(PUEBLO, Colo.) — Black Hills Energy is releasing a study claiming that a government utility takeover of the electric distribution system in the City of Pueblo would cost citizens an initial $1 billion and raise utility bills.
Black Hills Energy released a preliminary feasibility study from The Brattle Group, “an independent consulting and advisory firm focused on answering complex economic, finance, and regulatory questions for corporations, law firms, and governments around the world.” Black Hills Energy said it commissioned the study, which was paid for with company funds and not at the expense of the customer.
“Our independent analysis estimates that the cost of taking over the Black Hills Energy distribution system would be in excess of one billion dollars and estimates that the ongoing annual operating costs to serve customers in Pueblo through the municipal ownership model would be higher in each year of the twenty-year study period,” said Ann Bulkley, principal at The Brattle Group and co-author of the study. “These findings should be studied carefully by customers, community leaders, and elected officials to help determine whether a utility takeover attempt makes sense, given the high costs and risks.”
According to the study, it could cost the city $1.01 billion to acquire the Black Hills Energy distribution system. The study did not include the costs of the city buying facilities to generate electricity or buying the transmission lines.
In terms of annual operating costs, the study claims the average residential Pueblo customer would pay $270 more per year than Black Hills Energy rates. The study estimated an increase of $30 to $80 million per year to run as compared to Black Hills Energy over the 20-year study period. The increase in costs, according to the study, was the annual debt payment for the initial $1.01 billion, as well as costs to purchase power and transmit it over unowned power lines. Black Hills Energy said the cost of operating and maintaining an electric distribution system is higher on average for a municipal utility than Black Hills Energy.
The mayor of Pueblo, Heather Graham, released a statement in response to the study:
“It’s interesting to see Black Hills Energy commission a study that they claim is paid for with ‘company funds and not at the expense of customers’ when ratepayers actually are the individuals paying for the study along with the nasty and untrue advertising campaigns seen across social media and on TV. The City of Pueblo is currently in the midst of our own feasibility study, which outlines all options for electric utilities moving forward—not just the idea of municipalization outlined by the study Black Hills Energy commissioned themselves. The City realizes that our decision affects more than just residents within City limits, which includes Pueblo County our neighbors in Pueblo West and potentially a much larger service areas like Canon City, Penrose, Florence, Cripple Creek and more.
Municipalization was the intention of the City in 2019, now the City of Pueblo is looking at multiple options like a co-op or an alternative utility company purchasing the assets from Black Hills. At the end of the day, we know that Black Hills Energy is interested in the pocketbooks of their investors, not in the pocketbooks of their ratepayers, or in this case our Pueblo residents.”
Mayor Heather Graham
