Report says Pueblo ditching Black Hills Energy to form city utility is not feasible

• A study commissioned by the city of Pueblo found that municipalizing the city’s electric utility is currently unfeasible.
• While the municipalization of city assets has been deemed unfeasible, the city may explore a collaborative effort with other regions served by Black Hills Energy.
• The ballot question 2A on May 6, 2025, will determine if Pueblo will explore alternative electric utility options.

It is not yet feasible for the city of Pueblo to purchase all of Black Hills Energy’s assets and operate its own electric utility, according to a study conducted by GDS Associates and commissioned by the city.

That conclusion was presented to Pueblo City Council on April 7. While GDS Associates’ complete feasibility study is still being finalized, a previous study commissioned by Black Hills Energy and conducted by the Brattle Group concluded that the municipalization of Pueblo’s electric utility would cost the city over $1 billion.

Despite those conclusions on municipalization, some city leaders aren’t giving up on the possibility of leaving Black Hills in the hope of providing lower electric rates for the city.

“The preliminary conclusions are not favorable in regards to ‘municipalization’ within the City only,” Pueblo Mayor Heather Graham told the Chieftain in a written statement. “This outcome does not necessarily effect the feasibility of other alternatives. We are in this for the long game.”

Graham added that the city remains “focused on Pueblo taking control of its energy future,” providing lower rates for residents and “more reliable energy.”

Could Pueblo team up with others in the Black Hills coverage area?

GDS Associates Principal Matthew Butler and Vice President Garrett Cole concluded that municipalization is not currently feasible, but said establishing a utility in collaboration with other regions served by Black Hills Energy could be more effective.

“We focused on assessing the feasibility of the city acquiring the territory specifically within the city limits, however, larger or a full territory acquisition and associated distribution, transmission and generation assets could produce a potentially more favorable feasibility perspective,” Butler said.

Black Hills’ Colorado coverage area includes electric customers in Pueblo, Crowley, Custer, Fremont, Otero and Teller counties. About 52% of Black Hills’ total Colorado electric customer base is estimated to reside within Pueblo city Limits, according to Butler and Cole’s presentation.

Whether or not the city will opt out of its franchise agreement and pursue electric utility options other than Black Hills, “if determined feasible,” will be decided by Question 2A on the May 6, 2025, special election ballot.

Steve Welchert, a spokesperson for “NO on 2A,” shared a statement with the Chieftain referencing the findings presented by Butler and Cole.

“The city just opened Pandora’s Box,” Welchert wrote. “Having been told by their own consultants that taking over the utility would not be feasible for the city, they have now decided taking over the entire region must be the way to go. Perhaps they believe the Graham Grocery Tax will raise the billions they need to buy the whole system.”

“Our Colorado electric system serves over 100,000 customers in six counties, many towns and several unincorporated areas… Based on the ballot language, the City of Pueblo seems to think they’re going to ask those communities to pick up the multi-billion dollar tab,” Black Hills Vice President of Colorado Utilities Campbell Hawkins said in a written statement shared with the Chieftain. “It’s just simply not affordable for them and it’s not feasible.”

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Pueblo Chieftain reporter James Bartolo can be reached at JBartolo@gannett.com. Support local news, subscribe to the Pueblo Chieftain at subscribe.chieftain.com.