Jun 9 - McClatchy-Tribune Regional News - Peter Roper The Pueblo Chieftain, Colo.



Only a handful of Pueblo residents turned out Tuesday night to complain about Black Hills Energy's proposed 9.65 percent increase in electric rates -- but the public hearing was just a small squall in the larger storm over the utility's plan to build a new natural gas-fired power plant north of the city.

On the table for comment was a proposed settlement between Black Hills and the Colorado Public Utilities Commission that would grant the electric utility a rate increase this year of about $7.90 a month for residential customers.

Paul Gomez, a black-robed administrative law judge for the PUC, conducted Tuesday's hearing, but most of the residents who came to City Hall were more worried about the utility's plan to build a PUC-approved, natural gas-fired power plant north of Pueblo at a cost of at least $450 million.

Black Hills officials already have said that the project will require another rate hike next year of between 8-15 percent.

 John Madrid, a disabled Pueblo man, summed up the fundamental frustration of most of the witnesses.

"I didn't get a cost-of-living (increase) in my pension this year because of the economic situation," Madrid told Gomez. "I don't see how a town like Pueblo will be able to absorb the cost of building this plant."

City Council members Steve Nawrocki, Judy Weaver and Leroy Garcia were all in attendance for the hearing, as was a delegation of about 10 Black Hills officials. Right now, a majority of council and Black Hills are at odds over annexing the plant's 250-acre site into the city.

Black Hills has pledged to give the city $7.5 million in advance taxes if the land is annexed, but the utility walked away from the annexation agreement at the May 24 council meeting. That's when a majority of council added a condition that the utility use area workers and pay union-scale wages and benefits in building the plant.

Council has delayed making a decision on the annexation plan until next Monday night's regular meeting, hoping to reach some agreement with the utility.

But the issue that plagued the public Tuesday night was how the city finds itself having to build a new power plant for any utility when Xcel Energy just completed the $1.3 billion Comanche 3 station south of the city, but does not provide power to any Pueblo customers except the Evraz Rocky Mountain Steel mill.

Black Hills does buy power from Xcel, but the Denver-based utility will not renew the Black Hills contract when it expires in December 2011 -- which is why the PUC approved Black Hills' plan to build a new power plant to serve Pueblo.

Ellen Hendrick called herself "under-employed," but she told Gomez she can't afford the series of rate increases that Black Hills says are necessary to provide power to the city.

"Our leaders should have worked a deal (with Xcel) when it was being built to provide us with power," she protested.

Tom Thielmeier put it another way: "Xcel gets to leave its pollution behind in Pueblo when it ships its electricity to its Denver customers."

The loudest critic of the city's efforts to work with Black Hills, local businessman Sean McCarthy, wasn't at the hearing, but he sent his detailed testimony through other speakers. McCarthy told council at its May 24 meeting that it should begin looking at the admittedly expensive job of acquiring Black Hills, saying that it would be cheaper for city ratepayers and businesses in the long run.

Local business owners Tisha Casida and Justin Parker read McCarthy's testimony at the hearing and urged the PUC to delay any approval of Black Hills' rate requests until a fuller picture is known about likely future rate hikes. In his written remarks, McCarthy labeled the $7.5 million Black Hills has promised the city a "payday loan" that local ratepayers will regret as the long-term rate increases overwhelm that short-term gain.

For council, the quandary is that the city looked at buying the electric utility when it was owned by Aquila, but rejected the idea for numerous reasons including cost. Then Black Hills bought the company in 2006 and became the PUC-designated electric provider.

As for the immediate rate increase of 9.65 percent, Gomez will conduct an evidentiary hearing on that proposed settlement Thursday at the PUC offices in Denver. He is expected to issue a recommended decision to the commission within a month. In that decision, he can urge the PUC commissioners to accept the settlement, reject it, or even modify it.

Thursday's hearing begins at 10 a.m. and can be viewed at the PUC's website.

(c) 2010, McClatchy-Tribune Information Services  To subscribe or visit go to:  www.mcclatchy.com/