatory and bonding fees could result in the cost ballooning upward of $4 billion. By the way don’t forget to add in the payroll for those who keep the lights on.

All one has to do is compare the estimates five years ago to today’s costs to realize the enormity of the undertaking. Does anyone believe prices will decrease in the future?

Elected Pueblo City Council members, Pueblo County commissioners, city administrators and the mayor have pledged they will not give up the fight, which is their right. But at the continued waste of the taxpayers’ money without a solid financial and governance path going forward?

It must be noted Black Hills recently requested a rate increase before the Public Utilities Commission. The community vigorously opposed the increase and was successful in reducing Black Hills’ request for an 18% increase to roughly 7%.

The result is testament to a sound grassroots movement to continue to be a voice for the ratepayers. It would behoove Black Hills to negotiate in good faith with the community to provide meaningful financial relief in the true spirit of being a good neighbor.

I’m voting NO on Question 2A.

Dennis Maes served 24 years as a 10th Judicial District judge in Pueblo and was chief judge for 17 of those years. He previously served as director of Pueblo County Legal Services, Inc.; as a public defender and as an attorney in private practice.

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