With the phase 1 study the city commissioned to consider ending its franchise agreement with Black Hills Energy early and creating its own municipal utility completed, city officials appear ready to move to the next step.

Pueblo's Electric Utility Commission recommended launching the phase 2 study to the City Council. Though council members on Monday night didn't vote, they gave direction to Mayor Nick Gradisar and the EUC to proceed.

Council would likely vote on conducting the phase 2 study at its upcoming meeting.

The 56-page, phase 1 study was completed by EES Consulting Inc. and cost the city $122,000. It's unclear at this time what the phase 2 study will cost, though EES Consulting would be the author.

Councilman Bob Schilling was the only City Council member who expressed reservation at Monday's work session.

"I've been through this utility thing before. We spent $800,000 in 2000 and came to the conclusion that it was a mistake to make a change," Schilling said. "We already have a ton of dough in this thing, and all they gave us was something that asked more questions. I don't know how far down the black hole I want to go with this thing because there are so many assumptions.

"And we have no idea what Black Hills might do. What if Black Hills adjusts their rates and it made no sense for us to do this? I'm really not willing to take that gamble."

The phase 1 feasibility study determined that Pueblo ratepayers could save 10-12 percent a year if the city creates its own municipal electric utility.

The study also found that the cost of buying assets from Black Hills and creating a utility would range between $255 million and $334 million based on different scenarios, but could save ratepayers more than $160 million over the next 20 years.

The finished report was released in January.

EES said the study was an initial analysis and recommended that the city move ahead with a second analysis reviewing financial and legal issues involved in taking over all or part of Black Hills Energy's regional power distribution network.

It assumes Pueblo would purchase the utility's distribution network and looks at three scenarios: a municipal utility that serves just Pueblo; an alternative that includes some out-of-city customers; and the possibility of having to buy all of Black Hills distribution network to nearby communities as well.

rseverance@chieftain.com

Twitter: @RyanS_Chieftain