Preliminary Feasibility Study
Prepared for Black Hills Energy
A preliminary independent analysis has been conducted to evaluate whether it is financially feasible for the city of Pueblo, Colorado to acquire the electric distribution assets owned and operated by Black Hills Energy within the Pueblo city limits.
Based on the analysis conducted, municipalization of the electric distribution assets within the city limits is not currently considered to be financially feasible. While municipalization would allow a municipal utility in Pueblo to finance future electric operations entirely with tax-exempt debt without shareholder returns, this benefit is more than offset by the costs to acquire and operate the existing electric distribution system within the city. Specifically, the cost to acquire the electric distribution assets within the city limits of Pueblo and establish a new public electric utility is estimated to require financing of more than $1 billion. Forming a municipal utility is estimated to cost Pueblo electric customers, on average, an additional $57 million per year over the next 20 years as compared to the same electric service continuing to be provided by BHE. In addition, there are numerous additional factors beyond financial feasibility that voters should evaluate before deciding whether to proceed with municipalization.
