Taking the off-ramp: The challenging road to utility municipalization

By John David Baldwin on January 17, 2018
Activists in Pueblo, Colorado want their city to municipalize their local utility.

A diverse coalition of activists in Pueblo, Colorado have taken the bold step of urging their city to municipalize their utility, asking the local government to purchase the investor-owned private utility and turn it into a government entity. Their story shows how solar supporters and other renewable energy activists can join together to fight for their energy rights.

Last September the Pueblo City Council voted to establish an “off-ramp commission”. Its purpose is to study alternatives to its private utility, Black Hills Energy (BHE). This vote came as the result of sustained pressure from grassroots activists. The off-ramp commission will try to come up with the plan that’s most cost-effective and beneficial for its citizens. Although the city has not yet explicitly committed to municipalization, it’s clearly on the road to that destination.

“The city has turned on the blinker of its turn signal,” said David Cockrell, a local Sierra Club activist involved in pushing the legislation.

How Pueblo got to that point is a complex and inspiring story of a beleaguered community and the power of grassroots action. The concept of municipalization is not new to Colorado. In 2010, Boulder’s voters chose to begin municipalizing its existing electric utility (Xcel). In a recent surprise election result, voters approved a continuation of the process.

This new effort is not the first time Pueblo – once known as “Steel City,” or “The Pittsburgh of the West,” for its prosperous steel industry, now in decline – considered municipalizing its utility. In the mid-2000s, the city council considered acquiring it from the previous private owner, Aquila. It chose not to do so and BHE purchased the utility in 2008. Shortly after the purchase, Anne Stattelman, the Executive Director of Posada, a housing and supportive services organization based in Pueblo County, became concerned about the increase in power shut-offs to poor households. She also regarded the fees the utility charged for turning on power and the deposits demanded to be excessive.

She met with BHE officials in 2009 and was told, in her words, that, “Black Hills Energy is an investor-owned utility and that it has one concern and one concern only: profits for its stockholders”.

“It was downhill from there,” Stattelman said.

Since then, BHE has invested heavily in expensive natural gas infrastructure. This made the company strongly resistant to cheaper, renewable energy sources. Rebecca Vigil, Energy Justice Community Coordinator of the coalition Pueblo’s Energy Future (PEF), said that the utility is currently proposing to almost double the energy charge and increase the customer fee for solar ratepayers, specifically to discourage demand for rooftop solar.

Jodie Van Horn, Director of Sierra Club’s Ready for 100 Campaign, said Pueblo now has some of the highest electricity rates in the country. For her, the campaign for renewable energy in Pueblo is very much an energy justice issue: it’s all about lower bills and cheaper, cleaner electricity. Nearly 20% of Pueblo residents live at or below the federal poverty level, according to the U.S. Census Bureau.

Van Horn notes that there are about 1,600 people per quarter who are disconnected, and only a little over half of these get reconnected. Stattelman claims that at one point after the BHE takeover, 35 percent of the homeless people that Posada served had sought its help because of power shut-offs.

Besides local environmentalists and low-income advocates, another vocal constituency was seriously troubled by BHE’s commitment to “brown” energy: the city’s businesses.

“Energy justice applies to businesses, not just consumers,” Cockrell said. “Businesses understand that renewable energy is where we need to go: it is more cost-effective than fossil fuels.”

Community frustration came to a head last year when the utility sought to build its third natural gas peaker plant. It did so without any thought of using renewables with storage, or allowing any public input. The plant’s construction would have triggered a rate increase for BHE customers.

“This action of BHE started the movement,” said Cockrell.

As Van Horn elaborates, the public utilities commission “held a hearing for the rate increase, and 400 community members turned out to say ‘no’. The commission had never seen that many people turn out for a hearing in its history.” Commissioners voted to reject the rate increase.

This event sparked the creation of the grassroots coalition Pueblo’s Energy Future. According to Stattelman, Susan Perkins, an energy lawyer, was inspired by work at the Rocky Mountain Institute on collective impact groups to launch PEF. The group began with the energy justice issue and grew from there. The coalition has been in place for six years and has been actively lobbying and educating the public for about two years

“The group expanded from the rate question (that is, energy justice) to the climate question, to economic development,” Stattelman said. “So now we have a ‘three-legged stool’. We don’t go forward as a collective impact group unless the initiative speaks to renewables, energy justice and economic development.”

The Pueblo City Council passed a resolution last February that said “yes” to 100 percent renewable energy for Pueblo by 2035. Both the Sierra Club’s Sangre de Cristo group and PEF worked with a city council representative in creating the successful resolution. The president of the city council then warned that unless it created its own utility, the city wouldn’t have any authority over its sources of power and thus couldn’t fulfill its renewables mandate.

When BHE purchased Aquila it was granted a 20-year franchise agreement by voters. This included a clause where voters could reconsider the contract in 2020 – the “exit” from the utility “highway,” so to speak. So the coalition went to work persuading members of the council to begin the process of taking that exit.

The crucial factor about the PEF coalition is that it emphasizes the dollars and cents advantages of renewable energy. It stresses this message with elected officials, having discovered that the most persuasive arguments for renewables are economic rather than the environmental.

“We were able to get the proposal passed in the city council by a vote of 6-1,” said Cockrell, speaking of the September vote, “because we were able to show the economic benefits of replacing the gas infrastructure with wind and solar.”

Purchasing BHE would, of course, be a very expensive investment for the city, but Stattelman, at least, was undeterred.

“It was a long time coming and a great move forward,” she said, “but we also all know that this is a marathon not a sprint, and the hard work is still ahead.”