#Pueblo election: Colorado’s steel city calculates risks and rewards of ousting its electrical utility — The Mountain Town News

From The Mountain Town News (Allen Best):

Pueblo debates risks and opportunities

Pueblo voters on May 5 will decide whether to stick with their existing electrical utility, Black Hills Energy, or municipalize operations.

Proponents and opponents frame their arguments in terms of opportunity and risk. The fulcrum for the debate is the high cost of electricity in Pueblo, which is among the highest in Colorado and some say the nation.

The most immediate comparison is to Colorado Springs, which has a municipal utility, similar to what is proposed for Pueblo. Residential rates in Pueblo are 36% higher, 33% higher for large commercial customers, and 41% higher for small commercial.

In metropolitan Denver, rates charged by Xcel Energy are also substantially lower. In fact, nearly all of Colorado’s several dozen utilities charge less than those charged by Black Hills, according to rate surveys conducted by the Colorado Association of Municipal Utilities. Steve Andrews, a proponent of municipalization, says those who get their power from public-power sources across Colorado similar to what he supports in Pueblo paid $82 per 700 kilowatt-hours of electricity compared to $112 for Pueblo.

Could Pueblo residents and businesses do better if the city—through its parallel agency, the Pueblo Board of Water Works—took over operations? That’s what voters must decide.

How much it would cost to take over Black Hills operations depends upon what portion of the service territory is included. A study completed last October by EES Consulting calculated the debt service for Black Hills operations only within Pueblo at $348 million over a 30-year period.

There are also provisions for creating a regional utility to deliver electricity to all of the current Black Hills electrical customers in Colorado, if they want to join Pueblo. All of Pueblo County, including Pueblo, would be $461 million. The estimated cost was $848 million for acquisition of the full Black Hills service territory in Colorado, which stretches from Cripple Creek and Westcliffe on the west to Rocky Ford and beyond to the east.

These figures include Black Hills’ generating assets, but whether they would be acquired would depend upon negotiations.

The Board of Water Works would be responsible for negotiating with Black Hills or, if necessary, for condemning the assets in legal proceedings. The board would also be responsible for financing the acquisition costs and court costs. The board members would continue to be elected by city voters.

The Water Board pointed to relatively simple arithmetic. The city had commissioned two studies. The first one established that a public power utility would reduce rates and costs over time. The Phase 2 study delivered in October offered more specifics. It said Black Hills generates between $250 million and $260 million in revenues, and after expenses, enough revenue would be left to cover bonds of $900 million to $1 billion. It also concluded that a community-owned electric utility could deliver current customer savings of 10% to 14%.

Electrical utilities are wonky things, so a brief primer might be useful. First, Colorado has two investor-owned utilities that deliver electricity: Black Hills and Xcel Energy. The latter serves metropolitan Denver and some other areas in Colorado. The remainder of Coloradans get their electricity from electrical co-ops or municipal providers.

Black Hills, which is based in Rapid City, S.D., in 2008 purchased Aquila, the previous utility serving Pueblo, for $282 million, according to a filing on the Federal Energy Regulatory Commission website. It soon got out of coal, replacing that with a gas-fired power plant east of Interstate 25 near the airport and industrial park. Pueblo’s franchise agreement with Black Hills continues to 2030.

Opponents of municipalization have a sturdy voice in the Pueblo Chieftain. Its just-vote-no editorial on April 10 reminded readers of instructions issued by judges in criminal cases: “Don’t vote to convict unless the prosecutors have proven their case beyond a reasonable doubt.” Proponents had failed that test, it said. Most of the information came from a single consultant’s report – and one tainted in the Chieftain’s telling by the guidance of the city officials who “were very transparent about their interest in hearing the virtues of municipal electric services,” the newspaper said.

“Relying so heavily on one source of information on a subject this complicated is a bit like reading the CliffsNotes on “Moby Dick” and then claiming to be an expert on whale hunting,” the newspaper said. “Proponents say a municipal electric company would save money, but it’s not clear how.”

Risks outweigh potential rewards, in the newspaper’s view. “It seems extremely unwise to put the city’s future at risk based on some vague hopes that it would all work out well in the end.”

The city council also adopted a resolution, on a 4-3 vote, opposing municipalization. Among those in the majority was Dennis Flores, the city council president. “Do not be fooled. This is not the panacea the other side would have you believe,” he wrote in the Chieftain.

The most prominent supporter of municipalization is Nick Gradisar, the mayor. He took office in January 2019, winning 57% of votes.

“Black Hills is an investor-owned utility and, as such, its primary allegiance and legal duty is to its shareholders to generate profits,” he wrote in a Jan. 28 op-ed published in the Chieftain. “A public electric company would have no shareholders, would not have to generate profits, and its primary legal duty would be to its customers and ratepayers.” But he warns against expecting lower rates immediately.

“Based on its current rates, over the remaining 10 years of the franchise agreement, Black Hills would take out of this community $130 million in profits. This is one of the reasons that we have the highest electric bills on the Front Range.”

The business community in Pueblo mostly seems to favor municipalization. The Pueblo Chamber of Commerce points to the consultant’s study—the same one seen by the Chieftain as wanting in depth and honesty—as showing transition to a community owned electric works would achieve “significant rate savings over a 20-year period.”

“When it comes to attracting new businesses to Pueblo, these rates can be a deal breaker,” says Andrew Lang, chief operating officer of TR Toppers, a Pueblo-based food processing and distribution company, in an op/ed in the Chieftain.

The Pueblo Chieftain in that story described her comments as “often scorching.” She sees Black Hills as taking actions that are scorching.

“The company is unstoppable—scorched earth litigation at the PUC, high-priced lobbyists, access to the governor,” she wrote in an April 10 op/ed, “End Black Hills’ predatory business practices.”

That strong language is tame in comparison with her remarks in an interview conducted by municipalization proponents on a Facebooks stream last Friday night. There she accused Black Hills of chicanery at every turn, describing the company as an “energizer vampire.” (See a partial abridged transcript.)

Much has been made by opponents of municipalization about Boulder’s much longer attempt to break away from Xcel Energy and form its own municipal utility. “Our neighbors in Boulder have spent a decade and millions of dollars in an attempt to municipalize their electric service, without an end in sight,” points out the Chieftain. Opponents also point out that many efforts to municipalize around the country have come to nothing.

But proponents say that Boulder went about things differently, and Pueblo has a better approach and has learned from Boulder’s mistakes. Too, Pueblo’s later start works in favor of Pueblo, while creating a drag on Boulder’s efforts. Prices of renewable energy have plunged in the last decade, allowing Pueblo more options and undermining the reason why Boulder sought independence: To more rapidly green up its power supply. Xcel Energy, its supplier, is now rapidly doing so—ironically by closing two of the three coal plants that are the city’s backdrop.

Boulder’s attempted break a decade ago was precipitated by a desire to accelerate the transition to emissions-free energy. In Pueblo, the municipalization effort has been almost purely about rates. That’s ironic, given that Pueblo was the first municipality in Colorado to formally embrace a 100% renewable energy goal. That was in 2016.

Larry Atencio, a city council member who initially was the public face of the 100% renewable goal, getting national attention, opposes municipalization but instead points to the work of Black Hills. It’s building a 200-megawatt renewable energy system, probably solar, that will result in a 5% decrease in rates. Proponents, however, question whether the solar farm will ever get built, given how much generation Black Hills already owns. As for the 100% renewable goal adopted by Pueblo, Gradisar, the mayor, says that municipalization should allow Pueblo to hit that target by 2035.

A poll conducted by the city in early March, part of a broader survey about municipal issues, found 70% favoring a new public-power utility. But that was before a public relations campaign was launched by a new group called Pueblo CARES with a barrage of TV and radio advertisements challenging municipalization. The Chieftain on April 16 reported that the group had received over $1.5 million in contributions from Dec. 19 through April 13. Several council members and others had contributed $250 or less to the group, and Black Hills Energy said it has contributed, but not exactly how much.

The proponent group, Bring Power Home 2020, a campaign-issue committee that grew out of the all-volunteer Pueblo’s Energy Future, reported $21,000 in contributions for the same period. That mismatch in the campaign war chest is one reason that Andrews, of Bring Power Home 2020, describes his group’s efforts as one of David vs. Goliath.

Still, municipal proponents mostly express optimism they will prevail. “I think we’re still in the running,” says David Cockrell, a former city planner and college administrator and a key figure for several years in the municipalization effort. “We are not convinced we’re going to lose. It’s still possible we may win substantially.”

And if David should win the vote next Tuesday? Koncilja, the former PUC commissioner, says it will be national news. It will also be the big pivot that will allow Pueblo, which even now remains best known in Colorado for its steel mill, to more fully participate in the great energy transition.

Study: #Colorado’s water still affordable, but that may change as COVID-19 stresses utilities @WaterEdCO

Tap water via Wikimedia

From Water Education Colorado (Jason Plautz):

Even before COVID-19 swept across Colorado and other states, concern over the cost of water had begun to rise.

Nearly 12 percent of American households lack access to affordable water, a number that is expected to triple in the next five years, according to a 2018 study from Michigan State University (MSU).

The good news: Western states are still able to provide relatively affordable water, but that could change as utilities try to recoup losses associated with the pandemic and begin to pay for the massive repairs and upgrades to their systems that were on the drawing board before COVID-19 struck.

Measuring affordability

In Colorado, newer infrastructure and conscious rate-setting has kept water largely affordable, as in most Western states. The MSU study found that less than 8 percent of Colorado’s census tracts were at “high risk” of an affordability crisis based on income, better than all but 12 other states. (“High risk” tracts were defined with a median income of less than $32,000, where rate increases would disproportionately affect ratepayers’ budgets.) Among the regions identified in the study as at risk were Denver, Pueblo, Colorado Springs, and Alamosa in the San Luis Valley.

Water systems built in the mid-century infrastructure boom or to comply with the Clean Water Act requirements of the 1970s are reaching the end of their useful life. That’s on top of the massive programs to replace lead and copper lines, the need to procure more water in drought-prone areas, and the cost of adapting infrastructure to cope with extreme weather from climate change.

According to the National Association of Clean Water Agencies (NACWA), water rates have risen faster than inflation since 2002.

And for customers on fixed incomes, even small increases can make a huge difference for their budgets.

“When we think about affordability, we’re not concerned about whether it’s expensive for someone to water their lawn. We want to know that people can cook, shower, clean, flush their toilets…the basic necessities,” says Manny Teodoro, an associate professor in the political science department at Texas A&M University.

States are grouped by EPA region. Colorado is in EPA Region 8, where the average annual wastewater charge in 2018 was $289—less than other regions. Graphic credit: Environmental Protection Agency

According to Denver Water spokesman Todd Hartman, most households the utility serves pay less than 1 percent of their income for water. Denver Water does not have specific numbers on how many households pay more than 1 percent for drinking water, Hartman says, but added that, “Socioeconomic conditions in the Denver Water service area compare favorably to U.S. averages and have continued to improve in recent years.”

But with costly repairs coming due, it will take a concerted effort to maintain high-quality infrastructure and deliver quality water, while keeping rates from ballooning in a way that disproportionately affects lower-income families.

In Colorado, drinking water infrastructure needs are estimated at more than $10 billion, according to the 2020 Colorado Infrastructure Report Card from the American Society of Civil Engineers, with a chunk of that cost going back to ratepayers. That’s prompted discussions about how to best fund those repairs—and how to make sure that no customer feels an unfair burden when utilities need more capital.

“The question of the [utility] bill has always been there, but it’s becoming more and more significant,” says Andrew Rheem, a senior manager with the Colorado-based consulting firm Raftelis, which has worked with utilities in Boulder, Greeley and Denver. “How it gets addressed is going to continue to evolve, but right now a lot of communities are just wondering how to find any solution.”

The cost of water

When water affordability enters the national conversation, it’s usually because of a crisis.

In 2014, the Detroit Water and Sewerage Department took an extraordinary step: In order to recoup unpaid bills, it shut off running water to more than 30,000 low-income households who were behind on payments. As the utility worked to put customers on a payment plan and restore service, the action drew a rebuke from around the world; even the United Nations sent a delegation to the city and deemed it “contrary to human rights.”

Traditionally, governments and utilities, including Denver Water, determine affordability with the EPA calculation that compares water and wastewater bills to a region’s median household income (MHI). If drinking water doesn’t exceed 2.5 percent of MHI and wastewater doesn’t exceed 2 percent, they are considered affordable.

According to Texas A&M’s Teodoro, the working poor are paying roughly 10 percent of their income on water nationally. That number could rise if economic trends continue.

“In a lot of communities, things like rent and energy are going up faster than incomes are,” Teodoro says. “Both the numerator and the denominator are going in the wrong direction.”

Most of the pain, however, is likely to be felt in the American South, where incomes are lower and infrastructure is in more desperate need of repair. Cities in the Northeast, where pipes can date back to the early 1900s and the income gap is wider, are also in greater danger.

Elizabeth Mack, who authored the MSU study, says affordability is posed to be a “burgeoning crisis.” It already weighs on households that are struggling with high rents, energy bills and food costs, but could soon rise even more.

“You can start seeing problems affecting households we consider lower-middle income,” Mack says. “These households are already squeezed from a variety of perspectives. If incomes were going up a lot, this might not be an issue, but they’re just not.”

The crisis also breaks along color lines. In a 2019 report, the National Association for the Advancement of Colored People found “a clear connection between racial residential segregation and black access to water systems,” including rising rates that disproportionately affected black neighborhoods.

The West, however, has largely avoided those problems. In Teodoro’s national analysis, he found that Western states had, on balance, more affordable rates than the rest of the country. NACWA’s annual Cost of Clean Water Index found that EPA Region 8 (Colorado, Utah, Wyoming, Montana, North Dakota and South Dakota) had the lowest average wastewater charge of any region, with a $289 annual average compared to the $504 national figure.

That’s in part because of less urgent infrastructure needs. Although much of Colorado’s water infrastructure dates back to at least the 1960s, it’s still in better shape than pipes and treatment plants in other parts of the country. The American Society of Civil Engineers estimates that Colorado needs $10.19 billion in drinking water infrastructure improvements over the next two decades, a huge bill but less than other states like Pennsylvania ($16.77 billion), Alabama ($11.26 billion), and Ohio ($13.41 billion).

Even areas where income levels could signal affordability challenges have kept water rates low. The San Luis Valley was a high-risk tract in Mack’s study, based on median income, but rates in the City of Alamosa are not a serious burden for residents. Heather Brooks, city manager for Alamosa, said the city has, if anything, kept rates too low to cover capital costs. A half-cent sales tax dedicated to water infrastructure has helped defray those costs.

Pueblo Water spokesman Joe Cervi likewise said that the utility has lowered costs by keeping a lean staff and planning ahead for major repairs. According to city data, the average bill for 11,000 gallons is $53.15, well below the Front Range average of $62.82.

A helping hand

Often, affordability can butt up against one of the biggest priorities for Colorado utilities: conservation. In 2014, Longmont Water decided to encourage conservation by charging customers based on use, rather than the lifeline rate that charged everyone the same amount for their first 2,000 gallons. There was concern, however, that the change could punish families who need lots of water to shower and cook, says Becky Doyle, a rate analyst and manager for the City of Longmont’s Department of Public Works and Natural Resources.

“A grandma who lives by herself can keep the water bill low, but that’s not the only kind of low-income household composition we need to be worrying about,” Doyle says. “Low-income households aren’t all low water users.”

Longmont already had a rebate program for fixed-income seniors, but extended that benefit to any household eligible for the Low-income Energy Assistance Program (LEAP). But, in a sign that water isn’t top of mind for many households, only two additional applicants signed up in the first year. Expanded outreach has garnered about 130 participants, but Doyle acknowledged that’s still not everyone.

Facing much-needed infrastructure repairs, other utilities across the state have sought to blunt the impact to customers with their own expanded assistance programs. Denver Water, for example, has some 140 projects planned for the next five years, which call for higher customer bills. After a rate increase in 2019 that added roughly 55 cents per month for urban customers (the increase was between $1.90 and $3.40 per month for suburban households), the board has approved another increase for 2020 that will add about a dollar more per month. (For suburban households, the increase will be between $1.15 and $1.36.)

The increases to the fixed monthly charge, which is associated with the meter size, are being done slowly to even out revenues year to year, and to limit the impact on the community, the utility says. Denver also uses a three-tiered charge and assesses indoor use, such as flushing toilets, cooking and bathing, at the lowest rate to reduce the burden on low-income families that, say, won’t pay for watering a lawn. The lowest rate is also measured during the winter, reflecting “essential, nondiscretionary usage,” Denver Water says.

Denver Water also offers assistance, like a one-time courtesy cancellation and payment extension for water shutoffs after delinquent payments and a pilot partnership with Mile High United Way to provide one-time bill relief and like other utilities has pledged to suspend shutoffs to help protect those who’ve lost their jobs as a result of the pandemic.

Elsewhere, utilities are exploring income-based structures that would ensure that the poorest families face the lowest cost burden. Philadelphia in 2017 rolled out a first-in-the-nation structure that charged lower rates for households at or below 150 percent of the federal poverty line, which some experts predicted would actually increase revenues by reducing missed or late payments. Baltimore, where some poor black residents have complained of triple-digit bills, has also debated a similar structure, and advocates are watching closely to see if the model could be expanded to more cities that are facing payment crises.

Is there a fix?

For utilities, providing service without raising rates would be easiest with an influx of federal funding. Washington has been talking about water infrastructure assistance, including through the proposed LIFT Act (Leading Infrastructure for Tomorrow’s America Act), and under some of the COVID-19 relief measures, money may be provided to help utilities offset their infrastructure costs.

And all the while, drinking water standards and infrastructure costs will only pile up. That, says MSU’s Mack, means utilities need to start planning to avoid the worst impacts.

“We can’t say what’s going to happen, but there could be some big spikes in bills if all this deferred investment comes up at one time. The risk is when that gets to households that are already being squeezed,” she says.

An earlier version of this article appeared in the Spring 2020 issue of Headwaters magazine.

Jason Plautz is a journalist based in Denver specializing in environmental policy. His writing has appeared in High Country News, Reveal, HuffPost, National Journal and Undark, among other outlets.

Fresh Water News is an independent, non-partisan news initiative of Water Education Colorado. WEco is funded by multiple donors. Our editorial policy and donor list can be viewed at wateredco.org.

Even with beef plants staying open, reduced capacity means #Colorado ranchers feel the #coronavirus pinch — The Colorado Sun #COVID19

Photo credit: Bob Berwyn

From The Colorado Sun (Jesse Paul):

To be a cattle rancher in Colorado is to expect setbacks.

There are droughts and fires and economic volatility. There are snowstorms and tornadoes and tricky equipment. There are changing consumer demands.

But rarely do the stumbling blocks line up one after another and all at once the way they have now with the crisis caused by the new coronavirus, which has placed a wide-ranging economic drag on one of Colorado’s largest industries. Nationally, the cattle industry is expected to take a hit as large as $13.6 billion, according to a study released by the National Cattlemen’s Beef Association.

Cattle prices have plummeted, some types of feed have become difficult to find and schedules for readying animals for market have required rearranging. Meanwhile, slaughterhouses have either closed or, in the best case, reduced capacity because of worker infections, meaning feedlots have had to keep feeding animals that are past their processing prime…

[The] President’s executive order Tuesday that meat-processing plants stay open provides some assurance that the beef market won’t collapse altogether. But Gov. Jared Polis has indicated that he may take action if workers’ health is put at risk.

“I will not let any executive order stand in the way of us protecting people in Colorado,” Polis said Wednesday.

Even if the facilities do stay open through the pandemic, ranchers who work in Colorado’s $4 billion cattle industry are still expecting a decline in slaughterhouse capacity that will eat away at their bottom lines. Any delay in moving cattle from feedlots to processing facilities — like the JBS beef plant in Greeley and Cargill Meat Solutions in Fort Morgan — is a major problem…

Terry Fankhauser, executive vice president of the Colorado Cattlemen’s Association, said that even with beef processing plants staying open, he expects a 30% or more reduction in their capacity nationwide.

There is only about a two-week span when cattle are in their prime for slaughter. If the animals are kept for longer, ranchers begin losing money as the meat quality declines and the cost of feeding animals becomes uneconomical…

Fankhauser estimates that for every 10% drop in slaughterhouse capacity, there’s a $40-$50 reduction in cattle price per head. “If that exacerbates over a long period of time — say, five weeks — that will continue to compound. A five-week, 50% reduction in harvest knocks fat cattle prices back to 1970s levels,” he said…

Colorado’s congressional delegation is working to increase the options for ranchers. Republican U.S. Reps. Scott Tipton of Cortez and Ken Buck of Windsor joined Republican U.S. Sen. Cory Gardner and Democratic U.S. Sen. Michael Bennet in sending a letter to Agriculture Secretary Sonny Perdue asking him to suspend the rule that cattle must be processed through a U.S. Department of Agriculture-regulated facility if a rancher wants to sell on the national commercial market…

If there’s one thing the cattle industry wants people to know it’s that the beef supply chain isn’t at risk of failing. There’s a great deal — millions of pounds — of chilled and frozen meat stored across the state and plenty of cattle available to be slaughtered.

There’s no reason to panic buy.

The pork and poultry industries have had to euthanize animals because of coronavirus-related disruptions, but that won’t happen to Colorado cattle, Fankhauser said. “We will not be euthanizing cattle because we have a different system that’s able to hold animals longer.”

But while there may be plenty of beef, economic realities are definitely threatening ranchers. In the long term, they’re worried about falling beef prices related to a shift in consumption as restaurants stay closed and more people get their meat from supermarkets.

Restaurants typically buy higher-end cuts of beef, as do cruise ships. Both industries either aren’t operating or are operating at a reduced capacity, reducing demand and redrawing supply chain lines…

And the market — also impacted by the reduction in slaughterhouse capacity — has reacted in a way that doesn’t favor ranchers. Live cattle futures, for instance, have fallen about 35% since January. That represents a reduction of several hundred dollars per head of cattle…

“We’ve got businesses that are pretty well-designed to weather movement within markets through the course of the year,” [Steve Wooten] said. “We’re a pretty resilient group of people in this industry. We take on weather, we take on markets and keep our chin up and keep working because it generally tends to work out for us.”

Water use patterns provide a sense of normalcy — News on TAP

Denver Water employees keep watchful eye on the system through COVID-19. The post Water use patterns provide a sense of normalcy appeared first on News on TAP.

via Water use patterns provide a sense of normalcy — News on TAP

It’s a dirty problem, but somebody’s gotta solve it — News on TAP

Denver Water faces a gritty challenge at one of its key locations for managing water supplies. The post It’s a dirty problem, but somebody’s gotta solve it appeared first on News on TAP.

via It’s a dirty problem, but somebody’s gotta solve it — News on TAP

Boulder flood plan update

Boulder. By Gtj82 at English Wikipedia – Transferred from en.wikipedia to Commons by Patriot8790., Public Domain, https://commons.wikimedia.org/w/index.php?curid=11297782

From The Boulder Daily Camera (Jan Burton):

Stormwater and flood management utility capital projects are funded primarily by monthly user charges, with costs spread out using 20-year revenue bonds. The annual debt service payments associated with such bonds are factored into utility rates through the annual budget process. So, those of us living in Boulder pay for all of these projects on our water utility bills.

Examine your own bill to see your fixed monthly charge on the line “Stormwater/Flood.” The fee is used to support flood infrastructure, regulatory compliance, water quality monitoring and hazard programs. These fees have increased by 135% since 2013, and Boulder leads the area for the highest stormwater and flood rates, not surprisingly, since Boulder is the Colorado city most at risk for flash floods.

City staff presented details to the Water Resources Advisory Board on the preferred option, Variant 1, 100-year flood protection, which was found to have the least environmental impacts, the lowest cost, and the greatest probability of permitting feasibility through the various regulatory agencies. The cost of this version is projected to be $66 million. Other alternatives, a 200-year and a 500-year, are estimated at $93 million and $96 million, minimally a $27 million difference…

…three of the WRAB board members…and voted, with two other members dissenting, to accept the city’s preferred plan, suggesting that Council move forward into more detailed planning and engineering analysis. WRAB member Ted Rose said that “this is about acting, actually moving forward to protect our fellow citizens.” Board Chair Kirk Vincent and member Trisha Oeth, brought up equity concerns of differing flood protection levels across the community, the huge backlog in aging infrastructure, and the inability of many customers — renters, churches or schools — to afford rates that could double…

Planning Board is scheduled to review the plan next week, followed by the Open Space Board of Trustees and, finally, City Council, in June.